EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 28 October 2005 
at the request of the French Financial Markets Authority  
on draft amendments to its General Regulation 
(CON/2005/40) 
 1. On 22 September 2005 the European Central Bank (ECB) received a request from the Autorité des 
marchés financiers  (AMF) (French Financial Markets Authority) for an opinion on draft 
amendments to its Règlement Général  (General Regulation) (hereinafter the ‘draft amendments’). 
The draft amendments will simplify the rules applic able to the transfer of  ownership of financial 
instruments admitted to the operations of a cen tral depository or settled through a settlement 
system. 
2. The ECB’s competence to deliver an opinion is based on the fifth and sixth indents of Article 2(1) 
of Council Decision 98/415/EC of 29 June 1998 on th e consultation of the European Central Bank 
by national authorities regarding draft legislative provisions
1, as the draft amendments relate to 
payment and settlement systems and rules applicab le to financial institutions insofar as they 
materially influence the stability of financial ins titutions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedur e of the European Central Bank, the Governing 
Council has adopted this opinion.  
3. The ECB was consulted in 2004 by the French Ministry of Economic Affairs, Finance and 
Industry2 on a draft order which contained certain dr aft amendments to Articles L.431-2 and L.431-
3 of the Monetary and Financial Code (hereinafter  the ‘Code’) concerning rules on the transfer of 
ownership of financial instruments3. Article L.431-2 of the Code provides as a principle that ‘the 
transfer of ownership of financial instruments … occurs on its entry in the purchaser’s account, on 
the date and subject to the conditions defined by  the General Regulation of the AMF’. The draft 
amendments4, on which the ECB is now consulte d, will define such conditions5. 
                                                      
1  OJ L 189, 3.7.1998, p. 42. 
2  ECB Opinion CON/2004/22 of 15 June 2004 at the request of the French Ministry of Economic Affairs, Finance and 
Industry on certain provisions of a draft order reforming tran sferable securities issued by joint-stock companies. 
3  Order No 2005-303 of 31 March 2005 ( Official Journal of the French Republic  No 76, 1 April 2005 ) amending 
Articles L.431-2 and L.431-3 of the Code wa s ratified by Law No 2005-811 of 20 July 2005 ( Official Journal of the 
French Republic, No 168, 21 July  2005 ).  
4  General Regulation, Book V on market infrastructures, Title VI. This Title is provisionally entitled ‘Transfer of 
ownership of financial instruments - Date and conditions of the entry of financial instruments in the purchaser’s account’. 
5  In its opinion CON/2004/22 of 15 June 2004, the ECB stre ssed that ‘the ECB may review its position … once it has 
comprehensively assessed the imple menting measures contained in the AMF's General Regulation’. 
2 4. The ECB notes that, under the draft amendments, th e entry in the purchaser’s account will take 
place on the date of the actual finalisation of th e trade, as indicated in the rules governing the 
functioning of the settlement and delivery system, when the account of the purchaser’s custodian or 
of the custodian’s agent is credited on the books of the central depository6. The ECB understands 
that, with the exception of certain situations expressly provided for in the General Regulation7, the 
date of the finalisation of the trade and, simulta neously, of the entry in the account will be three 
trading days following the date of execution of the orders. 
5. As mentioned in its previous opinion, the ECB welcomes the French authorities’ aim of 
simplifying the existing transfer of ownership regi mes for financial instruments and the abolition of 
the distinction between transactions on and outsi de regulated markets thus avoiding a potential 
source of distortion. It is fundamental to the creation and functioning of a safe, efficient and integrated EU clearing and settlement infrastructur e to have clear and harmonised rules on transfer 
of ownership, and in particular concerning the mo ment of transfer of financial instruments held 
with central securities depositories. Against this  background, the ECB welcomes the fact that the 
draft amendments will further clarify the applicable ru les in this field. In th is respect, the ECB fully 
shares the view of the European Commission, which has identified th e rules regarding the transfer 
of ownership of financial instruments as one of the core legal issues to be addressed by the newly 
established Legal Certainty group
8.  
6. The ECB notes that the objective of the French re form is to ‘align systems of settlement of 
financial instruments with international standards’ and ‘to define a single regime for the transfer of 
property … by providing that the transfer of propert y takes place at the time of finalisation of the 
operations, i.e. in practice three days after the trade’9. The rules laid down in the draft amendments 
are in line with the draft standard s proposed by the European System of Central Banks (ESCB) and 
the Committee of European Securities Regulators (CESR), which retain T+3 settlement as the 
current European ‘minimum standard’, implying that final settlement should occur no later than 
T+310. 
7. According to the draft Article 560-5 of the Genera l Regulation, the rules governing the functioning 
of a market or a multilateral trading facility may provide that, for certain types of transactions, the 
date on which entries are to be made in the purch asers’ accounts is ‘other than three trading days 
following the transaction date’. The ECB understands  that this provision is intended to cover 
settlement cycles shorter than three trading days. The ECB notes however that, as currently drafted, 
Article 560-5 could also cover settlement cycles longer than three trading days. It is noted in this 
                                                      
6  General Regulation, draft Article 560-1. 
7  General Regulation, draft Articles 560-3 to 560-8 and Article 332-65.  
8  Communication from the Commission to the Council and the European Parliament of 28 April 2004 entitled ‘Clearing 
and Settlement in the European Union – Th e way forward’, COM(2004) 312 final, p. 25. 
9  Explanatory report to Order No 2005-303 of 31 March 2005 addressed to the President of the French Republic ( Official 
Journal of the French Republic , No 76, 1 April 2005 ).  
10  ‘Standards for securities clearing and settlement in the European Union, Sept ember 2004 report’. Standard 3: Settlement 
cycles and operating times, pp. 11 and 23. 
3 respect that the draft ESCB/CESR standards reco mmend further harmonisation of settlement cycles 
across markets in order to reduce fragmentation of the EU securities markets, and an evaluation of 
whether a settlement cycle shorter than T+3 is a ppropriate for certain securities. The ECB therefore 
suggests amending the above provision to state that the rules governing the functioning of a market or a multilateral trading facility may provide that, for certain types of transactions, the date on 
which entries are to be made in the purchasers’ accounts is ‘less than three trading days following 
the transaction date’. 
8. This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 28 October 2005. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET