The Harmonization of European Securities Law

The European Union's (EU) mission has been and continues to be the establishment of a single, internal market for financial services comprising the entire territory of its fifteen Member States. Achieving a single market was historically dependent on provision of market access and development of a comprehensive securities regulatory regime to displace or otherwise harmonize disparate national laws. Excluding the United Kingdom, the Member States prior to the 1990s had no significant retail securities markets, virtually no comprehensive securities regulation, and, consequently, no national securities commissions. Their stock exchanges were self-regulated with minimal, if any, governmental oversight. As a result, the EU's challenges have been to legislate access, to legislate virtually the entire field of securities law, and to legislate regulatory harmony. Harmonization proved the most difficult and most improbable of these preconditions to a single market in financial services. Fortunately, the forces driving its achievement never yielded to the anti-harmonization view that a single, harmonized regulatory system would deny investors optimal choices among diverse national regimes and thus eliminate the supposed benefits of regulatory competition. Rather, the EU has steadfastly pursued the ultimate goal of maximum harmonization, both to unify fifteen markets into one and to prevent refragmentation of the emergent single market as a result of diverse nationalistic regulatory philosophies. In a meaningful sense, commonality has triumphed over diversity.This symposium essay first addresses the evolutionary history of harmonization of the Member States' financial systems. After briefly evaluating the various directives aimed toward harmonization, the focus turns to contemporary measures aimed to achieve more expedient and efficient responses to the accelerating, evolutionary changes in European financial markets. While recognizing the EU's considerable ongoing success in regulating and integrating its financial markets, the author concludes with recommendations for improvements in the legislative and regulatory processes aimed toward the continued development of regulatory harmonization