The Advocate General has opinioned on the powers granted to ESMA under Article 28 of the Short Selling Regulation which contains restrictions on short selling EU sovereign debt and equity financial instruments, and on entering into uncovered sovereign credit default swaps. Article 28 requires ESMA to intervene in the financial market of a member state in the event of a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the EU. It can do this by prohibiting or imposing conditions on the entry by natural or legal persons into short sales or similar transactions, or by requiring such persons to notify or publicise such positions.

The Advocate General’s opinion is not binding on the Court of Justice but it is his role to propose a legal solution to the court. The court will give its judgment at a later date. The Advocate General concluded that Article 28 should be annulled, as Article 114 of the Treaty on the Functioning of the European Union was not a proper legal basis for its adoption. If, however, the Court of Justice were to decide that Article 114 TFEU was an appropriate legal basis for Article 28, the Advocate General was of the view that the powers vested in ESMA under the article were in line with the relevant EU constitutional rules in relation to the delegation of powers to an agency.