This book deals with the regulation and supervision of investment services within the European Union (EU).1 Recent developments in financial services at EU level as well as regulatory and institutional developments at national level constitute the subject and focus of this book timelier than ever. The question of the institutional structure of the EU investment services regulation and supervision has now moved beyond the purely academic domain to form the subject of specific political debate.


European Union Financial Service European Central Bank Security Market European Union Level 
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  1. 1.
    For the purposes of this book, unless otherwise indicated, the term ‘regulation’ will be used to refer to the legal rules or administrative requirements established by financial authorities or markets to limit or control the risks assumed by financial firms and to the imposition of such provisions either generally or on the activities of an individual institution. ‘Supervision’ shall refer to the associated or complimentary process of monitoring or reviewing the behaviour of financial firms with any specific sets of regulatory provisions imposed or with more general standards of prudent or proper behaviour. See, e.g., Gardener, E.P., Theory and Practice in 1 Banking Supervision: Some Reflections (IES Institute of European Finance, RP 86/2) 2; Llewellyn, D., The Regulation and Supervision of Financial Institutions (Gilbart Lectures on Banking, 1986) 9;Google Scholar
  2. Goodhart, C. et al., Financial Regulation: Why, How and Where Now? (London: Routledge, 1998) 189;Google Scholar
  3. Walker, G., International Banking Regulation: Law, Policy and Practice (London: Kluwer, 2001) 1.Google Scholar
  4. For a US perspective, see Breyer, S., Regulation and Its Reform (Cambridge: Harvard University Press, 1982);Google Scholar
  5. Spulber, D., Regulation and Markets (Cambridge: MIT Press, 1989) 21. The terms ‘regulator’ and ‘supervisor’, however, may be used in a broader sense, including all authorities that regulate, supervise or review compliance by financial institutions. The European Union was created under Article A of the Maastricht Treaty and is stated to be founded on the European Communities, namely the European Community, the European Coal and Steel Community and the European Atomic Energy Community. The Maastricht Treaty was subsequently consolidated under the Amsterdam Treaty (Consolidated Treaty establishing the European Community, OJ C 340/173, 10 November 1997, hereinafter ‘EC Treaty’).Google Scholar
  6. 2.
    EU securities markets have benefited from new trends: the total volume of international bond issues in euros is now practically equivalent to the volume of issues in US dollars and the volume of derivatives contracts traded has multiplied every quarter since mid-1998. However, indicators show substantial scope for further capital market integration in Europe. Using a survey on business services carried out by the Commission, it can be estimated that eliminating barriers to cross-border trade would increase current EU GDP by between 1.1 and 4.2%. See European Commission, Economic Reform: Report on the Functioning of Community Product and Capital Markets (COM(2001), 7 December 2001) 17. Another study estimates that an integrated financial sector could add between 0.5 and 0.7% to EU GDP or 43 billion euro;Google Scholar
  7. see Heinemann, F. and Jopp, M., The Benefits of a Working European Retail Market for Financial Services (Report to European Financial Services Round Table, 2002) 12. Although such figures might turn out to be exaggerated, the effects are, no doubt, big enough to deserve increasing political attention.Google Scholar
  8. 4.
    European Commission, Completing the Internal Market: White Paper to the European Council (COM(85) 310 final, 28 June 1985).Google Scholar
  9. 8.
    European Commission, Financial Services: Implementing the Framework for Financial Markets: Action Plan (COM(99) 232, 11 May 1999).Google Scholar
  10. 11.
    It is characteristic that of the 36 target Internal Market actions scheduled to be achieved by June 2001, only 26 (56%) were expected to be completed on time. See European Commission, ‘Working Together to Maintain Momentum’: 2001 Review of the Internal Market Strategy (COM(2001) 198 final, 11 April 2001) 4. The success rate for completing target actions fell to just over 50% for 2002;Google Scholar
  11. see European Commission, 2002 Review of the Internal Market Strategy: Delivering the Promise (COM(2002) 171 final, 11 April 2002).Google Scholar
  12. 13.
    See IOSCO, Supervisory Framework for Markets (May 1999) 2.Google Scholar
  13. 15.
    See e.g., Thieffry, G., ‘After the “Lamfalussy” Report: The First Step towards a European Securities Commission (“ESC”)?’ in Andenas, M. and Avgerinos, Y., EU Financial Market Supervision: Towards a Single Regulator? (London: Kluwer, forthcoming 2003);Google Scholar
  14. Danthine, J.P. et al., The Future of European Banking (London: CEPR, 1999) 98;Google Scholar
  15. Leleux, P., ‘Corporation Law in the US and in the EEC’ (1967–68) 5 CMLRev 133, 159.Google Scholar
  16. 16.
    See Lannoo, K., Does Europe Need an SEC? (Madrid: ECMI, 1999) 43;Google Scholar
  17. Avgouleas, E., ‘The Harmonisation of Rules of Conduct in EU Financial Markets: Economic Analysis, Subsidiarity and Investor Protection’ (2000) 1 ELJ 72, 84;CrossRefGoogle Scholar
  18. Committee of Wise Men, Initial Report on the Regulation of European Securities Markets (9 November 2000) 26.Google Scholar
  19. 17.
    See European Commission, Better Lawmaking 2000 (COM(2000) 772 final, 30 November 2000) 15.Google Scholar
  20. 18.
    See European Commission, Enhancing Democracy in the European Union (SEC(2000) 1547/7 final, 11 October 2000) 10.Google Scholar
  21. 19.
    Padoa-Schioppa states that ‘on the whole, (…) the legislative cum regulatory reform, although rather unusual and very diversified in comparison with those of most currency jurisdictions, does not seem to present loopholes or inconsistencies that may hamper the pursuit of systemic stability’; Padoa-Schioppa, T., EMU and Banking Supervision (Lecture at the London School of Economics, 24 February 1999).Google Scholar
  22. 22.
    Such a normative approach is worth pursuing, despite the fact that political and bureaucratic factors ultimately play an important role in the outcome of supervisory and institutional structures. Beyond that, the most persuasive general theory of regulation, popular among lawyers, economists and political scientists until the late 1950s, held that regulation grew out of a need for a regulatory programme to secure the ‘public interest’; see Peacock, A., The Regulation Game (Oxford: Basil Blackwell, 1984) 8. In the financial services sector this interest may extend and become part of more serious risk-management and financial stability objectives.Google Scholar
  23. 23.
    See Alfon, I. and Andrews, P., Cost-Benefit Analysis in Financial Regulation (FSA Occasional Paper Series No. 3, September 1999) 5.Google Scholar

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© Yannis V. Avgerinos 2003

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  • Yannis V. Avgerinos

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