Latin American Capital Markets

172 RUBEN LEEcan ask the European Court to review that member state's actions so as to enforcethe European Union legislation.Three linked strategies have been employed to achieve the Single Market forfinancial services: the harmonization between member states of the minimum standardsfor the prudential supervision of financial institutions; the mutual recognition byeach member state of the competence of the supervisory bodies in each other memberstate for the governance of these minimum standards; and the assignment of thesupervision of a financial institution to the home country of that financial institution,in those areas that have been harmonized between member states.These strategies have been used in a wide range of secondary legislation topromote the Single Market for financial services. Among the issues addressed havtbeen the admission of stocks to an official stock exchange quotation; 10 the particularsthat should be published for securities admitted to an official stock exchange listing;1 ' the contents of public offer prospectuses;' 2 the information that companies admittedto an official stock exchange listing should publish on a regular basis; 13 thecriteria for determining when the purchase or sale of a major shareholding in a listedcompany should be disclosed; 14 the standards for pooled investment vehicles, termedundertakings for collective investment in transferable securities; 15 insider dealing; 16and the minimum capital requirements that banks and securities firms must have inorder to obtain a passport to operate their securities trading businesses throughoutthe European Union. 17 Cooperation between securities regulators for dealing withcross-border practices and trading is only lightly covered by relevant legislation, andthe investigative powers of national authorities and sanctions are not defined at theEuropean Union level.One important piece of secondary legislation in the European Union, the InvestmentServices Directive (ISD), allows firms that provide investment services, suctas broker-dealers, to obtain what is called a European passport. This passport givesinvestment service firms the right, under certain circumstances, to provide their sevices without restriction throughout the European Union. 18 The ISD details the conditionsunder which the three-pronged approaches of minimum harmonization, mu-10 Council Directives 79/279/EEC and 82/148/EEC.1 ' Council Directives 80/390/EEC, 82/148/EEC, 87/345/EEC, and 90/211/EEC.12 Council Directive 89/298/EEC.13 Council Directive 82/121/EEC.14 Council Directive 88/627/EEC.15 Council Directives 85/61 I/EEC and 88/220/EEC.16 Council Directive 89/592/EEC.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub17 Council Directive 93/6/EEC.18 Council Directive 93/22/EEC.