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Pan-European Securities Markets: Policy Issues and Regulatory Responses

Published online by Cambridge University Press:  17 February 2009

Guido A. Ferrarini
Guido A. Ferrarini
Affiliation:
Professor of Law, University of Genoa; Director, Centre for Law and Finance .
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Extract

In this paper, I analyse some of the policy issues concerning the formation of pan-European securities markets, as well as the regulatory responses which are discussed at EC level with reference to regulated markets and issuers disclosure. By “pan-European securities markets” I intend to refer to those regulated markets which have many intermediaries connected, via remote access, from several European countries and offer trading services with respect to securities issued by companies domiciled in several Member States. I use the same concept to indicate also the primary markets where pan-European securities offers take place. My purpose is to assess the impact of some of the reforms included in the Financial Services Action Plan on the development of pan-European (primary and secondary) markets.

Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 3 , Issue 2 , June 2002 , pp. 249 - 292
Copyright
Copyright © T.M.C. Asser Press and the Authors 2002

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References

1 Baum, H., “Globalizing Capital Markets and Possible Regulatory Responses”, in: Basedow, J. and Kono, T. (eds.), Legal Aspects of Globalization. Conflict of Laws, Internet, Capital Markets and Insolvency in a Global Economy (The Hague/London/Boston: Kluwer Law International 2000) pp. 77–132Google Scholar, at p. 99: “These activities are located below the level of formal legal harmonisation and can be described as harmonisation from below”.

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4 See H. Baum, supra n. 1, p. 105.

5 Ibid., p. 108.

6 See Wymeersch, E., “The Harmonisation of Securities Regulation in Europe in the New Trading Environment”, in: Ferran, E. and C.A.E, Goodhart (eds.), Regulating Financial Services and Markets in the XXIst Century (Oxford: Hart 2001) p. 189Google Scholar; Hertig, G., “Regulatory Competition for EU Financial Services” 3 J. Int. Ec. Law (2000) 349.CrossRefGoogle Scholar

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8 Ibid., p. 29.

9 See White, supra n. 7, at 29.

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11 Ibid., at 2366.

12 Ibid..

13 See Giovanoli, supra n. 2, pp. 3 et seq.

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17 See Majone, G., Regulating Europe (London/New York: Routledge 1996) pp. 284 et seq.CrossRefGoogle Scholar

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19 See International Accounting Standards Board, “Exposure draft of a proposed Preface to International Financial Reporting Standards” (November 2001) p. 11.

20 Ibid., at 11 and 12.

21 See Dye, R.A. and Sunder, S., “Why not Allow the FASB and IASB Standards to Compete in the US?”, Yale School of Management, Working Paper Series AC, Working Paper 02 (May 2001).Google Scholar

22 Network externalities are the benefits of having multiple customers adhere to the same standard. See Dye and Sunder, supra n. 21, at F12: “If multiple firms adhere to the same set of standards, readers can compare across firms and interpret the reports better”.

23 Dye and Sunder, supra n. 21, attribute the world leadership in accounting to FASB. In addition they argue that IASB's standards could be diluted to gain international acceptance and IASB could be deadlocked or captured by interests hostile to business. See, however, n. 19 supra and the accompanying text.

24 See Buxbaum, R.M. and Hopt, K.J., Legal Harmonization and the Business Enterprise. Corporate and Capital Market Law Harmonization Policy in Europe and the U.S.A. (Berlin/New York: de Gruyter 1988) pp. 232 et seq., 262 et seq.Google Scholar

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26 Ibid., p. 15.

27 OJ L [1999] 184/23.

28 Lenaerts, K. and Verhoeven, A., “Towards a Legal Framework for Executive Rule-Making in the EU? The contribution of the new comitology decision”, 37 C.M.L. Rev. (2000) 645.Google Scholar

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30 See the Final Report, supra n. 25, p. 22.

31 Ibid., p. 28.

32 See the draft Commission decision of 6 June 2001 establishing the European Securities Committee (Brussels, 6 June 2001) COM (2001) 1493 (final).

33 See Final Report, supra n. 25, pp. 29 et seq.

34 Ibid.

35 Ibid., p. 28.

36 Ibid., p. 24.

37 See Lenaerts and Verhoeven, supra n. 28, at 651.

38 Ibid., with reference to Case 25/70 Köster, [1970] ECR 1161, para 6.

39 See Final Report, supra n.25, p. 37.

40 See Majone, supra n. 17, p. 273 et seq.; La Spina, A. and Majone, G., Lo Stato Regolatore (Bologna: Il mulino 2000) p. 267Google Scholar; Chiti, E., “The Emergence of a Community Administration: the Case of European Agencies”, 37 C.M.L. Rev. (2000) 309.Google Scholar

41 Final Report, supra n. 25, p. 40.

42 Ibid., p. 21.

43 See Financial markets: Commission welcomes Parliament's agreement on Lamfalussy proposals reform, at

44 As recently done for the proposed prospectus directive, infra s. 4.2.7.

45 Ibid., p. 37.

46 The question of a European SEC was already considered by Buxbaum and Hopt, supra n. 24, who offered a negative answer on political grounds. See also Lee, R., “Supervising EU Capital Markets: Do We Need a European SEC?”, in: Buxbaum, R.M., Hertig, G., Hirsch, A., Hopt, K.J., European Economic and Business Law (Berlin/New York: de Gruyter 1996) p. 187Google Scholar, arguing that the European Commission should develop into a body similar, in some important respects, to the SEC.

47 See Final Report, supra n. 25, p. 41.

48 See Case 9/56 Meroni, [1957-1958] ECR 133; Case 10/56 Meroni, [1957-1958] ECR 157.

49 See La Spina and Majone, supra n. 40, p. 267; O'Keeffe, D. and Carey, N., “Financial Services and the Internal Market”, in: Ferrarini, , Hopt, and Wymeersch, (eds.), Capital Markets in the Age of the Euro. Cross-border Transactions, Listed Companies and Regulation (London/The Hague/Boston: Kluwer Law International 2002) 15.Google Scholar

50 The following comments draw on Ferrarini, G., “The European Regulation of Stock Exchanges: New Perspectives”, 36 C.M.L. Rev. (1999) 569–598.Google Scholar

51 For a commentary, see Biancheri, C., “Cooperation Among Supervisory Authorities Under the ISD”, in: Ferrarini, G. (ed.), European Securities Markets. The Investment Services Directive and Beyond (London/The Hague/Boston: Kluwer Law International 1998) pp. 369 et seq.Google Scholar

52 A distinction is usually made between pre-trade and post-trade transparency. The former is the information as to the price at which any incoming order can be executed; the latter is the information as to recent trade history.

53 The transparency of a market depends, to a considerable extent, on its microstructure. In terms of pre-trade transparency, auction markets are “‘inherently’ more transparent than dealer markets; post-trade transparency tends to be lower in dealer markets as a result of ‘inherent technical factors and deliberate choices by exchange authorities”: Pagano, M. and Roell, A., “Transparency and Liquidity: a Comparison of Auction and Deaker Markets with Informed Trading”, 51 J. Fin. (1996) 580.CrossRefGoogle Scholar

54 As argued by the UK Securities and Investment Board with respect to the dealer market operated by the London Stock Exchange: “in such a market too stringent a regime of post-trade transparency can adversely affect liquidity and thus the efficiency of the equity market, particularly with respect to institutional dealing in large size…” (SIB, Regulation of the United Kingdom Equity Markets, Discussion Paper (Feb. 1994) p. 11).Google Scholar

55 In the end, Article 21 very much incorporated the views of the UK and Germany: see Röell, A., “Competition among European exchanges: recent developments”, in: Ferrarini (ed.), European Securities Markets, supra n. 51, pp. 213–224, at p. 216.Google Scholar

56 Steil, B., “Equity trading IV: the ISD and the regulation of European market structure”, in: Steil, B. (ed.), The European Equity Markets. The State of the Union and An Agenda For the Millennium (London: ECMI and the Royal Institute of International Affairs 1996) pp. 113 et seq., at p. 127.Google Scholar

57 See Pagano, M., “The Changing Microstructure of European Equity Markets”, in: Ferrarini, G. (ed.), European Securities Markets, supra n. 51, pp. 177–204, at pp. 191 et seq.Google Scholar

58 See, for the origin of such provisions in France, De Juglart, M. and Ippolito, B., Traité de Droit Commercial, vol. 7: Banques et Bourses, 3rd ed. by Martin, L.M. (Paris: Montchrestien 1991) pp. 663 et seq.Google Scholar; for Belgium, Art. 23 of Law 4 Dec. 1990 concerning financial transactions and financial markets; for Italy, Art. 11 of Law 2 Jan. 1991, No. 1. (“SIM Law”).

59 See, for the UK, Pennington, R., The Law of the Investment Markets (Oxford: Blackwell Law 1990) p. 24Google Scholar; for Germany, , von, Rosen, “Die rechtliche Ordnung des geregelten Kapitalmarkts”, in: Assman, and Schütze, (eds.), Handbuch des Kapitalanlagerechts, 2nd ed. (Munchen: Beck 1996) p. 57.Google Scholar

60 This assumption is open to criticism, given today's existence of alternative venues for trading securities efficiently: Macey, J. and O'Hara, M., “The Law and Economics of Best Execution”, 6 J. Fin. Intermediation (1997) 188–223.CrossRefGoogle Scholar

61 See Bronfman, C., Lehn, K. and Schwartz, R., “US Securities Markets Regulation: Regulatory Structure”, in: Steil, B. (ed.), International Financial Market Regulation (Chichester/New York: Wiley 1994) p. 56.Google Scholar

62 In Ferrarini, supra n. 50, at 584 et seq., I have argued that introduction of a per se prohibition is questionable on the ground that the concentration of exchange transactions may increase market liquidity and efficiency. In particular, the concentration rules aim to solve the ‘free-riding problem’ which arises whenever the exchange members exploit the information received from the exchange by transacting on competing exchanges or off-board: see Mulherin, J.H., Netter, J.M. and Overdahl, J.A., “Prices are Property: the Organization of Financial Exchanges from a Transactions Costs Perspective”, 34 J. Law & Econ. (1991) 591CrossRefGoogle Scholar. Concentration rules are similar to exclusive dealing clauses which are agreed upon by producers and distributors to limit their clients' free-riding. If Article 14 (3) had not been adopted, concentration would be dealt with under the antitrust rules of the EC Treaty in terms similar to those applicable to excl usi ve dealing.

63 For an illustration of this argument, ibid., at 588 et seq.

64 See the Communication from the Commission to the European Parliament and the Council, Upgrading the Investment Services Directive (93/22/EEC), 16 November 2000, Provisional Version.

65 Steil, supra n. 56, p. 129.

66 Hopt, K.J., “Zum Begriff des geregelten Marktes nach der Wertpapierdienstleistungs-richtlinie – am Beispiel von Eurex”, in: Horn, , Lwowski, and Nobbe, (eds.), Bankrecht – Schwerpunkte und Perspektiven. Festchrift für Herbert Schimansky (Koln: RWS 1999) pp. 631–652, at p. 638.Google Scholar

67 See Ferrarini, supra n. 50, at 582 et seq.

68 See Hopt, K.J. and Baum, H., “Börsenrechtsreform in Deutschland”, in: Hopt, K.J., Rudolph, B. and Baum, H. (eds.), Börsenreform. Eine ökonomische, rechtsvergleichende und rechtspolitische Untersuchung (Stuttgart: Schaeffer-Poeschel 1997) pp. 361 et seq.Google Scholar

69 See Revision of Investment Services Directive (93/22/EEC), including Overview Paper, Annex I: Revised Orientations and Annex II: Summary of Responses, at

70 See Overview of Proposed Adjustments to the Investment Services Directive, Working Document, at

71 See the Commission Communication, supra n. 64.

72 Ibid., p. 13. This assumption does not exclude the popular view that the regulated markets' single passport is already practically in force under Article 15 (4) ISD: see para. 2.1 above.

73 Ibid., p. 15.

74 Ibid.

75 See Revision of the Investment Services Directive, supra n. 69, Annex 2: Summary of Responses to the Preliminary Orientations of Commission Services, p. 25.

76 See A. Whittaker, ‘A European Law for Regulated Markets? Some Personal Views”, in: Ferrarini (ed.), supra n. 51, p. 272 et seq., arguing that gaps in the coverage of the ISD do not necessarily mean that a new directive at the European level is needed.

77 See Ferrarini, supra n. 50, p. 575.

78 See Revision of Investment Services Directive, supra n. 69, Overview Paper, p. 2.

79 Ibid., p. 3.

80 Ibid., p. 9.

81 Ibid.

82 This issue was extensively debated in the US: see Macey, J. and O'Hara, M., “Regulating Exchanges and Alternative Trading Systems: a Law and Economics Perspective”, 28 J. Leg. St. (1999) 17.CrossRefGoogle Scholar

83 See Overview Paper, supra n. 78, p. 10 citing, at note 5, Euromoney, Nov. 2001, p. 78: “Banks that have taken the lead are already capable of internalising about a third of their transaction volumes”.

84 See The Regulation of Alternative Trading Systems in Europe, September 2000. FESCO/ 00-064C, p. 4: “An ATS is an entity which, without being regulated as an exchange, operates an automated system that brings together buying and selling interests – in the system and according to rules set by the system's operator – in a way that forms, or results in, an irrevocable contract”.

85 Ibid., p. 5, arguing that “high volume bilateral systems” are capable of contributing to market fragmentation “thereby reducing overall interaction in a market”.

86 See Revision of the Investment Services Directive, supra n. 69, Annex I: Revised Orientations, p. 22.

87 See Overview Paper, supra n. 78, p. 10.

88 See Overview Paper, supra n. 78, p. 11.

89 See The Regulation of Alternative Trading Systems in Europe, supra n. 84 above, p. 12, where FESCO states that by fragmenting the markets and lowering transparency “ATS might make it more difficult and costly for intermediaries to achieve best execution on investors' behalf”.

90 See Annex I: Revised Orientations, supra n. 86, p. 23.

91 Ibid., p. 17.

92 See Overview Paper, supra n. 78, p. 13, stating that in a similar case “the firm must assume all obligations to clients that apply to a broker providing comparable service”.

93 Ibid., p. 9, where it is also stated (at note 2) that the value of other instruments often can be established on the basis of fixed reference values, or the value of an underlying (including equity).

94 See Overview Paper, supra n. 78, p. 14.

95 Ibid., p. 15.

96 Ibid.

97 Ibid., p. 3.

98 Ibid., p. 16.

99 Pagano, M. and Roell, A., “Transparency and Liquidity: A Comparison of Auction and Dealer Markets with Informed Trading”, 51 J. Fin. (1996) 580.CrossRefGoogle Scholar

100 Ibid.

101 See Annex I: Revised Orientations, supra n. 86, p. 36.

102 Ibid.

103 Pagano and Röell, supra n. 99, 580.

104 See Ferrarini, supra n. 50, 582 et seq.

105 See Bronfman, Lehn and Schwartz, supra n. 61, at 58.

106 See Mulherin, Netter and Overdahl, supra n. 62.

107 On the difficulty to predict whether market consolidation or fragmentation will prevail, see Biais, B., “Euroepan Stock Markets and European Unification”, in: Dermine, J. and Hillion, P. (eds.), European Capital Markets with a Single Currency (Oxford: OUP 1989) pp. 252 et seq.Google Scholar

108 See supra n. 61.

109 See Overview Paper, supra n. 78, p. 26.

110 See Annex I: Revised Orientations, supra n. 86, p. 32.

111 Ibid., p. 33.

112 Directive No. 79/279/EC of 5 March 1979, OJ [1979] L 66.

113 Directive 01/34/EC of 28 May 2001, OJ [2001] L 184.

114 See Overview Paper, supra n. 78, p. 27.

115 Ferrarini, supra n. 50, at 572 et seq.

116 See Annex I: Revised Orientations, supra n. 86, p. 34.

117 See Overview Paper, supra n. 78, p. 13, where it is said that the revised orientations “[r]ecognise that client orders may be executed outside the rules and systems of exchanges under a range of formats (incidental client internalisation, systematic order-internalisation, ATS)”.

118 See supra n. 61 and 62, and accompanying text.

119 See also for other references, Di Noia, C., “Customer-controlled Firms: the Case of Financial Exchanges”, in: Ferrarini, Hopt and Wymeersch, supra n. 49, pp. 173–191.Google Scholar

120 See Annex I: Revised Orientations, supra n. 86, pp. 30 et seq.

121 See Overview Paper, supra n. 78, p. 26.

122 For information, see Ferrarini, G., “Stock Exchange Governance in the European Union”, in: Balling, M., O'Brien, and Hennessy, (eds.), Corporate Governance, Financial Markets and Global Convergence (Dordrecht: Kluwer 1998) p. 139.CrossRefGoogle Scholar

123 See Annex I: Revised Orientations, supra n. 86, p. 36.

124 See Revision of the Investment Services Directive, supra n. 75, Annex II: Summary of Responses to the Preliminary Orientations of Commission Services (July 2001), p. 27.

125 On the costs and benefits of accounting standards' harmonisation, supra n. 21 and accompanying text.

126 These are Council Directive 80/390/EEC of 17 March 1980, co-ordinating the requirements for the listing particulars to be published for the admission of securities to official stock exchange listing, OJ [1980] L 100, and Council Directive 89/298 of 17 April 1989, co-ordinating the requirements for the prospectus to be published when transferable securities are offered to the public, OJ [1989] L 124.

127 See the Commission Communication, EU Financial Reporting Strategy: the Way Forward, COM (2000) 359 final, 13 June 2000, p. 3, stating that, in order to accelerate the completion of a single securities market, companies' financial statements should be comparable: “To achieve this objective, the Union requires common financial reporting standards – standards that are transparent, fully understood, properly audited and effectively enforced”.

128 See DG Internal Market, Commission launches consultation on transparency obligations of publicly traded companies (17 July 2001).

129 On these efforts, see Licht, A., “International Diversity in Securities Regulation: Roadblocks on the Way to Convergence”, 20 Cardozo L. Rev. (1998) 227Google Scholar, cautioning against insufficient analysis of the corporate governance implications of harmonisation projects concerning international securities regulation; id., “Games Commissions Play: 2X2 Games of International Securities Regulation”, 24 Yale J. Int'l L. (1999) 61Google Scholar, using game theory and international relations theory to explain co-operation in several areas, including that of accounting standards.

130 See the IOSCO resolution of 17 May 2000

131 See IASC Foundation 2001 Annual Report

132 See the proposal for a European Parliament and Council regulation on the application of international accounting standards (COM (2001)80-C5-0061/2001-2001/0044(COD)). On this proposal, see the Report by the European Parliament, Committee on Legal Affairs and the Internal Market (Rapporteur: The Lord Inglewood), 28 February 2002, Final A5-0070/2002, including Legislative Proposal, Draft Legislative Resolution and Opinion of the Committee on Economic and Monetary Affairs.

133 See Commission Communication, supra n. 127, p. 7.

134 Ibid., further specifying that ‘the central task of this mechanism should be to confirm that IAS are in full conformity with the Union's overall approach – more specifically, if there is conformity with the EU's Accounting Directives and that a suitable basis for financial reporting by listed EU companies is provided’.

135 Ibid., p. 8. Reference should be made to the Council Decision of 28 June 1999 which governs “comitology”.

136 See the Explanatory Memorandum, p. 5, and the 8th considerandum of the Draft Regulation, note 132.

137 See DG Internal Market, Commission proposes requirement for listed companies to use International Accounting Standards by 2005 (13 February 2001).

138 See DG Internal Market, Commission welcomes creation of European Technical Expert Group (26 June 2001).

139 Supra n. 137, p. 9. The Accounting Directives will be amended to maintain consistency between the EU financial reporting framework and IAS, as illustrated by directive 01/65/EC of 27 September 2001 introducing principles of “fair value accounting” in the annual and consolidated accounts of certain types of companies (OJ [2001] L 283). This directive refers to various forms of derivative financial instruments such as futures, options, forward contracts and swaps, and to the solutions adopted by the most influential accounting standards setters to ensure that the financial impacts of these instruments are reflected in company financial statements appropriately (ibid., p. 3). These solutions, including those adopted by IASC (see IAS 39 (1998), para. 66 et seq.), move away from the historical cost valuation model, on which the Accounting Directives are based, towards a “valuation at fair value” model, which most often refers to valuation according to the markets (See the Explanatory Memorandum introducing the proposal for a directive amending Directives 78/660/EEC and 83/349/EEC as regards the valuation rules for the annual and consolidated accounts of certain types of companies, 24.02.2000 COM (2000) 80 final, 2000/0043 (COD), p. 3). The purpose of the directive is ‘to modernise the Accounting Directives in line with business developments and associated developments in international accounting standard setting so that they remain in line with the capital market financial reporting requirements of internationally active European companies. It will therefore enable European companies to participate in the capital markets on equal terms with their non-European competitors” (ibid., p. 4).

140 See “Towards an EU Regime on Transparency Obligations of Issuers whose Securities are Admitted to Trading on a Regulated Market”, Consultation Document of the Services of the Internal Market Directorate General, MARKT/11.07.2001. See also Summary of the Replies Received to the Consultation Document of 11 July 2001, MARKT/F2/HGD/JT D82001.

141 See Towards an EU Regime etc., supra n. 140, p. 8, where the need to consolidate is referred to the relevant provisions of Directive 79/279/EEC on the conditions for admission of securities to official stock exchange listing, Directive 82/121/EEC on regular reporting and Directive 88/62/EEC on major shareholdings in a listed company. This document, however, specifies that “consolidation alone is insufficient”.

142 Ibid., p. 9 et seq. The practice of publishing half-yearly reports is deemed insufficient; therefore, “the services of DG Internal Market favour a condensed set of consolidated financial statements for each quarterly period”, the content of which should follow international accounting standards.

143 Ibid., p. 11 et seq.

144 Ibid., p. 12.

145 Ibid., p. 13: “Ideally there should be a system of hyperlinks between the competent authorities of the Member States…” See, however, E. Wymeersch, “The Use of ICT in Company Law”, in: Ferrarini, Hopt and Wymeersch, supra n. 49, pp. 474 et seq., advocating a system of disclosure by issuers on individual websites, under the supervision of national regulators. Access to these websites on a European basis could be facilitated by either the stock exchanges or the supervisors or other bodies involved in the market organisation (at p. 480).

146 Towards an EU Regime etc., supra n. 140.

147 For a reference to these Directives, see supra n. 126.

148 Jackson, H.E. and Pan, E.J., “Regulatory Competition in International Securities Markets: Evidence from Europe in 1999 – Part I” 56 Bus. Law (2001) 653, at 681.Google Scholar

149 Ibid. The authors comment, however, that the quality of disclosure documents accompanying “international style offerings” and the due diligence work underlying this documentation are of much higher quality than the formal disclosure requirements on most European countries (at 685).

150 Ibid., 688: “Under U.S. law, if an institutional investor purchases a security in a private placement, the security may generally not be resold to retail investors for one to two years”.

151 Ibid., 690.

152 FESCO, A ‘European Passport’ for Issuers, A Report for the EU Commission, 20 December 2000, p. 4. As stated by the International Primary Market Association (IPMA) in its letter of comments to FESCO, dated 15 August 2000 (shown to me by the courtesy of IPMA's Secretary General, Clifford R. Dammers, Esq.): “The current regime for prospectuses and public offers of securities is not conducive to an integrated, efficient pan-European capital market. The Listing Particulars Directive (80/390/EC) has not had the intended effect. Only two or three issuers a year attempt to use the Directive. The cost of complying with local requirements means that only very large issuers, like Deutsche Telekom II can, as a practical matter, avail themselves of the Directive”.

153 Ibid., p. 3. The essence of FESCO members' agreement is to ground the mutual recognition of prospectuses on a mechanism of “simple notification”. Once the documents constituting a prospectus have been approved by the home country authority (i.e. the competent authority of the country where the issuer has its registered office or its primary listing), the prospectus is automatically recognised upon notification to the host country authorities where the offer or listing takes place. Therefore, an issuer may offer or list its shares in another EEA State simply by complying with this notification procedure (Ibid., p. 4).

154 Ibid., p. 7.

155 See Proposal for a directive on the prospectus to be published when securities are offered to the public or admitted to trading, Brussels, 30.05.2001, COM (2001) 280 final, 2001/aaaa (COD).

156 See Explanatory Memorandum, p. 2, where the following comment: “Unless reform is undertaken, inconsistencies will continue. The European financial market will remain fragmented. And cross border capital raising will remain the exception, rather than the rule – the antithesis of the logic of the single currency”.

157 Ibid., p. 3.

158 See the Report by the European Parliament, Committee on Economic and Monetary Affairs, Rapporteur: C. Huhne, Final A5-0072/2002, including Legislative Proposal, Draft Legislative Resolution, Explanatory Statement and Opinion of the Committee on Legal Affairs and the Internal Market.

159 See Annex I (Prospectus), II (Registration Document), III (Securities Note) and IV (Summary Note).

160 Supra s. 2.2.

161 See Final Rule: International Disclosure Standards, Securities and Exchange Commission, 17 CFR Parts 210, 228,229,230,239,240, 249 and 260 (Release Nos. 33-7745; 34-41936; International Series Release No. 1205).

162 Scott, H.S., “Internationalization of Primary Public Securities Markets”, 63 Duke Journal of Law and Contemporary Problems (2000) 71, at 78.CrossRefGoogle Scholar

163 H.S. Scott, “Internationalisation of Primary Public Securities Markets Revisited”, in: Ferrarini, Hopt and Wymeersch (eds.), supra n. 49, p. 306.

164 See supra n. 18-20 and accompanying text.

165 Scott, supra n. 163, at 79.

166 Ibid.

167 See the study by FESCO, Stabilisation and Allotment – A European Supervisory Approach, June 2001.

168 See the comparative study by Hopt, K.J., Die Verantwortlichkeit der Banken bei Emissionen (Munich: Beck 1991)Google Scholar; for recent developments in the UK see E.Z. Lomnicka and J.L. Powell, Encyclopedia of Financial Services Law, para. 4-512; for Germany see Baumbach, A., Duden, K. and Hopt, K.J., Handelsgesetzbuch, 30th ed. (Munchen: Beck 2000) pp. 1557 et seq.Google Scholar

169 See Wegen, G. and Lindemann, C., “The Law Applicable to Public Offerings in Continental Europe”, in: van Houtte, H. (ed.), The Law of Cross-border Securities Transactions (London: Sweet & Maxwell 1999) pp. 162 et seq.Google Scholar

170 See Article 5 of the proposed prospectus directive and Explanatory Memorandum introducing it, at p. 5 (supra n. 155).

171 See Explanatory Memorandum, p. 5, and Article 9 of the proposed directive (supra n. 155).

172 See Explanatory Memorandum, p. 5.

173 See Moloney, supra n. 3, para. 4.9.3.6.

174 See Comments from the London Stock Exchange on the Proposed Prospectus Directive, August 2001, para. 2.12 et seq.

175 See the Report by the European Parliament, supra n. 158, at p. 23, where the comment: “The latter format may not be appropriate for certain smaller issuers who do not plan to go repeatedly back to the markets”.

176 See the Explanatory Memorandum, supra n. 155, p. 3.

177 Ibid., p. 4 and Article 15 of the proposed directive.

178 See Article 17.

179 See Article 16 and the Explanatory Memorandum, supra n.155, p. 4.

180 See Article 2 (1)(g).

181 See Article 18(1).

182 Supra n. 174, para. 3.

183 Ibid., para. 3.3.

184 For further information about the examples made, see Ferrarini, “European Securities Regulation and the Rise of Pan-European Securities Markets: An Overview”, in: Ferrarini, Hopt and Wymeersch (eds.), supra n. 49, 241, pp. 242 et seq.

185 See Comments by the London Stock Exchange, supra n. 171, para 3.2.

186 See Licht, A., “Stock Exchange Mobility, Unilateral Recognition, and the Privatisation of Securities Regulation” 41 Va. J. Int. L. (2001) 583.Google Scholar

187 Supran. 155,p. 13: “The Directive needs to clarify that the prospectus requirement cannot be triggered when securities are the subject of a procedure for admission to trading without the consent of the issuer”.

188 See A. Licht, supra n. 186.

189 For an analysis of these problems, from the Italian perspective, see Ferrarini, G., “Ammissione alia quotazione e ammissione alle negoziazioni”, Banca borsa e titoli di credito (2002) (forthcoming).Google Scholar

190 Explanatory Memorandum, supra n. 155, p. 4.

191 Ibid.

192 See Article 19 (2).

193 See supra s. 4.1.2.

194 See Article 19 (3).

195 On the benefits of regulatory decentralisation, see Mahoney, P. G., “The Exchange as a Regulator” 83 Va. L. Rev. (1997) 1453.CrossRefGoogle Scholar

196 See Amendment 56 in the Report by the European Parliament, supra n. 158, at 45, and the relevant “justification” referring to the fact that “in many Member States, market operators are today entrusted with functions and/or responsibilities in the context of prospectus scrutiny and approval”.

197 See Article 2 (1) (g).

198 See M.B.∣Fox, “Securities Disclosure in a Globalizing Market: Who Should Regulate Whom”, 95 Mich. L. Rev. (1997) 2498CrossRefGoogle Scholar; Id., “Retaining Mandatory Securities Disclosure: Why Issuer Choice is not Investor Empowerment”, 85 Va. L. Rev. (1999) 1244Google Scholar. The second study includes a criticism of the issuer choice model proposed by Romano, supra n. 10, and Choi, S.J. and Guzman, A.T., “The Dangerous Extraterritoriality of American Securities Law”, 17 Nw. J. Int'l L. & Bus. (1996) 207, 228–e32Google Scholar; Id., “Portable Reciprocity: Rethinking the International Reach of Securities Regulation”, 71 S. Cal. L. Rev. (1998) 903Google Scholar. For a response, see Romano, supra n. 14.

199 Fox, “Securities Disclosure in a Globalizing Market: Who Should Regulate Whom”, ibid., at 2504.

200 Ibid., at 2580 et seq.

201 See the Explanatory Statement by C. Huhne, MPE, in the Report by the European Parliament, supra n. 158, 50-53, at 51. See Comments from the London Stock Exchange etc., supra n. 174, para 4.

202 See the Explanatory Statement, ibid., at 51.

203 See the “justification” to amendment 16, in the Report by the European Parliament, supra n. 158, at 17.

204 See the European Parliament's Legislative Proposal, supra n. 158.

205 See Bergsträsser, S., “Regulatory Implications of an Exchange Merger”, in: Ferrarini, Hopt and Wymeersch, supra n. 49, pp. 289–296.Google Scholar