The Desirability of ‘Weak’ Form Legal Harmonization: Perspectives from Statutory Interpretation and Legal Coherence

Abstract

Harmonized regulatory frameworks have become increasingly important. This is especially so following the global financial crisis, where there have been calls for a harmonized international response to securities regulation. Examples in the EU include MIFID and the Takeover Directive. MIFID regulates securities traders and stock exchanges. It contains rules that indicate the obligations on exchanges and traders vis-à-vis matters such as achieving the “best execution” of trades. The Takeover Directive regulates mergers and acquisitions, their regulations include regulations on anti-takeover provisions, compulsory acquisitions, and the method of paying for acquisitions. These impose a ‘weak’ form of harmonization: member states can opt out of some provisions, many provisions are vague (and require definition by domestic regulators) and member states retain the right to legislate around the harmonized framework. These directives have not received universal support.