One Ring to Rule Them All
One Ring to rule them all, One Ring to find them,
One Ring to bring them all and in the darkness bind them.
So goes the inscription on the ring found by Bilbo Baggins in J.R.R. Tolkein’s Lord of the Rings books. In The Fellowship of the Ring, Tolkein describes what happens when the words were recited by the wizard Gandalf in the Black Speech tongue: “The change in the wizard’s voice was astounding. Suddenly it became menacing, powerful, harsh as stone. A shadow seemed to pass over the high sun, and the porch for a moment grew dark. All trembled, and the Elves stopped their ears.”
National authorities within the European Union may have felt similarly (and done similarly) when the European Court of Justice (“ECJ”) released its January 22nd ruling concerning the Short Selling Regulation. Certainly the UK’s Chancellor of the Exchequer, George Osborne, was one of those. It was Osborne who challenged the regulation in which the European Securities and Markets Authority (“ESMA”) was authorized to override national authorities and mandate a ban on the short selling of securities during times of economic emergency.
And it was Osborne, and some fear the City of London, that lost the judicial challenge.
The sense of doom which some may have felt upon hearing the ECJ’s opinion may not be entirely misplaced. The ECJ based its opinion not on whether the EU properly delegated authority to ESMA, but on “a direct conferral of power to an agency.” ESMA, the ECJ continues, is a decision-making agency empowered to make “legally binding decisions directed at individual legal entities in substitution for either a decision, or the inaction, of a competent national authority which may well disagree with a decision taken by ESMA.”
In other words, when it comes to banning short sales in the EU there is now one rule to rule them all, one rule to find them, one rule to bring them all and in the darkness bind them.