EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 15 April 2005 
at the request of the Belgian Ministry of Finance 
on a draft royal decree concerning the status of securities settlement and assimilated institutions  
(CON/2005/9) 
 
Introduction  
1. On 10 February 2005 the European Central Ba nk (ECB) received a request from the Belgian 
Ministry of Finance for an opinion on a draft royal decree concerning the status of securities 
settlement and assimilated institutions (hereinafter the ‘draft decree’). 
2. The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing 
the European Community and on the fifth and sixth indents of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Ce ntral Bank by national authorities 
regarding draft legislative provisions
1, since the draft decree concerns  settlement systems and rules 
applicable to financial institutions in so far as th ey materially influence the stability of financial 
institutions and markets. In accordance with the first sentence of Article 17.5 of the Rules of 
Procedure of the European Central Bank, th e Governing Council has adopted this opinion. 
3. The draft decree will implement Article 23 of the Law of 2 August 2002 on the supervision of the 
financial sector and financial services2. It regulates and organises the supervision by the Commissie 
voor het Bank, Financie- en Assurantiewezen/Commi ssion bancaire, financière  et des assurances 
(CBFA) (the Belgian Banking, Finance and Insurance Commission) of: 
(i)  certain securities settlement institutions that  are not credit institutions established in Belgium 
(Article 1(4); hereinafter the ‘secu rities settlement institutions’); and  
(ii)  certain institutions assimilated with securiti es settlement institutions (Article 1(5)), i.e. 
institutions established in Belgium the business of  which consists completely or partially in 
the operational management of settlement institutions’ services, including where these settlement institutions are credit institutions  established in Belgium (hereinafter the 
‘assimilated institutions’).  
                                                           
1  OJ L 189, 3.7.1998, p. 42. 
2 See in relation to this Law: ECB Opinion CON/2002/13 of 24 Ap ril 2002 at the request of the Belgian Ministry of Finance 
on a draft proposal for a law on prudential supervision of the financial sector and financial services. 
2 4. The institutions covered by the draft decree will be subject to licensing and business operation 
requirements which are largely inspired by the requi rements that either currently already apply, or 
will apply in the near future, to credit institutions  and investment undertakings. The draft decree is 
without prejudice to oversight by the Nationale  Bank van België/Banque Nationale de Belgique 
(NBB) over securities settlement systems. 
General considerations  
5. There is currently no Community legislation that  specifically regulates or supervises institutions 
which only provide settlement services in the Comm unity. The ECB refers in this context to the 
Commission’s Communication entitled ‘Clearing and Settlement in the European Union – The way 
forward’3, in which the Commission notes that, in or der to create ‘EU Securities Clearing and 
Settlement Systems that are efficient and safe a nd which ensure a level playing field among the 
different providers of Clearing and Settlement services’, the adoption of ‘a common regulatory and 
supervisory framework  that ensures financial stability and invest or protection, leading to the mutual 
recognition of systems’ needs to be pursued4. The Commission further notes that ‘a common 
regulatory/supervisory framework will also create a level playing field by eliminating the existing 
disparities as regards access rights and capital requi rements between clearing and settlement service 
providers that are licensed as banks and those that are not’5. While the ECB strongly supports the 
Commission’s intention to propose a Directive on Clearing and Settlement6, it welcomes the 
adoption in the meanwhile of national legislati on on the regulation and supervision of securities 
settlement institutions that are not credit institutions. Of course, on the entry into force of any future 
Community legislation in this area, national legi slation such as the draft decree will need to be 
aligned with Community legislation. The ECB also  welcomes the purpose of the draft decree to 
align, to the extent possible, th e rules applicable to securities settle ment and assimilated institutions 
with the rules applicable to credit institutions. Th is will facilitate the tasks of supervisors, amongst 
others, as well as limit distortions in the regulat ory framework applicable to all these institutions. 
6. The ECB also draws attention to the ‘Standard s for Securities Clearing and Settlement in the 
European Union’ that it publishe d jointly with the Committee of European Securities Regulators 
(CESR)7 (hereinafter the ‘ESCB-CESR Standards’). St andard 18 states, amongst other things, that 
‘entities providing securities clearing and settlement  services should be subject to, as a minimum, 
transparent, consistent and effective regulation and supervision’. Although ‘regulatory, supervisory 
and oversight activities should have a sound basis,  which may or may not be based on statute, 
depending on a country’s lega l and institutional framework’8, the ECB nonetheless considers 
legislation to be beneficial for reasons of legal certainty and clarity. The ECB therefore welcomes 
                                                           
3  COM(2004) 312 final (hereinafter the ‘2004 Communication’). 
4  See the 2004 Communication, p. 8. 
5  See the 2004 Communication, p. 10.  
6  See the 2004 Communication, p. 11. 
7  Available on www.ecb.int and www.cesr-eu.org. 
8  See paragraph 191 of the September 2004 ESCB-CESR  report, available on www.ecb.int and www.cesr-eu.org. 
3 the draft decree. Of course, once the ESCB-CESR St andards apply, the decree might need to take 
these standards into account.  
7. As regards the draft decree’s objective to also regulate and organise the supervision of assimilated 
institutions, the ECB in Opinion CON/2004/27 welcom ed the fact that Belgian law ‘extends the 
supervisory regime of the CBFA for settlement ins titutions … to institutions established in Belgium 
carrying out … operational management services.’ The ECB took particular note that ‘the intention 
is to designate institutions that provide substantia l and critical operational and intellectual services to 
settlement institutions’. Although the ECB understands that the rules regarding assimilated 
institutions are only meant to concern institutions th at provide settlement services of substantial and 
critical importance, it could be helpful to explicitly specify this in the draft decree itself. This will 
prevent legal uncertainty as to whether the draft decree applies to any in stitution established in 
Belgium that provides settlement services, even if these services are not of substantial or critical 
importance. 
Specific considerations  
8. The draft decree defines securities settlement in stitutions by reference to the institutions in 
Article 23(1) of the Law of 2 August 2002 (except credit institutions established in Belgium). As a 
result of this cross-reference, the institutions referred to in Article 23(1)(5º) of the Law of 
2 August 2002, which are by definition not estab lished in Belgium, could arguably also be 
considered as being subject to the business opera tion requirements laid down in Chapter III of the 
draft decree. However, in view of the nature of those business operation requirements which seem to 
be specifically designed for companies incorporated  under Belgian law (see e.g. Articles 6 and 11), 
the ECB understands that this would conflict w ith the draft decree’s purpose to only submit 
securities settlement institutions that are establis hed in Belgium to these requirements. It would 
therefore be helpful if Chapter III could specify th at the securities settlement institutions covered by 
it are those incorporated under Belgian law, as is e xpressly provided for in th e case of assimilated 
institutions.  
9. The ECB welcomes the obligation imposed on the se curities settlement and assimilated institutions 
to also comply at all times with financial ratio s that the CBFA may establish by regulation so that 
their solvency and liquidity may be supervised (Article 13). Furthermore, the ECB notes with interest that the draft decree incorporates, by referring to the Law of 22 March 1993 on the status 
and supervision of credit institutions, several key re quirements for all these institutions that already 
apply to credit institutions, including requirements for the CBFA to (i) be notified of any intended 
acquisition or disposal of a holding in such institutions that would directly or indirectly provide at least 5% (or multiples thereof) of the capital or  voting power; and (ii) approve mergers and 
acquisitions involving these institutions; and (iii)  be notified of the establishment of foreign 
branches by such institutions, with the possibilit y for the CBFA to oppose the intended activities; 
and (iv) be notified of the institutions’ annual accounts, including on a consolidated basis.  
4 10. The ECB particularly welcomes Article 19, which addresses the eventuality that non-compliance by 
participants in a securities settlement institution with  its rules would have a negative impact on this 
institution’s condition, in which cas e this institution must promptly inform the CBFA thereof, which 
must, in turn, inform the NBB. The ECB is aware of  the fact that the draft decree only concerns the 
CBFA’s prudential supervision of securities settlement  institutions and that the NBB is responsible 
for oversight of the securities settlement sy stems managed by these institutions. The ECB 
nonetheless notes that the Eurosystem and the NBB, as an integral part of the Eurosystem, are 
entrusted with the tasks of, amongst others, prom oting the smooth operation of payment systems and 
contributing to the stability of the financial syst em. Article 19 could therefore stress that the CBFA 
should exchange with the NBB in a timely fashion  all relevant information that the CBFA has 
received from the institution concerned. This would, for instance, avoid information deficiencies that 
might occur in case of uncertainty as to whethe r certain information concerns the institution’s 
condition, thus falling under the CBFA’s supervision,  or the system’s condition, thus falling under 
the NBB’s oversight. Of course, this timely in formation exchange between the CBFA and the NBB 
could be detailed in the arrangements in Ar ticle 23(4) of the Law of 2 August 2002.  
11. The CBFA’s prudential supervision of securities settlement and assimilated institutions includes 
these institutions’ foreign branches and services (Artic le 21). Pursuant to Article 48 of the Law of 
22 March 1993, which by reference applies to this  supervision (second paragraph of Article 21), the 
CBFA may, amongst other things: (i) carry out in spections at a branch established in another 
Member State after prior notification of the aut horities supervising the credit institutions in that 
Member State; and (ii) request these foreign author ities to carry out the inspections. The ECB raises 
the question as to how these provisions would apply in the case of institutions that might not be 
credit institutions, given that not all Member States provide for the supervision of such institutions. 
For the same reason, the draft decree could clarify how Article 49 of the Law of 22 March 1993, which refers in the context of the supervision on a consolidated basis of credit institutions to other 
Member States’ supervisory authorities, would apply by virtue of Article 23 to the CBFA’s 
supervision on a consolidated basis of groups of securities settlement and assimilated institutions. 
12. The ECB notes with interest that, as a consequen ce of the application to securities settlement and 
assimilated institutions of Article 55 of the Law of 22 March 1993 re garding the external audit of 
credit institutions (Article 24 of the draft decree), the CBFA may, at the request of the ECB or the 
NBB, instruct the securities settlement and assimila ted institutions’ auditors to confirm that the 
information these institutions are obliged to provide  to the ECB or the NBB is complete, accurate 
and complies with existing rules. 
13. By virtue of Article 28 of the draft decree, Chap ters II to V are rendered entirely applicable to 
assimilated institutions operating in Belgium as branch es of foreign institutions that are not credit 
institutions. These branches cannot benefit from the ‘EU-passport’ rules under the Community 
legislation applicable to credit institutions and i nvestment undertakings. As regards the requirement 
that it must be possible for the CBFA and the inst itution’s home country authorities to exchange 
5 information, the wording of Article 28(2º) could cl arify that it is not the institution concerned that 
must satisfy this requirement, but rather the legal framework of the jurisdicti on where this institution 
is incorporated. As regards branches of foreign in stitutions, the ECB refers to the September 2004 
ESCB-CESR Report, which states that ‘issues rais ed by the operation of cross-border systems 
should be addressed in a way that delivers regula tion/supervision/oversight  consistent with each 
relevant authority’s responsibilities and avoids ga ps and duplication, and hence unnecessary costs’ 
and which recommends cooperation between the rele vant authorities ‘in order to minimise the 
regulatory burden’9. The ECB refers in this context also to the future Community legislation on 
settlement and custody, which might contain rules on the regulation and supervision of branches of 
foreign institutions.  
14. Finally, the CBFA is required to consult the NBB before authorising exceptions to the requirement 
that securities settlement and assimilated institutions have sufficient liquidity at their disposal to 
continue their activities (Article 29). There is no comparable requirement for the CBFA to consult 
the NBB before authorising exceptions to the requi rement that securities settlement and assimilated 
institutions communicate to the CBFA their financ ial positions on a monthly basis, their detailed 
statement of services (including financial data) on a quarterly basis, as well as the relevant management and audit reports (Ar ticle 30), although this informa tion could also be relevant for 
monitoring these institutions’ observance of Article 29. If, notwithstanding the foregoing, the draft 
decree maintains the absence of prior consultation of the NBB under Article 30, it could be helpful 
for the draft report to the King to clarify the reason for this divergen ce with respect to the 
consultation of the NBB under Article 29.  
15. This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 15 April 2005. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                           
9  See paragraphs 192 and 193 of th e September 2004 ESCB-CESR report.