European Capital Markets Law

Cover
Title Page
Preface
Summary Contents
Detailed Contents
List of Contributors
List of Abbreviations
1 Foundations of Capital Markets Legislature in Europe
	§ 1. History
		I. Introduction
		II. Segré Report (1966)
		III. Phase 1: Coordination of Stock Exchange and Prospectus Laws (1979–1982)
		IV. White Paper on Completing the Internal Market (1985)
		V. Phase 2: Harmonisation of the Laws on Securities Markets (1988–1993)
		VI. Financial Services Action Plan (1999)
		VII. Lamfalussy Report (2000)
		VIII. Phase 3: Reorganisation of the Laws on Prospectuses and Securities (2003–2007)
		IX. Continuation of Phase 3: Harmonisation of Takeover Law (2004)
		X. White Paper on Financial Services Policy (2005)
		XI. The de Larosière Report (2009)
		XII. Phase 4: Towards a European Supervision and a Single Rulebook on Capital Markets Law (since 2009)
		XIII. First Step of Phase 4: Regulation of Credit Rating Agencies (2009)
		XIV. Continuation of Phase 4: Revision of the Framework Directives and Establishment of a Single Rulebook (2009–2014)
		XV. Continuation of Phase 4: Regulation on Short Sales (2012)
		XVI. Continuation of Phase 4: Regulation on OTC Derivatives (2012)
		XVII. End of Phase 4: Regulation of Benchmarks (2016)
		XVIII. Phase 5: Capital Markets Union (since 2015)
		XIX. Conclusion
	§ 2. Concept and Aims of Capital Markets Regulation
		I. Concept
		II. Regulatory Aims
			1. Efficiency of Capital Markets and Investor Protection
			2. Financial Stability
		III. Regulatory Strategies and Instruments
			1. Disclosure and Prohibition
			2. Enforcement
	§ 3. Legislative Powers for Regulating Capital Markets in Europe
		I. Legal Foundations of the European Union
		II. Rules on Competence
			1. Coordination of Provisions on the Protection of Shareholders and Creditors
			2. Coordination of Start-Up and Pursuit of Self-Employment
			3. Establishing an Internal Market
			4. Cross-border crimes
		III. Legislative Instruments
			1. Overview
			2. Regulation
			3. Directive
	§ 4. Process and Strategies of Capital Markets Regulation in Europe
		I. The Term Capital Markets Regulation
			1. Market Regulation versus Market Supervision
			2. Capital Markets Regulation versus Financial Markets Regulation
		II. The Regulatory Process
			1. The European Level
				(a) Historical Development
				(b) The Lamfalussy II Process
					(aa) Level 1: Framework Acts
					(bb) Level 2: Delegated Acts and Implementing Measures
					(cc) Level 3: Guidelines and Recommendations
					(dd) Level 4: Supervision of the Enforcement by Member States
					(ee) Involvement of Stakeholders
					(ff) Graph: Lamfalussy II Process
			2. Evaluation
		III. Strategies of Capital Markets Regulation
			1. Regulations and Directives
			2. Minimum and Maximum Harmonisation
				(a) Definitions
				(b) Advantages and Disadvantages
				(c) Tendency towards Maximum Harmonisation
			3. The National Level
				(a) Methods for a Transformation of European Directives
				(b) Accompanying National Law
				(c) Excurse: The Principles-based Approach to Regulation in the United Kingdom
					(aa) Foundations of Principles-based Regulation
					(bb) Effects of Principles-based Regulation on Enforcement
					(cc) Evaluation
					(dd) Outlook
				(d) Self-regulation
	§ 5. Sources of Law and Principles of Interpretation
		I. Sources of Law
			1. European Law
				(a) Market Abuse Regulation and Directive on Criminal Sanctions for Market Abuse
				(b) Prospectus Directive
				(c) Markets in Financial Instruments Directive (MiFID)
				(d) Transparency Directive
				(e) Takeover Directive
				(f) Regulation on Credit Rating Agencies
				(g) Regulation on Short Selling
				(h) Benchmark Regulation
				(i) Regulations on the European Supervisory Authorities
				(j) Shareholder Rights Directive
				(k) Further Directives
			2. National Laws of the Member States
				(a) Austria
				(b) France
				(c) Germany
				(d) Italy
				(e) Spain
				(f) Sweden
				(g) United Kingdom
		II. Interpretation
			1. Importance of Interpretation
			2. Principles of Statutory Interpretation
				(a) Textual Interpretation
				(b) Contextual Interpretation
				(c) Historical Interpretation
				(d) Teleological Interpretation
	§ 6. Dogmatics and Interdisciplinarity
		I. Overview
		II. Legal Nature
			1. Foundations
			2. Interpretation
		III. Relations with other Fields of Law
			1. Accounting Law
			2. Company Law
		IV. Interdisciplinarity
			1. Homo oeconomicus or irrational investor?
				(a) Basic Assumption: Rationality
				(b) Behavioural Finance
					(aa) Bounded Rationality
					(bb) Overconfidence
					(cc) Fairness
					(dd) Prospect Theory/Framing/Risk Aversity
					(ee) Hindsight Bias
					(ff) Representativeness/Availability/Salience
			2. Relevance of the Results of Behavioural Finance for Capital Markets Law
				(a) Interpretation of the Law
				(b) Legislation
					(aa) Challenges
					(bb) Recent Developments in the Financial Services Legislation
2 Basics of Capital Markets Law
	§ 7. Capital Markets
		I. Overview
			1. Trading Venue
			2. Facts
			3. Primary and Secondary Markets
			4. Stock Exchanges
		II. Regulated Capital Markets
			1. Scope of Application of European Capital Markets Law
			2. Definition
			3. Market Segments
		III. SME Growth Markets
	§ 8. Financial Instruments
		I. Introduction
		II. Securities
			1. Definitions in MiFID II
			2. Shares
			3. Bonds
			4. Derivatives
	§ 9. Market Participants
		I. Introduction
		II. Issuers
		III. Investors
		IV. Other Market Participants
	§ 10. Access to the Markets and Market Exit
		I. Issuance of Shares
		II. Admission to Trading of Shares
		III. Market Exit
	§ 11. Capital Markets Supervision in Europe
		I. Introduction
		II. European Requirements
			1. Institutional Organisation
			2. Powers
				(a) Administrative and Investigation Powers
				(b) Administrative Fines
				(c) Other Administrative Sanctions
				(d) Choice of Sanctions/Administrative Measures
		III. Capital Markets Supervision by the Member States
			1. Institutional Concepts
				(a) Model of Integrated Supervision
				(b) Model of Sectoral Supervision
				(c) Hybrid Models
				(d) Twin Peaks Model
				(e) Direct Banking Supervision by the European Central Bank (ECB)
				(f) Generally Preferable Supervisory Model?
			2. Internal Organisation
			3. Administrative and Criminal Powers
			4. Liability of Supervisory Authorities
			5. Use of Resources and Sanctioning Activity
		IV. Cooperation between the NCAs
			1. Cooperation within the European Union
			2. Cooperation with Third Countries’ Authorities
		V. Competition between the National Supervisory Institutions
		VI. The European Financial Supervisory Scheme
			1. The European Financial Markets Supervisory System (ESFS)
				(a) Macro-prudential Level
				(b) Micro-prudential Level
				(c) Single Supervisory Mechanism (SSM) and Single Resolution Mechanism (SRM)
			2. The European Securities and Markets Authority (ESMA)
				(a) Internal Organisation
				(b) Independence and Budget Autonomy
				(c) Powers of Intervention vis-à-vis NCAs
					(aa) Breaches of EU Law by the National Supervisory Authorities
					(bb) Decisions on Emergency Situations and Disagreements between NCAs
						(1) Emergency Situations
						(2) Disagreements between Competent Authorities in Cross-Border Situations
						(3) National Fiscal Responsibilities Limit ESMA Powers
				(d) Direct Supervision of Market Participants
					(aa) Warnings and Prohibition of Financial Activities
					(bb) Supervision of Credit Rating Agencies (CRA) and Trade Repositories (TR)
				(e) Single Rulebook and Supervisory Convergence
					(aa) Supervisory Convergence
					(bb) Guidelines and Recommendations
					(cc) Regulatory and Implementing Technical Standards
						(1) Regulatory Technical Standards (RTS)
						(2) Implementing Technical Standards (ITS)
						(3) Assessment
				(f) Compliance of ESMA’s powers with the TFEU
				(g) Judicial Review
				(h) Liability of ESMA
				(i) Access to Information
			3. Conclusion
	§ 12. Sanctions
		I. Introduction
		II. Sanctioning Systems in the Pre-Crisis Era
			1. Criminal and Administrative Sanctions
			2. Civil Law Sanctions
		III. Reforms after the Financial Crisis
			1. Need for Reforms
			2. Public Enforcement
				(a) Provisions on the Detection and Exposure of Legal Infringements
				(b) Supervisory Measures
				(c) Sanctions
			3. Development of a Private Enforcement
		IV. Outlook
3 Market Integrity
	§ 13. Foundations
		I. Introduction
		II. Legal Foundations
			1. MAR
			2. CRIM-MAD
			3. Further Measures by ESMA
			4. Overview on the Single Rulebook on Market Abuse
		III. Level of Harmonisation
			1. Minimum versus Maximum Harmonisation
			2. Evaluation
		IV. Presentation of Market Abuse Law in this Book
	§ 14. Insider Dealing
		I. Introduction
		II. Regulatory Concepts
			1. Market Abuse Regime
			2. Accompanying Rules
		III. Concept of Inside Information
			1. Relevance of the Term
			2. Definition and Interpretation of Inside Information under the MAD 2003 Regime
			3. Implementation in the MAR 2016
				(a) Information of a Precise Nature
					(aa) Existing Circumstances
					(bb) Future Circumstances and Intermediate Steps in a Protracted Process
					(cc) Reference to an Issuer or to Financial Instruments
					(dd) Rumours
				(b) Information which has not been made public
				(c) Price Relevance
					(aa) Foundations
					(bb) Assessment by NCAs
				(d) Special Rules for Derivatives on Commodities and Front Running
			4. Stricter Rules in the Member States?
		IV. Prohibitions
			1. Overview
			2. Prohibition of the Acquisition or Disposal of Financial Instruments
				(a) Foundations
				(b) Use of Inside Information and Legitimate Behaviours
			3. Unlawful Disclosure of Inside Information
				(a) Foundations
				(b) Market Sounding
			4. Recommending or Inducing
			5. Exemptions
		V. Supervision
			1. European Requirements
				(a) Powers of National Authorities
				(b) Insider Lists
				(c) Notification Obligations and Whistleblowing
			2. National Practices and Supervisory Convergence
		VI. Sanctions
			1. Overview
			2. Administrative Pecuniary Sanctions
			3. Criminal Sanctions
			4. Investor Protection through Civil Liability
		VII. Conclusion
	§ 15. Market Manipulation
		I. Introduction
		II. Regulatory Concepts
			1. Requirements under European Law
			2. Direct effect in the Member States
		III. Scope of Application of the MAR
			1. Personal Scope
			2. Material Scope
		IV. Prohibitions
			1. Regulatory System
			2. Core Definitions of Market Manipulation
				(a) Information Based Manipulation
					(aa) The Core Definition
					(bb) Digression: Behavioural Finance
				(b) Transaction-Based Manipulation
					(aa) Core Definition and Indicators
					(bb) Exceptions
						(1) Legitimate Reasons
						(2) Accepted Market Practices (AMPs)
				(c) Other Forms of Market Manipulation
				(d) Benchmark Manipulation
			3. Instances of Market Manipulation
				(a) Dominant Market Position
				(b) Transactions at the Close of the Market
				(c) Certain Means of Algorithmic and High-Frequency Trading (HFT)
				(d) Abusing Access to the Media
				(e) Emission Allowances
		V. Safe-Harbour Rules
			1. Introduction
			2. Buy-Back Programmes
				(a) Aim of the Programme
				(b) Disclosure Obligations
				(c) Trading Conditions
				(d) Restrictions
			3. Price Stabilisation
				(a) Scope of Application
				(b) Period of Stabilisation
				(c) Disclosure and Organisational Obligations
				(d) Ancillary Stabilisation
		VI. Supervision
			1. Supervisory Mechanisms
			2. Investigatory Powers
		VII. Sanctions
			1. Requirements under European Law
				(a) Administrative Sanctions
				(b) Criminal Sanctions
				(c) Investor Protection through Civil Liability
			2. Transposition in the Member States
				(a) Administrative Sanctions
				(b) Criminal Sanctions—practical relevance in the Member States under the MAD 2003-regime
				(c) Investor Protection through Civil Liability
		VIII. Conclusion
4 Disclosure System
	§ 16. Foundations
		I. Introduction
		II. Transparency and Capital Market Efficiency
			1. Allocational Efficiency
			2. Institutional Efficiency
			3. Operational Efficiency
		III. Disclosure Provisions as Part of the Regulation of Capital Markets
			1. The Importance of Legal Disclosure Provisions from an Economic Point of View
				(a) Reduction of Information Asymmetries to Prevent Market Failure
					(aa) Social Value of Public Information
					(bb) Reduction of Agency Costs and Signal Theory
				(b) Information and the Public Good Problem
				(c) Mandatory Disclosure and the Theory of Transaction Costs
				(d) Conclusion
			2. Disclosure Provisions as Part of Investor Protection
				(a) Principle of Investor Protection through Information Disclosure
				(b) Discussion on the Scope of Investor Protection
				(c) Criticism of the Information Paradigm and Complementing Measures for Investor Protection
		IV. Development of a Disclosure System in European Capital Markets Law
	§ 17. Prospectus Disclosure
		I. Introduction
		II. Legal Sources
			1. European Law
			2. Implementation in the Member States
			3. Reform
		III. Foundations of the Prospectus Regime
			1. Approval by NCA
			2. Approval Procedure
			3. European Passport
		IV. Obligation to Draw up a Prospectus
			1. Scope of Application
			2. Exemptions from the Obligation to Publish a Prospectus
				(a) Exceptions for Certain Addressees, Offers or Securities
				(b) Exemptions for Certain Issuances in Cases of Public Offers
				(c) Exemptions for Certain Issuances for the Admission to the Regulated Market
				(d) Supplements
			3. Content, Format and Structure of a Prospectus
				(a) General Rules
				(b) Format of the Prospectus
					(aa) Single or Separate Documents and Base Prospectus
					(bb) Summary
					(cc) Incorporation by Reference
				(c) Specific Information Depending on the Type of Security and the Issuer
				(d) Language of the Prospectus
				(e) Update
		V. Supervision and Sanctions
			1. Requirements under European Law
			2. Supervisory Measures
				(a) Suspension or Prohibition of an Offer
				(b) Administrative Sanctions
			3. Sanctions under Criminal Law
			4. Private Enforcement
				(a) Deficiencies of the Prospectus
				(b) Claimant and Opposing Party
				(c) Causation
				(d) Responsibility
				(e) Legal Consequences
		VI. Conclusion
	§ 18. Periodic Disclosure
		I. Introduction
			1. Development of a System of Periodic Disclosure
			2. Financial Accounting Information as the Basis of Financial Reporting
		II. Regulatory Concepts
			1. Requirements under European Law
				(a) The Financial Report as a Unified Reporting Standard for Periodic Disclosure
				(b) Correlation with European Accounting Law as a Reflection of the Dualistic Regulatory Concept
				(c) Addressee of the Disclosure Obligation
			2. Implementation in the Member States
		III. Annual Financial Report
			1. Overview
			2. Financial Accounting Information
				(a) Consolidated and Individual Accounts
				(b) Management Report
				(c) Auditing of the Annual Financial Report
				(d) Single Electronic Reporting Format (ESEF)
		IV. Half-yearly Financial Reports
			1. Overview
			2. Financial Accounting Information
				(a) Consolidated and Individual Accounts
				(b) Interim Management Report
				(c) Auditing of the Half-yearly Financial Report
		V. Quarterly Periodic Financial Reports
			1. The Question of a Sufficient Supply of Capital Markets with Information on Issuers
				(a) Concept of a Quarterly Reporting Obligation in the TD 2004
					(aa) Content of Interim Management Statements
					(bb) Quarterly Financial Reports under the TD of 2004
				(b) Concept of Additional Periodic Disclosure after the Reform of 2013
		VI. Disclosure Procedures
			1. Requirements under European law
			2. Transposition in the Member States
			3. European Electronic Access Point (EEAP)
		VII. Enforcement of Financial Information
			1. Dual-enforcement in Germany and Austria
			2. Enforcement in the United Kingdom by the Conduct Committee
		VIII. Sanctions
			1. Liability for Incorrect Financial Reporting
				(a) Specific Liability for Incorrect Financial Reporting
				(b) Liability under the General Civil Law Rules
			2. Sanctions under Criminal and Administrative Law
				(a) Requirements of the TD
				(b) Legal Situation in den Member States
		IX. Conclusion
	§ 19. Disclosure of Inside Information
		I. Introduction
			1. Dual Function of the Disclosure Obligation
			2. Practical Relevance
		II. Regulatory Concepts
			1. Requirements under European Law
			2. National Regulation
		III. Obligation to Disclose Inside Information
			1. Addressees
				(a) Issuers of Financial Instruments
				(b) Persons Acting on Behalf or on Account of the Issuer
				(c) Companies Controlled by the Issuer
				(d) Emission Allowance Market Participant
			2. Relevant Information
				(a) Foundations
				(b) Information Directly Concerning the Issuer
				(c) Future Circumstances
				(d) Corporate Group Constellations
				(e) Relationship to Other Disclosure Rules
			3. No Offsetting of Information
			4. No Combination of Disclosure with Marketing Activities
			5. Publication Procedure
		IV. Delay in Disclosure
			1. Foundations
			2. Legitimate Interests
				(a) Requirements under European Law
				(b) Divergent Legal Traditions in the Member States
					(aa) Attempts at a Dogmatic Approach
					(bb) Further Constellations
				(c) In particular: Multi-Stage Decision-Making Processes
			3. No Misleading the Public
			4. Ensuring Confidentiality
			5. Conscious Decision by the Issuer
		V. Supervision
		VI. Sanctions
			1. Importance of National Legal Traditions
			2. Civil Liability
				(a) Germany
				(b) Austria
				(c) United Kingdom
				(d) Other Member States
			3. Administrative Sanctions
				(a) Fines
					(aa) Germany
					(bb) France
				(b) Further Administrative Sanctions
				(c) Naming and Shaming
			4. Criminal Law
		VII. Conclusion
	§ 20. Disclosure of Major Holdings
		I. Introduction
			1. Regulatory Aims
			2. Degree of Harmonisation
			3. Practical Relevance
		II. European Concepts of Regulation
			1. Legal Sources
			2. Scope of Application
			3. Disclosure Obligations under the TD
			4. Further Disclosure Obligations
		III. Notification Obligations on Changes in Voting Rights
			1. Prerequisites
				(a) Procedures Subject to Notification
				(b) Thresholds
				(c) Exemptions from the Notification Obligation
			2. Legal Consequences
				(a) Notification
				(b) Publication
			3. Attribution of Voting Rights
				(a) Regulatory Concepts
				(b) Cases of an Attribution of Voting Rights
					(aa) Acting in Concert
						(1) Legal Practice in France
						(2) Legal Practice in Germany
						(3) Legal Practice in Italy
						(4) Legal Practice in Spain
					(bb) Temporary Transfer of Voting Rights
					(cc) Notification Obligations of the Secured Party
					(dd) Life Interest
					(ee) Voting Rights Held or Exercised by a Controlled Undertaking
					(ff) Deposited Shares
					(gg) Shares Held on Behalf of Another Person
					(hh) Voting Rights Exercised by Proxy
		IV. Notification Requirements when Holding Financial Instruments
			1. Foundations
				(a) Requirements under the TD 2004
				(b) Deficits
			2. Reform of the Transparency Directive 2013
				(a) Prerequisites
				(b) Attribution of voting rights
			3. Legal Consequences
		V. Notification of Intent
			1. France
			2. Germany
			3. Reforms at European level
		VI. Supervision
			1. Requirements under European Law
			2. Supervisory Practices in the Member States
		VII. Sanctions
			1. Requirements under European Law
			2. Investor Protection by means of Civil Liability
		VIII. Conclusion
	§ 21. Directors’ Dealings
		I. Introduction
		II. Regulatory Concepts
			1. Legal Foundation
			2. Additional Disclosure Rules
			3. Practical Relevance
		III. Disclosure Obligations
			1. Notification Requirements
				(a) Persons Subject to the Notification Obligation
				(b) Transactions Subject to the Notification Requirements
			2. Publication
		IV. Closed Period
		V. Supervision and Sanctions
			1. Requirements under European Law
			2. Disgorgement of Profits
			3. Civil Liability
		VI. Conclusion
	§ 22. Access to Information
		I. Requirements under European Law
		II. Implementation in the Member States
			1. Germany
			2. United Kingdom
		III. Conclusion
	§ 23. Disclosure of Corporate Governance Issues
		I. Introduction
		II. Corporate Governance Statement
		III. Disclosure of Information Necessary for Shareholders to Exercise their Rights
			1. Introduction
			2. Regulatory Concepts
			3. Disclosure of Changes in the Rights Attached to Shares
			4. Disclosure of Information Necessary for Exercising Rights
				(a) Information Necessary for Shareholders
				(b) Information Necessary for the Holders of Debt Securities
		IV. Conclusion
5 Trading Activities
	§ 24. Short Sales and Credit Default Swaps
		I. Introduction
		II. Need for Regulation
			1. Short Sales as a Means for Market Manipulation
			2. Short Sales as a Means for Destabilising the Financial System
		III. EU Regulation on Short Selling and Credit Default Swaps (SSR)
			1. Scope of the SSR
			2. Rules on Short Sales
				(a) Prohibited Transactions
				(b) Transparency Obligations
				(c) Rules for Central Counterparties (CCP)
			3. Rules on Sovereign Credit Default Swap Agreements (CDS)
			4. Powers of the NCAs and ESMA
			5. Sanctions
		IV. Conclusion
	§ 25. Algorithmic Trading and High-Frequency Trading
		I. Introduction
		II. Defining AT and HFT/Technical Aspects and Trading Strategies
			1. Definitions and Important Terms
			2. Trading Strategies
				(a) AT/HFT as Technical Means for Implementing Trading Strategies
				(b) Overview of Concepts Behind Particular AT and HFT Strategies
		III. Potential Risks and Benefits of AT and HFT
			1. Potential Risks of AT and HFT
				(a) Systemic Risk and Market Stability
				(b) Market Quality and Market Integrity
			2. Potential Benefits of AT and HFT
				(a) Increased Liquidity and Superior Intermediation
				(b) Increased Market Efficiency and Market Quality
			3. Risk-Benefit-Assessment and Consequences
		IV. Regulatory Measures with regard to AT/HFT
			1. European Approach
				(a) MiFID, MAD and ESMA-Guidelines
				(b) Level 1 regime: MiFID II
					(aa) Provisions Concerning AT/HFT Firms and Investment Firms that Provide DMA/SA
					(bb) Provisions concerning Trade Venues with Particular Relevance for AT/HFT
				(c) Level 2: ESMA’s Technical Advice and Regulatory Technical Standards
					(aa) Technical Advice
					(bb) Draft Regulatory Technical Standards
				(d) Action taken by selected Member States/Gold plating
				(e) Assessment of the European Union regime
			2. Some Thoughts on HFT regulation in other Jurisdictions
		V. Conclusion
6 Intermediaries
	§ 26. Financial Analysts
		I. Introduction
		II. Types of Financial Analysts
		III. Regulatory Concepts
			1. Requirements under European Law
			2. Direct application in the Member States
		IV. Specific Regulation of Financial Analysts
			1. Scope
				(a) Material Scope
				(b) Personal Scope
			2. Production of Research
				(a) Objective Presentation of Investment Recommendations
					(aa) General Requirements
					(bb) Special Requirements for Qualified Persons and Experts
				(b) Disclosure Obligations
					(aa) Identity of the Producer of Investment Recommendations
					(bb) Actual and Potential Conflicts of Interest
						(1) General Provisions
						(2) Additional Requirements for Qualified Persons and Experts
						(3) Additional Requirements for Investment Firms, Credit Institutions or Persons Working For Them
			3. Dissemination of Investment Recommendations Produced by Third Parties
			4. Principle of Proportionality—Non-written Recommendations
			5. Sanctions
				(a) Requirements under European Law
				(b) Transposition in the Member States—Germany vs the UK
		V. Relevance of the General Rules of Conduct for Financial Analysts
			1. Market Manipulation
				(a) Information-Based Manipulation
				(b) Fictitious Devices or Any Other Form of Deception or Contrivance
				(c) Scalping
				(d) Effects of Commission Delegated Regulation (EU) No. 2016/958 on the Definition of Market Manipulation
			2. Prohibition of Insider Dealings
			3. Organisational Requirements
				(a) General Organisational Requirements
				(b) Special Organisational Requirements
			4. Outlook: Research as an Inducement under MiFID II
		VI. Conclusion
	§ 27. Rating Agencies
		I. Foundations
			1. The Role of Credit Rating Agencies
			2. Effects of a Rating
			3. Market Structure and Development of Regulation in Europe
			4. Development of regulation in Europe
			5. Legal Sources
		II. Scope of Application and Regulatory Aims
			1. Foundations
			2. Aims
			3. Scope of Application
			4. Concepts and Definitions
		III. Regulatory Strategies
			1. Overview
			2. Avoidance of Conflicts of Interest
				(a) Independence of Credit Rating Agencies
				(b) Persons Involved in the Rating Procedure
			3. Improvement of the Quality of Ratings
			4. Transparency
				(a) Disclosure and Presentation of Credit Ratings
				(b) Transparency Report
			5. Registration
			6. The Problem of Over-Reliance
		IV. Supervision and Sanctions
			1. Foundations
			2. Procedure
			3. Administrative Measures and Sanctions
			4. Criminal Measures
			5. Civil Law Liability
				(a) National Laws of the Member States
				(b) Liability under European Law
		V. Conclusion
	§ 28. Proxy Advisors
		I. Introduction
			1. Overview
			2. Risks
		II. Regulatory Concepts
			1. Possible Regulatory Approaches
			2. National Regulatory Concepts
				(a) United Kingdom
				(b) France
				(c) Germany
			3. European Approaches
				(a) Background
				(b) Best Practice Principles
					(aa) Establishment
					(bb) Content
					(cc) Review
				(c) Shareholder Rights Directive
		III. Conclusion
7 Financial Services
	§ 29. Foundations
		I. Introduction
		II. Legal Sources
			1. Foundations
			2. The MiFID II Regime
				(a) Level 1
				(b) Level 2
	§ 30. Product Governance and Product Intervention
		I. Introduction
		II. Product Governance
			1. Principles
			2. Scope of Application
			3. Manufacturer
			4. Distributor
		III. Product Intervention
			1. Introduction
			2. Reform under the MiFID II-Regime
				(a) Powers of ESMA and the NCAs
				(b) Criteria and factors
		IV. Conclusion
	§ 31. Investment Advisory Services
		I. Introduction
		II. Definition
		III. Obligations of Investment Firms
			1. Exploration and Assessment of the Suitability of an Investment
			2. Information Obligations
			3. Specific Obligations in Case of Independent Advice
		IV. Supervision
		V. Sanctions
		VI. Conclusion
8 Organisational Requirements for Investment Firms
	§ 32. Compliance (Foundations)
		I. Compliance
		II. Relationship between Compliance and Risk Management
		III. Developments and Legal Foundations
	§ 33. Compliance (Organisational Requirements)
		I. Regulatory Concepts in European Law
			1. Overview
			2. Principles-based Approach to Regulation
			3. Regulatory Aim
		II. Implementation in the Member States
			1. Germany
			2. United Kingdom
		III. Regulatory Objectives and Scope of Compliance Obligations
			1. Mitigation of Compliance Risk
			2. Scope of the Compliance Obligation
		IV. Elements of a Compliance Organisation
			1. Compliance Function
				(a) Requirements
					(aa) Independence
						(1) Operational and Financial Independence
						(2) Organisational Independence
					(bb) Permanence and Effectiveness
				(b) Responsibilities
					(aa) Monitoring and Assessment
					(bb) Advice and Assistance
			2. Compliance Officer
				(a) Appointment
					(aa) Registration and Qualification Requirements
					(bb) Appointment of Members of Senior Management as Compliance Officers
				(b) Legal Status
					(aa) Independence towards Senior Management
					(bb) Disciplinarian Independence and Protection against Dismissal
				(c) Responsibilities and Powers
					(aa) Informational Rights and the Right to Issue Instructions
					(bb) Compliance Reporting
						(1) Internal Reporting
						(2) External Reports
			3. Informational barriers (‘Chinese Walls’)
				(a) Legal Foundations
				(b) Elements
					(aa) Segregation of Confidential Areas
					(bb) Watch Lists and Restricted Lists
				(c) Legal Effects
		V. Sanctions
			1. Sanctions against Investment Firms
			2. Sanctions against the Senior Management and the Compliance Officer
		VI. Conclusion
	§ 34. Corporate Governance
		I. Introduction
		II. ‘Governance-based’ regulation of investment firms
		III. Regulatory Framework
			1. Overview
			2. Board structure and composition
				(a) One tier vs. two tier board structures
				(b) Separation of functions; establishment of board committees for ‘significant’ firms
				(c) Diversity requirements
			3. Personal Requirements of the Board Members
				(a) Fit and properness
				(b) Limitation of directorships
			4. Board Members’ Duties
		IV. Sanctions
			1. Administrative sanctions
			2. Civil sanctions
		V. Conclusions
9 Regulation of Benchmarks
	§ 35. Foundations
		I. Introduction
		II. Legal Background and Regulatory Initiatives
		III. Functions of Benchmarks
	§ 36. Market Supervision and Organisational Requirements
		I. Regulatory Concept of the Benchmark Regulation
			1. Regulatory Aim and Structure
			2. Scope and Definitions
			3. Regulatory Concept
			4. Legal Requirements
				(a) Governance Requirements relating to the Benchmark Administrator
				(b) Input Data and Calculation Methodology
				(c) Governance and Control Requirements for Contributors
				(d) Investor Protection (Assessment Obligations)
			5. Restrictions on use and third-country benchmarks
			6. Authorisation, Supervision and Sanctions
				(a) Authorisation and Registration
				(b) Supervisory Powers and Sanctions
					(aa) Supervisory Powers of the National Supervisory Authorities
					(bb) ESMA’s Role
					(cc) Civil Law Liability
		II. Conclusion
10 Takeover Law
	§ 37. Foundations
		I. Legal Sources
		II. Implications of Takeover Bids
		III. Administration and Supervision
	§ 38. Public Takeovers
		I. Types of Bids
		II. Decision to Launch a Bid
		III. Offer Document
	§ 39. Disclosure of Defensive Structures and Mechanisms
		I. Introduction
		II. Structure of the Capital
		III. Restrictions Regarding the Transfer of Shares
		IV. Significant Shareholdings
		V. Holders of Special Rights
		VI. System of Control for Employee Share Schemes
		VII. Restrictions on Voting Rights
		VIII. Agreements between Shareholders
		IX. Provisions on the Appointment and Replacement of Board Members
		X. Powers of Board Members to Issue and Buy Back Shares
		XI. Change of Control Clauses
		XII. Compensation Agreements
		XIII. Conclusion
	§ 40. Mandatory Bid
		I. Introduction
		II. Prerequisites
		III. Exemptions from the Mandatory Bid
		IV. Creeping-in
		V. Gaining Control by Acting in Concert
			1. Legal Foundations
			2. Legal Practice in the Member States
				(a) Sacyr/Eiffage (France)
				(b) WMF (Germany)
			3. Attempts to further harmonise the concept
		VI. Conclusion
11 Conclusion
	§ 41. Review and Outlook
		I. Achievements
			1. Single Rulebook and Capital Markets Union
			2. Stricter and More Harmonised Sanctioning Regimes
		II. Challenges
			1. Supervisory Convergence
			2. Effective Sanctions
			3. Improving Access to Capital Markets
Bibliography
Subject Index
Index of National Laws
Index of National Laws by Country
Index of Supervisory and Court Rulings
Copyright Page