ESMA as a residual lawmaker: the political economy and constitutionality of ESMA’s product intervention measures on complex financial products

Iglesias-Rodriguez, Pablo (2021) ESMA as a residual lawmaker: the political economy and constitutionality of ESMA’s product intervention measures on complex financial products. European Business Organization Law Review. ISSN 1566-7529 (Accepted)

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Abstract

This article proposes that product intervention constitutes a form of residual lawmaking by ESMA that allows it to tackle aspects of investor protection not addressed by EU incomplete financial laws. Whilst product intervention may bring about certain advantages and contribute to mitigate regulatory arbitrage problems, it constitutes a highly intrusive regulatory mechanism that raises important questions about: a) ESMA’s rationale and motivations for its use; b) its compliance with the EU constitutional framework; and c) its adequacy for the regulation of complex financial products. This article addresses these questions through an analysis of the rationale and consequences of ESMA’s product intervention measures on Binary Options and Contracts for Differences of May 2018-July 2019, and of recent reforms of ESMA’s powers. It offers three main contributions to the existing literature. First, it contributes to the literature on administrative discretion and agencies’ rulemaking through an analysis of the political economy of ESMA’s deployment of product intervention powers and, also, of what this reveals about the relationships between ESMA and the EU Institutions on the one side and ESMA and National Competent Authorities on the other. Second, it contributes to the literature on the constitutionality of EU agencies through an examination of the compliance of ESMA’s product intervention measures with EU constitutional law and requirements. Third, it examines whether product intervention constitutes an adequate mechanism to address problems pertaining to investor protection in complex financial products markets and, in doing so, it contributes to the scholarly discussion on complex financial products’ regulation.

Item Type: Article
Schools and Departments: School of Law, Politics and Sociology > Law
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 15 Mar 2021 08:30
Last Modified: 15 Mar 2021 08:30
URI: http://sro.sussex.ac.uk/id/eprint/97814

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