EU financial market regulation a decade from the financial-crisis-era reforms: crisis, uncertainty, and capacity

This article reflects on the effectiveness of European Union (EU) financial market regulation, a decade or so after the closure of the EU’s massive financial-crisis-era reform programme. To do so, it considers the first significant test of the financial-crisis-era reforms: the March 2020 period of acutely elevated financial stability risk as the COVID-19 pandemic intensified, global markets roiled, and the investment fund sector experienced large-scale disruption. It relates the EU’s broadly successful management of this period to, first, the resilience of the legislative choices made and refined over the financial crisis era as regards investment fund regulation and, secondly, to technocratic action, by the European Securities and Markets Authority (ESMA) and the European Systemic Risk Board (ESRB), that facilitated rule amplification, risk monitoring, supervisory coordination, and supervisory convergence and thereby supported the earlier legislative choices. Drawing on the March 2020 experience, the article goes on to consider the capacity of EU financial market regulation more generally to manage what are increasingly dynamic risks to financial market stability. It identifies a strengthening of the EU’s capacity in this regard, but also persistent and intractable risks to this capacity, including as regards legitimation.