BRUSSELS (The Deal) -- Sending EU governments a clear message about who's the boss when it comes to financial regulation, the bloc's highest court on Wednesday dismissed the U.K.'s challenge to EU powers to ban shortselling.
The case stems from a 2012 EU regulation giving the European Securities and Markets Authority the right to regulate and prohibit shortselling in the 28-nation bloc order to protect financial markets from speculative trading.
The U.K. government challenged the measure in a case before the Luxembourg-based EU Court of Justice, arguing that ESMA had been given too much discretionary power. It also maintained that the regulation had the wrong legal basis and should therefore not apply.
Although a top legal adviser to the Court recommended siding with the U.K., the Court disagreed in its ruling Wednesday. It said that the powers available to ESMA "are precisely delineated and amenable to judicial review," and that those powers are fully compatible with the EU's treaties.
ESMA, which is based in Paris, is one of three Europe-wide supervisory agencies set up in early 2011 as part of the EU's postcrisis overhaul of financial services regulation.
The others are the London-based European Banking Authority and the European Insurance and Occupational Pensions Authority in Frankfurt.
Throughout the reforms, the U.K. has repeatedly resisted attempts for more centralised regulation, with ongoing separate challenges before the Court of Justice against an EU-wide cap on banker bonuses and a proposed financial transaction tax in 11 EU member states.
On the bonus cap, U.K. Chancellor of the Exchequer George Osborne last year found himself outvoted by his peers for the first time ever, and by a majority of EU legislators. Six months after legislators signed off on the measure, the U.K. took its case to the EU's highest court.