186 5 Equity and Shareholders’ Capital
transaction costs and the costs for maintaining a listing.^223 One of the ways to re-
duce costs is the promotion of competition by facilitating a level playing field be-
tween trading and settlement systems.^224 (2) The second key objective is the con-
struction of an integrated securities market.
It is normally said that the objective of the regulatory regime for issuer access is to “pro-
mote investor confidence in the securities markets via investor-protection measures, to en-
sure the effectiveness and efficiency of the market-place in allocating capital, and to reduce
the cost of capital for issuers seeking market finance”.^225
Information is a key factor in investor protection. Issuers in general have an incen-
tive to provide information to reduce funding costs, because investors will dis-
count securities in the absence of useful information. Furthermore, institutional
investors might choose not to buy or hold an issuer’s securities in order to protect
themselves against their own liability risks.^226
Key strategies, choice of decision-making process. The most important strate-
gies employed at Community level contain: the approximation of laws and the
recognition of national variations as equivalent; mutual recognition of regulatory
requirements (see Volume I); and home country control.
In principle, the strategy of equivalence could open the door to regulatory com-
petition. The degree of regulatory competition is nevertheless limited because of a
high degree of harmonisation in this area.
The adoption and implementation of Community legislation on financial ser-
vices is generally influenced by the so-called Lamfalussy approach proposed by
the Committee of Wise Men.^227 The Lamfalussy approach means a four-level ap-
proach to decision-making:^228
- Level 1 involves traditional legislative activity. Before presenting a legislative
proposal in the field of securities, the Commission nevertheless consults the
European Securities Committee (ESC), which comprises representatives of
each Member State.
(^223) See, for example, recitals 1 and 2 of Directice 2003/6/EC (Directive on market abuse) as
well as recitals 10, 16 and 21 of Directive 2003/71/EC (Prospectus Directive).
(^224) Moloney N, EC Securities Law. OUP, Oxford (2008) p 770: “... MiFID supports off-
exchange trading by internalizers (‘systematic internalizers’ under MiFID). This policy
is designed to promote competition between trading venues, reduce the costs of equity
trading by breaking the power of the main stock exchanges, provide investors with a
wider choice of trading venue, better meet the different trading requirements of retail
and wholesale investors, and support innovation.”
(^225) Ibid, p 53.
(^226) See ibid, p 93.
(^227) Final Report of the Committee of Wise Men on the Regulation of European Securities
Markets (February 2001).
(^228) See, for example, opinion of the European Economic and Social Committee on several
proposals, 2008/C 224/07.