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¹⁰ Niklas Luhmann, Trust and Power, Part 1 – Trust (1979) (first published as Vertrauen – Ein Mechanismus der Reduktion sozialer Komplexität (1968)).Google Scholar

¹¹ See, e.g., Coleman, James S., Foundations of Social Theory (1990); J.M. Barbalet, Social Emotions: Confidence, Trust and Loyalty, 16 International Journal of Sociology and Social Policy 75–96 (1996).Google Scholar

¹² See, for example, Rotter, Julian B., Generalized expectancies for interpersonal trust, 26 American Psychologist, 443–452 (1971).Google Scholar

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¹⁹ Malkiel, Burton G., A Random Walk Down Wall Street (10^th ed. 2012).Google Scholar

²⁰ Ripperger also refers to hope as the antonym of trust. Ripperger, supra note 15, at 38.Google Scholar

²¹ See Taleb, Nassim Nicholas, The Black Swan (2^nd ed. 2010).Google Scholar

²² See Luhmann, supra note 10.Google Scholar

²³ Explicit contracts might serve as a means of reducing complexity. See Ripperger, supra note 15, at 27; Horst Eidenmüller, Vertrauensmechanismus und Vertrauenshaftung, Archives for Philosophy of Law and Social Philosophy (Beiheft 74) 117, 121 (2000).Google Scholar

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²⁵ See Kersting, supra note 14, at 176. Ackermann addresses the possibility of an express “promise,” i.e. trusting in conduct being in compliance with one's contract. Thomas Ackermann, Der Schutz des negativen Interesses 141 (2007).Google Scholar

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²⁹ Stephen Knack & Philip Keefer, Does Social Capital Have an Economic Payoff? A Cross-Country Investigation, 112 The Quarterly Journal of Economics, 1251, 1252 (1997); T.K. Das & Bing-Sheng Teng, Trust, Control, and Risk in Strategic Alliances: An Integrated Framework, 23 The Academy of Management Review 491–512 (1998); Beckemper, supra note 28, at 320. Blair and Stout have considered this from a corporate law perspective. Blair, Margaret M. & Stout, Lynn A., Trust, Trustworthiness, and the Behavioral Foundations of Corporate Law, 149 University of Pennsylvania Law Review 1735, 1753 (2001).Google Scholar

³⁰ In this regard, see infra D.II.2.2.Google Scholar

³¹ Other have taken a somewhat similar approach. See Adler, supra note 15, at 218; Korczynski, supra note 15, at 4; Friederike Welter, Vertrauen und Unternehmertum im Ost- West- Vergleich, in Vertrauen und Marktwirtschaft 7, 8 (J. Maier ed., 2004); Hans-Dieter Haas & Simon Martin Neumair, Internationale Wirtschaft 780 (2006); Jeanette Hedwig Müller, Vertrauen und Kreativität 161 (2009).Google Scholar

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³³ Shapiro, Susan P., The Social Control of Impersonal Trust, 83 American Journal of Sociology 623, 632 (1987).Google Scholar

³⁴ Luigi Guiso et al., Trusting the Stock Market, 63 Journal of Finance 2557, 2586 (2008).Google Scholar

³⁵ Luhmann and Adler have addressed aspects of personal trust. See Luhmann, supra note 10, at 39; Adler, supra note 15, at 217. Kosfeld has written regarding the biochemical aspects of reputation and trust in the context of personal contact. See Michael Kosfeld et al., Oxytocin Increases Trust in Humans, Nature 673, 674 (2005).Google Scholar

³⁶ See Schäfer & Ott, supra note 27, at 546.Google Scholar

³⁷ Kramer, Roderick M., Trust and Distrust in Organizations: Emerging Perspectives, Enduring Questions, 50 Review of Psychology 569, 575 (1999). See, e.g., Adler, supra note 15, at 218; Nancy Kurland, Trust, Accountability, and Sales Agents' Dueling Loyalties, 6 Business Ethics Quarterly 289, 295 (1996).Google Scholar

³⁸ Bart Nooteboom, Trust: Forms, Foundations, Functions, Failures and Figures 8 (2002).Google Scholar

³⁹ See Schmoller, Gustav, GRUNDRIß der Allgemeinen Volkswirtschaftslehre 61 (1900); Eirik Furubotn & Rudolf Richter, Institutions & Economic Theory 10 (2^nd ed. 2005).Google Scholar

⁴⁰ Nooteboom use similar terminology. See Nooteboom, supra note 38, at 8.Google Scholar

⁴¹ Max Weber, Economy and Society 636 (1978).Google Scholar

⁴² Shapiro has commented on the necessity of “impersonal trust.” See Shapiro, supra note 33, at 634.Google Scholar

⁴³ See Luhmann, supra 10, at 50.Google Scholar

⁴⁴ See Claus-Wilhelm Canaris, supra note 14, at 503.Google Scholar

⁴⁵ Shapiro, supra note 33, at 634.Google Scholar

⁴⁶ Gilbert, supra note 26, at 90; Furubotn & Richter, supra note 39, at 86.Google Scholar

⁴⁷ Guiso et al., supra note 34, at 2559.Google Scholar

⁴⁸ Paola Sapienza, Trust and Financial Markets, in The First Credit Market Turmoil of the 21^ST Century 29, 34 (Evanoff et al. eds., 2009); Sapienza & Zingales, supra note 3, at 124; Blair & Stout, supra note 29, at 1746.Google Scholar

⁴⁹ Infra D.III.1.Google Scholar

⁵⁰ See Peter O. Mülbert & Steffen Steup, 59 Zeitschrift für Wirtschafts und Bankrecht 1633, 1639 (2005). See also Blair&; Stout, supra note 29, at 1746; Adler, supra note 15, at 217.Google Scholar

⁵¹ Williamson, supra note 15, at 463; Guiso et al., supra note 34, at 2558; Coleman, supra note 11, at 99.Google Scholar

⁵² See Luhmann, supra note 10, at 24, 35.Google Scholar

⁵³ Ripperger, supra note 15, at 5.Google Scholar

⁵⁴ See Guiso et al., supra note 34, at 2558; Peter Smith Ring & Andrew H. van de Ven, Structuring Cooperative Relationships between Organizations, 13 Strategic Management Journal 483, 489 (1992).Google Scholar

⁵⁵ See Loughrey, supra note 2, at 53; Stout & Blair, supra note 29, at 772; Brescia, supra note 2, at 1370; Colombo, supra note 2, at 580. See also Carlin et al., supra note 14, at 321.Google Scholar

⁵⁶ See Williamson, supra note 15, at 482.Google Scholar

⁵⁷ See Luhmann, supra note 10, at 35 (“trust cannot be reduced to trust in the law and in the sanctions which the law makes possible.”).Google Scholar

⁵⁸ Colin Mayer, Trust in Financial Markets, 14 European Financial Management 617, 630 (2008); Coleman, supra note 11, at 104; Adler, supra note 15, at 217. But see Michael Baurmann, Vertrauen und Anerkennung, in Neuer institutionalismus 107, 111 (Andrea Maurer & Michael Schmid eds., 2002).Google Scholar

⁵⁹ Schäfer & Ott, supra note 27, at 559; Kersting, supra note 14, at 205.Google Scholar

⁶⁰ Bishop offered a similar assessment. See Bishop, William, Negligent Misrepresentation through the Economists' Eyes, 96 Law Quarterly Review 360, 364 (1980).Google Scholar

⁶¹ See Shu Yu et al., Trade, Trust and the Rule of Law, 37 Journal of Political Economy 102, 103 (2015) (“Trust and formal institutions are considered to be two different transaction cost reducing channels and as such serve as substitutes.”); Beckemper, supra note 28, at 321. Luhmann had a more nuanced approach. See Luhmann, supra note 10, at 34 (“Legal arrangements which lend special assurance to particular expectations, and make them sanctionable, are an indispensable basis for any long-term considerations of this nature; thus, they lessen the risk of conferring trust. This collated development is the only plausible meaning one can attach to the notion occasionally advanced that law is a substitute for trust.”); id. at 41 (note 5) (“In all more sharply differentiated, more complex social orders, on the contrary, it is inevitable for law and trust to become separate in this way.”). Some scholars go so far as to suggest that legal regulation undermines, and prevents the establishment of, trust. See Fukuyama, Francis, Trust: The Social Virtues and the Creation of Prosperity 27 (1995); Ribstein, supra note 14 at 580; Llewellyn, David T., Trust and Confidence in Financial Services: A Strategic Challenge, 13 Journal of Financial Regulation and Compliance 333, 336, 341 (2005).Google Scholar

⁶² Wischmeyer, supra note 14, at 344; Loughrey, supra note 2, at 53. This perception of the possible role of the law in fostering trust also forms the basis of those theories that identify a correlation between regulation and trust within a society. See Knack & Keefer, supra note 29, at 1251 (Attempting to gauge the prevailing level of trust by reference to the findings of the World Values Survey (WVS), in which participants are asked, among other things, the following question: “Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?”). See also Brescia, supra note 2, at 1401. Others have pursued a more nuanced approach. See Carlin et al., supra note 14, at 321; Philippe Aghion et al., Regulation and Distrust, 125 The Quarterly Journal of Economics 1015-1049 (2010) (Explaining that a “cross section of countries, government regulation is strongly negatively correlated with trust.”).Google Scholar

⁶³ Supra B.IV.1.2. and B.IV.3.Google Scholar

⁶⁴ Ripperger, supra note 15, at 27.Google Scholar

⁶⁵ See Shapiro, supra note 33, at 633; Katharina Pistor, Law in Finance, 41 Journal of Comparative Economics 315, 326 (2013) (With further references to the “incomplete contract theory.”).Google Scholar

⁶⁶ See, generally, Baurmann, supra note 58, at 109 (With further references.).Google Scholar

⁶⁷ Kersting, supra note 14, at 187.Google Scholar

⁶⁸ Bartels and Sajnovits have commented on the position under German law. See Bartels, Klaus & Sajnovits, Alexander, Die Rolle der Beschaffung beim Gattungskauf, 69 Juristen Zeitung 322, 328 (2014).Google Scholar

⁶⁹ Wischmeyer, supra note 14, at 348.Google Scholar

⁷⁰ See supra note 7; supra note 8.Google Scholar

⁷¹ Julia Black, Reconceiving Financial Markets—From the Economic to the Social, 13 Journal of Corporate Law Studies 401–442 (2013); Llewellyn, supra note 61, at 336, 341 et seqq. Google Scholar

⁷² See also Eidenmüller, supra note 23, 117, 123.Google Scholar

⁷³ See Tomasic & Akinbami, supra note 2, at 374; infra D.1.Google Scholar

⁷⁴ See Sapienza, supra note 48, at 30.Google Scholar

⁷⁵ Furubotn & Richter, supra note 39, at 57; Ripperger, supra note 15, at 34.Google Scholar

⁷⁶ Mayer, supra note 58, at 630.Google Scholar

⁷⁷ Infra D.II.3.Google Scholar

⁷⁸ Peter O. Mülbert, Finanzmarktregulierung – Welche Regelungen empfehlen sich für den deutschen und europäischen Finanzsektor?, 65 Juristen Zeitung 834, 842 (2010).Google Scholar

⁷⁹ Sapienza, supra note 48, at 30; Guiso et al., supra note 34, at 2557 (with regard to the degree of capitalization); Tomasic & Akinbami, supra note 2, at 379 (with regard to the connection between trust and liquidity). See also Adam Ng et al., Does Trust Contribute to Stock Market Development?, 52 Economic Modelling 239–250 (2016).Google Scholar

⁸⁰ See David-Jan Jansen et al., When Does the General Public Lose Trust in Banks?, De Nederlandsche Bank NV, Working Paper No. 402 (2013); Markus Knell & Helmut Stix, Trust in Banks during Normal and Crisis Times—Evidence from Survey Data, 82 Economica 995 (2015). Filipiak provided a comprehensive overview of current economic research. See Filipiak, Ute, Trusting Financial Institutions: Out of Reach, Out of Trust?, 59 Quarterly Review of Economics and Finance 200–214 (2016).Google Scholar

⁸¹ Special Financial Market Stabilization Funds (Sonderfonds Finanzmarktstabilisierung). See Section 1 of the German Act Establishing a Financial Market Stabilization Fund (Gesetz zur Errichtung eines Finanzmarktstabilisierungsfonds – FMStFG), BGBl I 2008, 1982.Google Scholar

⁸² Troubled Asset Relief Program.Google Scholar

⁸³ Goddard et al. provided a comprehensive overview. See John Goddard et al., The Financial Crisis in Europe: Evolution, Policy Responses and Lessons for the Future, 17 Journal of Financial Regulation and Compliance 362–380 (2009); Pistor, supra note 65, at 319.Google Scholar

⁸⁴ Available at: http://www.spiegel.de/wirtschaft/merkel-und-steinbrueck-im-wortlaut-die-spareinlagen-sind-sicher-a-582305.html (as of: October 2015).Google Scholar

⁸⁵ Available at: https://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html (as of: October 2015).Google Scholar

⁸⁶ Regulation (EU) No 462/2013 (supra fn. 7) and Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010.Google Scholar

⁸⁷ Rodi commented on the management of the crisis at the EU level. See Rodi, Michael, Machtverschiebungen in der Europäischen Union im Rahmen der Finanzkrise und Fragen der demokratischen Legitimation, 70 Juristen Zeitung 737 (2015). Heun and Thiele have commented on the limits of Art. 125 TFEU. See Heun, Werner & Thiele, Alexander, Verfassungs- und europarechtliche Zulässigkeit von Eurobonds, 67 Juristen Zeitung 973, 978 (2012).Google Scholar

⁸⁸ Johannes Köndgen, Selbstbindung ohne Vertrag 114 (1981) (“One should dispense with the application of a legal concept once it ceases to adequately function as a classification tool and tends to result in the making of erroneous inferences in day-to-day practice.”) (authors' translation). Several other commentators have also been critical of the ubiquitous nature of trust if defined pursuant to the law. See Christian von Bar, Vertrauenshaftung ohne Vertrauen. — Zur Prospekthaftung bei der Publikums-KG in der Rechtsprechung des BGH, 12 Zeitschrift für Unternehmens- und Gesellschaftsrecht 476, 490 (1983); Hopt, Klaus J., Nichtvertragliche Haftung auβerhalb von Schadens- und Bereicherungsausgleich - Zur Theorie und Dogmatik des Berufsrechts und der Berufshaftung, 183 Archiv für civilistische Praxis 608, 639 (1983); Eduard Picker, Positive Forderungsverletzung und culpa in contrahendo — Zur Problematik der Haftungen „zwischen“ Vertrag und Delikt, 183 Archiv für civilistische Praxis 369, 418 (1983); Fleischer, supra note 24, at 420.Google Scholar

⁸⁹ Canaris responded to the criticism. See Claus-Wilhelm Canaris, Schutzgesetze - Verkehrspflichten –Schutzpflichten, in Festschrift Larenz 27, 105 (Gotthard Paulus et al. eds., 1983); Claus-Wilhelm Canaris, Die Schadensersatzpflicht der Kreditinstitute für eine unrichtige Finanzierungsbestätigung als Fall der Vertrauenshaftung, Festschrift Schimansky 43, 53 (Norbert Horn et al. eds., 1999); Claus-Wilhelm Canaris, Die Vertrauenshaftung im Lichte der Rechtsprechung des Bundesgerichtshofs, in 50 Jahre Bundesgerichtshof – Festgabe aus der Wissenschaft 129, 191 (Canaris et al. eds., 2000).Google Scholar

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⁹¹ Mülbert and Sajnovits have commented on aspects of German law. See Peter O. Mülbert & Alexander Sajnovits, Vertrauen und Finanzmarktrecht, 2 Zeitschrift für die gesamte Privatrechtswissenschaft (ZfPW) 1, 16 (2016). Atiyah have commented on the common law principle of “reliance” in this context. See Atiyah, Patrick S., Promises, Obligations, and the Law of Contract, 94 The Law Quarterly Review 193 (1978). Lindsay has written about the implied term of trust and confidence. See HMJ Lindsay, The Implied Term of Trust and Confidence, 30 Industrial Law Journal 1-16 (2001). Goetz and Scott have commented on the relevant US contract law. See Goetz & Scott, supra note 14, at 1261. See also Williamson, supra note 15, at 453. MacNeil has written in regard to relational contract theory. See Ian Roderick MacNeil, Whither Contracts?, 21 Journal of Legal Education 403 (1969). See Jürgen Oechsler, 9. Wille und Vertrauen im privaten Austauschvertrag - Die Rezeption der Theorie des Relational Contract im deutschen Vertragsrecht in rechtsvergleichender Kritik, 60 Rabels Zeitschrift für ausländisches und internationals Privatrecht 91, 93 (1996).Google Scholar

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⁹⁴ Higher Commercial Court (Oberhandelsgericht – OHG) of Vienna, judgment of 16 December 2014, file no. 4 Ob 155/14v.Google Scholar

⁹⁵ See Carneiro, Manuel A. da Frade, Die Zukunft der Vertrauenshaftung oder Plädoyer für eine „reine“ Vertrauenshaftung, in 1 Festschrift Canaris 99 (2007) (with further references).Google Scholar

⁹⁶ Hein Kötz, Europäisches Vertragsrecht 10 (1^st ed. 1996).Google Scholar

⁹⁷ Fundamental Westzucker, Case 1/73, [1973] ECR 723. Wischmeyer has written about the concept of trust in EU law. See Wischmeyer, supra note 14, at 350.Google Scholar

⁹⁸ This is true particularly in the UK and to some extent in France. See Schuppert, Gunnar Folke, Public Law: Towards a Post-National Model, in Germany, Europe and the Politics of Constraint 109, 123 (Kenneth Dyson & Klaus Goetz eds., 2003).Google Scholar

⁹⁹ For example, Germany, the U K, Greece, Ireland, Austria and Portugal. In addition, also the US and Switzerland. See ESMA, Comparison of Liability Regimes in Member States in Relation to the Prospectus Directive, 2013, ESMA/2013/619, available at https://www.esma.europa.eu/sites/default/files/library/2015/11/2013-619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf. See also Hopt, Klaus J. & Hans-Christoph Voigt, Prospekt- und Kapitalmarktinformationshaftung 44 (2005).Google Scholar

¹⁰⁰ Belgium, France, Luxembourg, Italy, the Netherlands and Spain. See ESMA, Comparison of Liability Regimes in Member States in Relation to the Prospectus Directive, 2013, ESMA/2013/619, available at https://www.esma.europa.eu/sites/default/files/library/2015/11/2013-619_report_liability_regimes_under_the_prospectus_directive_published_on_website.pdf. See also Hopt & Voigt, supra note 99, at 44; Niamh Moloney, EU Securities and Financial Regulation 121 (3rd ed. 2014).Google Scholar

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¹⁰³ Belgium, Germany, the UK, France, Greece, Italy, Luxembourg, the Netherlands, Austria, Portugal and Spain. In addition, also Switzerland and the US. See Hopt & Voigt, supra note 99, at 114.Google Scholar

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¹⁰⁵ Sapienza, supra note 48, at 30 (“Financing is nothing but the exchange of a sum of money today for a promise to return more money in the future.”); Guiso et al., supra note 34, at 2558; Loughrey, supra note 2, at 52; Natalie Gold, Trustworthiness and Motivations, in The Oxford Handbook of Financial Regulation, supra note 5, at 141.Google Scholar

¹⁰⁶ Sapienza, supra note 48, at 30 (“trust-intensive contracts”); Shapiro, supra note 33, at 628; Llewellyn, supra note 61, at 336.Google Scholar

¹⁰⁷ Peter O. Mülbert, Anlegerschutz und Finanzmarktregulierung – Grundlagen, 177 Zeitschrift für das gesamte Handels- und Wirtschaftsrecht 160, 172 (2013); John Armour et al.,Principles of Financial Regulation 226 (2016).Google Scholar

¹⁰⁸ See Sapienza & Zingales, supra note 3, at 124.Google Scholar

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¹¹⁰ Fama contributed Groundbreaking work on the subject. See Fama, Eugene F., Efficient Capital Markets: A Review of Theory and Empirical Work, 25 Journal of Finance 383–417 (1970). Gilson and Kraakman have addressed this from a legal perspective. See Gilson, Ronald J. & Reinier Kraakman, The Mechanisms of Market Efficiency, 70 Virginia Law Review 549–643 (1984). The same authors have provided arguments in defense of the efficient capital markets hypothesis (ECMH) in light of the doubts cast upon its validity in the wake of the financial markets crisis and insights from the sphere of behavioral finance. See Gilson, Ronald J. & Reinier Kraakman, Market Efficiency after the Financial Crisis: It's still a Matter of Information Costs, 100 Virginia Law Review 313–375 (2014). See Malkiel, Burton G., The Efficient-Market Hypothesis and the Financial Crisis, in Rethinking the Financial Crisis 75–98 (Alan Blinder et al. eds., 2012).Google Scholar

¹¹¹ Lars Klöhn, Marktbetrug, 178 Zeitschrift für das gesamte Handels- und Wirtschaftsrecht 671, 675 (2014) (with further references).Google Scholar

¹¹² See Recital 12 of the CRR: “This Regulation would entail that all institutions follow the same rules in all the Union, which would also boost confidence in the stability of institutions, especially in times of stress.”Google Scholar

¹¹³ Moloney has written about Bassel III. See Moloney, supra note 100, at 379; Armour et al., supra note 107, at 305. Currently, the Basel Committee on Banking Supervision is in the process of finalizing further revisions of the Basel agreements (Basel IV) which, in part, are highly controversial between European and US regulators and supervisors. See, e.g., Caroline Binham et al., Bank reform talks fail to agree loan risk measures - Basel Committee likely to miss year-end deadline for securing agreement on rules, Financial Times (Nov. 30, 2016), available at https://www.ft.com/content/7d2fdaca-b71d-11e6-ba85-95d1533d9a62.Google Scholar

¹¹⁴ Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. See Moloney, supra note 100, at 381; European Banking Regulation (Horst Eidenmüller et al. eds., 2016). Very recently, the European Commission presented plans for further amendments and revisions of the CRR, in particular implementing the Basel III framework. See Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements and amending Regulation (EU) No 648/2012, COM(2016) 850 final and Annex to the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements and amending Regulation (EU) No 648/2012, COM(2016) 850 final.Google Scholar

¹¹⁵ Directive 2013/36/EU (fn. 93). Very recently, the European Commission presented plans for further amendments and revisions of the CRR, in particular implementing the Basel III framework. See Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures, COM(2016) 854 final.Google Scholar

¹¹⁶ Several commentators have discussed the qualitative requirements as to risk management and corporate governance forming part of Pillar I of Basel III. See Peter O. Mülbert, Managing Risk in Financial System, in The Oxford Handbook of Financial Regulation, supra note 5, at 364, 372; Kern Alexander, The Role of Capital in Supporting Banking Stability, in The Oxford Handbook of Financial Regulation, supra note 5, at 334, 349. Gurlit and others have written about macroprudential banking supervision. See Gurlit, Elke, Instrumente makroprudenzieller Bankenaufsicht - unter besonderer Berücksichtigung zusätzlicher Kapitalanforderungen, 69 Zeitschrift für Wirtschafts und Bankrecht 1217, 1257 (2015; Elke Gurlit & Isabel Schnabel, The New Actors of Macroprudential Supervision in Germany and Europe - A Critical Evaluation, 27 Journal of Banking Law and Banking 349–362 (2015); Ester Faia & Isabel Schnabel, The Road from Micro-prudential to Macroprudential Regulation, in Financial Regulation – A Transatlantic Perspective 3 (Faia et al. eds., 2015); Brigitte Haar, Organizing Regonal Systems, The EU Example, in The Oxford Handbook of Financial Regulation, supra note 5, 157, 174, 177; Lastra, Rosa M., Systemic Risk and MacroPrudential Supervision, in The Oxford Handbook of Financial Regulation, supra note 5, at 309; Armour et al., supra note 107, at 409.Google Scholar

¹¹⁷ Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). See Everson, Michelle, Regulating the Insurance Sector, in The Oxford Handbook of Financial Regulation, supra note 5, at 409, 432; Meinrad Dreher, II Treatises on Solvency (2015).Google Scholar

¹¹⁸ Meinrad Dreher, Die ordnungsgemäße Geschäftsorganisation der Versicherungsgruppe nach Solvency II und VAG 2016, 69 Zeitschrift für Wirtschafts und Bankrecht 649, 655 (2015).Google Scholar

¹¹⁹ See Mülbert, supra note 116, at 374 (with further references).Google Scholar

¹²⁰ Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014 amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions. See Moloney, supra note 100, at 200.Google Scholar

¹²¹ Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010.Google Scholar

¹²² See, e.g., Art. 26 to Art. 28 of Regulation (EU) No 648/2012 of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR).Google Scholar

¹²³ Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012.Google Scholar

¹²⁴ Art. 45 et seq. of the MiFID.Google Scholar

¹²⁵ Several commentators have written about deposit guarantee schemes. See Moloney, supra note 100, at 835; Mülbert, supra note 116, at 390.Google Scholar

¹²⁶ See also Mülbert, supra note 116, at 390.Google Scholar

¹²⁷ Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes, in particular Recitals 3 and 7. See Patricia Sarah Stöbener de Mora, Bankrecht: Neuer Kommissionsvorschlag für ein Einlagensicherungssystem, 26 Europäische Zeitschrift für Wirtschaftsrecht 931 (2015). Moloney has commented on the proposal. See Moloney, supra note 100, at 843.Google Scholar

¹²⁸ See Mülbert, supra note 116, at 390.Google Scholar

¹²⁹ Proposal of the European Commission for a Regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit insurance Scheme, CoM(2015) 586 final. With regard to the further development thereof, see European Economic and Social Committee, Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit Insurance Scheme COM(2015) 586 final – 2015/0270 (COD), ECO/393, 18 May 2016 Official Journal of the European Union C 177/21; ECB, Opinion of the European Central Bank of 20 April 2016 on a proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 in order to establish a European Deposit Insurance Scheme (CON/2016/26), 12 July 2016, Official Journal of the European Union C 252/1. Very recently, the European Commission presented a proposal for amending the Regulation, see Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 as regards loss-absorbing and Recapitalisation Capacity for credit institutions and investment firms, COM(2016) 851 final (supra notes 114 and 115).Google Scholar

¹³⁰ European Commission, Financial Services: Implementing the framework for financial markets: Action Plan, COM(1999)232, 11 May 1999, available at: http://ec.europa.eu/internal_market/finances/docs/actionplan/index/action_en.pdf.Google Scholar

¹³¹ European Commission, Green Paper on Financial Services Policy (2005–2010) /* COM/2005/0177 final, p. 4 et seqq., available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52005DC0177&from=DE.Google Scholar

¹³² Recitals 4, 5 and 39 of the Directive 2014/65/EU (supra note 7); Recital 2 of the Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).Google Scholar

¹³³ Art. 11, Art. 17 and Art. 18 of the MiFID and Art. 27 et seqq. of the Commission's Delegated Directive on the MiFID.Google Scholar

¹³⁴ Art. 13 and Art. 18 of the MiFID.Google Scholar

¹³⁵ Art. 18 and Art. 19 of the MiFID and Art. 26 of Directive 2006/73/EC implementing Directive 2004/39/EC (the MiFID Implementing Directive).Google Scholar

¹³⁶ Section 31(4b) and (4c) and Section 33(3a) of the German Securities Trading Act (Wertpapierhandelsgesetz – the WpHG).Google Scholar

¹³⁷ Section 31(4c)(2) of the WpHG.Google Scholar

¹³⁸ The European Parliament overturned the prohibition against the provision of commission-based investment advisory services originally contained in the Proposal put forward by the Commission. Some members of the Parliament called this move “a catastrophe.” See EU-Parlament kippt Provisionsverbot für Finanzprodukte, Reuters (Sept. 27, 2012), available at http://www.handelsblatt.com/politik/international/mifid-ii-eu-parlament-kippt-provisionsverbot-fuer-finanzprodukte/7188012.html). After this there was some discussion as to whether the European Securities and Markets Authority (ESMA) would, in its proposals with regard to delegated (Level II) acts, introduce a “de facto prohibition against commissions”, provoking a strong response on the part of the European Parliament and a number of Member States. See Wefers, Angela, Bundestag bindet die Finanzaufsicht; “Wir konkretisieren das Mandat der BaFin” - EU-Behörden sollen sich auf gesetzlicher Basis bewegen, Börsen-Zeitung (May 6, 2015), at 5.Google Scholar

¹³⁹ Art. 16(3)(4) of the MiFID II. See EBA, Final Report – Guidelines on product oversight and governance arrangements for retail banking products, EBA/GL/2015/18, Guideline 9, p. 20.Google Scholar

¹⁴⁰ Art.16(3)(5) and Art. 24(2)(2) of the MiFID II. See EBA, Guidelines on product oversight and governance arrangements for retail banking products, EBA/GL/2015/18, 20, available at https://www.eba.europa.eu/documents/10180/1141044/EBA-GL-2015-18+Guidelines+on+product+oversight+and+governance.pdf; Moloney, supra note 100, at 796;Niamh Moloney, Regulating the Retail Markets, in The Oxford Handbook of Financial Regulation, supra note 5, at 736, 761;Petra Buck-Heeb, Der Product-Governance-Prozess, 179 Zeitschrift für das gesamte Handels- und Wirtschaftsrecht 782, 804 (2015).Google Scholar

¹⁴¹ Mülbert has noted that more extensive regulation of products was rare outside of the fund context. See Mülbert, supra note 107, at 198; Buck-Heeb, supra note 140, at 789.Google Scholar

¹⁴² The European Banking Authority (EBA) has accordingly stipulated, citing the fostering of trust as one of the grounds for this stipulation, that, with regard to the retail banking products falling within its area of responsibility, the competent bank supervisory authorities, i.e. including the ECB, must ensure that each of the institutions which are subject to their supervision has a product governance regime in place. See EBA, supra note 140) (This report does not address the question as to the legal grounds for the imposition of such obligations on the institutions in question.).Google Scholar

¹⁴³ See Art. 16(3) and Art. 24(2) of the MiFID II; see, furthermore, EBA (fn. 140) Guideline 5, p. 16 et seqq. See Emilios Avgouleas, Regulating Financial Innovation, in The Oxford Handbook of Financial Regulation, supra note 5, at 659, 681; Moloney, supra note 100, at 825; Armour et al., supra note 107, at 261; Niamh Moloney, Financial market governance and consumer protection in the EU, in Financial Regulation – A Transatlantic Perspective 221, 237 (Ester Faia et al. eds., 2015); Buck-Heeb, supra note 140, at 782; Katja Langenbucher, Anlegerschutz - Ein Bericht zu theoretischen Prämissen und legislativen Instrumenten, 177 Zeitschrift für das gesamte Handels- und Wirtschaftsrecht 679, 698 (2013).Google Scholar

¹⁴⁴ See Nijskens, Rob & Wagner, Rolf, Credit Risk Transfer Activities and Systemic Risk: How Banks Became Less Risky Individually but Posed Greater Risks to the Financial System at the Same Time, 35 Journal of Banking & Finance 1391-1398 (2011); Wolf Wagner & Marsch, Ian W., Credit Risk Transfer and Financial Sector Stability, 2 Journal of Financial Stability 173–193 (2006).Google Scholar

¹⁴⁵ Recital 27 of (repealed) Directive 2009/111/EC of the European Parliament and of the Council of 16 September 2009 amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management. The relevant provisions are now contained in Art. 406 et seq. of the CRR. See Mülbert, supra note 116, at 394.Google Scholar

¹⁴⁶ See Commission, European, Action Plan on Building a Capital Markets Union, COM(2015) 468 final, available at: http://ec.europa.eu/finance/capital-markets-union/docs/building-cmu-actionplan_en.pdf, p. 6: “[…] to build a single market for capital from the bottom up, identifying barriers and knocking them down one by one, creating a sense of momentum, and sparking a growing confidence for investing in Europe's future.” See the Proposal for a Regulation of the European Parliament and of the Council laying down common rules on securitisation and creating a European framework for simple, transparent and standardised securitisation and amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012, COM(2015) 472 final, available at: https://ec.europa.eu/transparency/regdoc/rep/1/2015/EN/1-2015-472-EN-F1-1.PDF; Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms, COM(2015) 473 final, available at: https://ec.europa.eu/transparency/regdoc/rep/1/2015/EN/1-2015-473-EN-F1-1.PDF. See, also, European Commission, press release from 25 April 2016: Capital Markets Union: Taking stock of the progress made so far, available at: http://europa.eu/rapid/press-release_IP-16-1562_en.htm.Google Scholar

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¹⁴⁸ But see CJEU, judgment of 27 March 2014 – C-565/12 (LCL Le Crédit Lyonnais SA/Fesih Kalhan), NJW 2014, 1941 (regarding the application of the Consumer Credit Directive (Directive 2008/48/EC on credit agreements for consumers)). Herresthal offered an opposing view. See Herresthal, Carsten, Unionsrechtliche Vorgaben zur Sanktionierung eines Verstoβes gegen die Kreditwürdigkeitsprüfung, 25 Europäische Zeitschrift für Wirtschaftsrecht 497–500 (2014) (denying the existence of any duty in this regard).Google Scholar

¹⁴⁹ Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010. See, e.g., Section 511 of the BGB, as amended by the German Act Implementing the Mortgage Credit Directive (Gesetz zur Umsetzung der Wohnimmobilienkreditrichtlinie). See Buck-Heeb, supra note 147, at 184.Google Scholar

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¹⁵¹ Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories. See Mülbert, supra note 116, at 391; Guido Ferrarini & Paolo Saguato, Regulating Financial Market Infrastructures, in The Oxford Handbook of Financial Regulation, supra note 5, at 568, 584.Google Scholar

¹⁵² Supra D.III.1.Google Scholar

¹⁵³ See Johannes Köndgen, Effizienzorientierung im Kapitalmarktrecht?, in Effizienz als Regelungsziel im Handels- und Wirtschaftsrecht 100, 129 (Holger Fleischer & Daniel Zimmer eds., 2008) (“a clear case of information asymmetry”) (authors' translation). See also Fleischer, Holger, Empfiehlt es sich, im Interesse des Anlegerschutzes und zur Förderung des Finanzplatzes Deutschland das Kapitalmarkt- und Börsenrecht neu zu regeln?, Gutachten F zum 64. DJT 2002, F 23.Google Scholar

¹⁵⁴ Article 3(1) of the Prospectus Directive.Google Scholar

¹⁵⁵ See Shapiro, supra note 33, at 637.Google Scholar

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¹⁵⁷ Shapiro, supra note 33, at 637). In addition, the reputation of individual issuers, which bears no relation to the statutory requirements imposed by the law governing securities prospectuses, will play a decisive role in establishing trust, particularly in the primary market.Google Scholar

¹⁵⁸ Article 4 of the Transparency Directive. Google Scholar

¹⁵⁹ Article 5 of the Transparency Directive. Google Scholar

¹⁶⁰ Article 17 of the MAR. Google Scholar

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¹⁶² Articles 4(2) and Art. 5(2) of the Transparency Directive. Google Scholar

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¹⁶⁴ Regulation (EU) No 462/2013, supra note 7. See Moloney, supra note 100, at 637. Schroeter has commented on ratings in general. See Schroeter, Ulrich G., Ratings – Bonitätsbeurteilungen durch Dritte im System des Finanzmarkt-, Gesellschafts- und Vertragsrechts (2014). Black has written about the role of gatekeepers. See Black, Julia, The Role of Gatekeepers, in The Oxford Handbook of Financial Regulation, supra note 5, at 254.Google Scholar

¹⁶⁵ Art. 5 of Regulation (EU) No 596/2014 (fn. 7).Google Scholar

¹⁶⁶ Art. 8 of Regulation (EU) No 596/2014 (fn. 7).Google Scholar

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¹⁷⁰ Mülbert, supra note 107,at 183; Köndgen, supra note 153, at 105.Google Scholar

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¹⁷⁵ Recital 2 of the MAR: “Market abuse harms the integrity of financial markets and public confidence in securities and derivatives.”Google Scholar

¹⁷⁶ The manipulation of benchmarks was subsequently included as a constituent element of the prohibitions against market manipulation. See Art. 12(1)(d) of the MAR.Google Scholar

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¹⁷⁸ Regulation (EU) No 1066/2016 of the European Parliament and of the Council on indices used as benchmarks in financial instruments and financial contracts. See Wundenberg, Malte, Regulierung von Benchmarks, in Europäisches Kapitalmarktrecht sections 30 and 31 (Rüdiger Veil ed., 2^nd ed. 2014); Gerald Spindler, Der Vorschlag einer EU-Verordnung zu Indizes bei Finanzinstrumenten (Benchmark-VO), 27 Journal for Banking Law and Banking 165–176 (2015).Google Scholar

¹⁷⁹ Recital 1 of Regulation (EU) No 1066/2016 of the European Parliament and of the Council on indices used as benchmarks in financial instruments and financial contracts: “Failures in, or doubts about, the accuracy and integrity of indices used as benchmarks can undermine market confidence, cause losses to consumers and investors and distort the real economy. It is therefore necessary to ensure the accuracy, robustness and integrity of benchmarks and of the benchmark determination process.”Google Scholar

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