The UK does not have the right to opt out of EU regulations that could ban short selling during a financial crisis, according to the EU’s Court of Justice. The court found that the regulations were in line with existing EU law and the case was dismissed “in its entirety,” reports the BBC reports.

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The law, passed in 2012, gives the European Securities and Markets Authority (ESMA) the authority to ban short selling if it believes the practice is undermining financial stability, but the UK has argued that this authority is disruptive, calling it a restraint on trade.

“We’ve consistently said we want tough financial regulation that works, but any powers conferred on EU agencies must be consistent with the EU treaties and ensure legal certainty,” said a UK Treasury spokesperson.

Short-selling said to drive instability

Short-selling has been blamed for making stock prices less stable, but those who defend the practice says it promotes price efficiency and liquidity in the market. Also, while dedicated short sellers often have a reputation for being tough investors, they wouldn’t be successful if they didn’t find real problems in corporate books. Even if short selling contributed to the crisis (which is certainly not a consensus view), short sellers couldn’t have destabilized the banks if the banks themselves hadn’t already been in a precarious position.

Pressure on Cameron to renegotiate EU powers

The UK is also trying to opt out of EU rules that put a limit on bankers’ bonuses and a future financial transaction tax (which, considering the volume of trade in London compared to the rest of Europe could easily be seen as unfair), and British Prime Minister David Cameron is reportedly being pressured to reconsider the UK’s relationship with the EU and take back some of the sovereignty that has been forfeited (though such actions could require a referendum, for political cover if nothing else).

Having this latest challenge thrown out of court doesn’t bode well for the UK’s next few cases, or for any future cases it might want to bring, and will likely fuel the push for more independence from the EU. Decoupling London from EU markets could also create a competitive advantage, since new regulations and taxes could be avoided by listing or trading on the London Stock Exchange instead of one of its continental competitors.