Britain's attempt to overturn the EU's ban on short selling of shares in market emergencies has ended in failure after the European Court of Justice (ECJ) dismissed the case.
The UK had argued that the European Securities and Markets Authority (ESMA) was given greater discretion than was justifiable under EU law.
The court rejected all four of Britain's pleas in a ruling that will have long standing consequences for the regulation of the UK's financial sector.
The ECJ found that the powers banning short selling were "circumscribed by various conditions and criteria" that limit ESMA's decision making.
The UK has launched a series of legal challenges over EU banker bonus caps and proposals for a financial transaction tax.
Alexandria Carr, regulatory lawyer at Mayer Brown, commented:
This decision could give the new European Parliament and Commission the green light to confer more powers to the regulatory supervisors.
It is also likely to cause concern in the UK and some other Member States, including Germany, which are already uneasy with the way in which the EU’s legal framework is being stretched as the EU seeks to confer wide new powers on EU bodies whilst avoiding the thorny question of whether this actually necessitates Treaty change.