Proportionality in a European Capital Markets Code

Abstract

This chapter discusses what principles should govern the proportionality of a Capital Markets Code, ie the scope of inclusion of legal issues as well as the extent of their legalization. We argue that the instrumental principle, drawn from the CMU’s intended policy outcomes, should form the underpinning principle for proportionality. In this manner, the Code would cater for issues crucial to incentivizing issuers to participate in the supply side and investors to deepen the demand side of European capital markets. The chapter also supports the Capital Markets Code to adopt an approach where various levels of legalization or hardening of legal principles can be provided, while recognizing a variety of sources of securities market governance.