In what could be an important ruling by the European Court of Justice (ECJ) the UK has lost its case against EU legislators over the power given to the European Securities and Markets Authority (ESMA) over European financial rules, specifically short-selling.
The UK wanted to annul rules in the EU short-selling legislation, introduced in November 2012, that allow ESMA to ban firms from short selling or require them to disclose certain short positions in exceptional circumstances.
Legal proceedings were filed against the Council of the European Union and the European Parliament last May, with the Chancellor George Osborne saying that the powers given to ESMA go beyond its remit and go beyond the limits of the Treaty of the Functioning of the European Union.
However, a statement from the ECJ yesterday (January 22) said that the powers available to ESMA are precisely delineated, adding that the measures it can take as part of the short-selling rules are part of its role to ensure the stability of financial markets.
Mr Osborne has been launching legal challenges to various EU financial rulings since 2011, from its cap on EU bankers’ bonuses to proposals for a financial transaction tax and the European Central Bank’s policy on providing liquidity to clearing houses.
A Government spokesperson said that it was disappointed in the ECJ’s decision not to uphold the UK’s challenge on the case and said that, in doing so, it has rejected the opinion of its own Advocate-General, Niilo Jääskinen.
However, a spokesperson for the European Commission described the ruling as “significant”, as it vindicates the use of a single market legal base, which requires “the approval of a weighted majority of member states to empower the agencies”.