Chapter

Financial Market Regulation

Zdenek Kudrna

in The EU's Decision Traps

Published in print May 2011 | ISBN: 9780199596225
Published online September 2011 | e-ISBN: 9780191729140 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199596225.003.0005
Financial Market Regulation

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The joint-decision trap complicates the adoption of financial market regulations in the EU. This chapter examines the capacity of the Lamfalussy procedure to provide an exit from the trap by supporting complex, yet consistently enforceable, technical compromises. The member states' preferences over key regulatory measures remain divided and tend to split them into two equally sized policy coalitions. In the case of the 1993 Investment Services Directive, the contested compromises proved too ambiguous to be enforced consistently across the EU. In 2001, the EU introduced the Lamfalussy procedure that delegated certain rule-making and monitoring powers to technocratic committees. As a result, the recent regulations, such as the 2004 Market in Financial Instruments Directive, are based on more complex technical compromises that are expensive to implement but can be monitored and enforced consistently, thus supporting EU regulatory integration.

Keywords: EU decision-making; financial services; regulation; Lamfalussy procedure; Market in Financial Instruments Directive

Chapter.  8863 words. 

Subjects: European Union

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