OPINION OF THE EUROPEAN MONETARY INSTITUTE
on a Consultation received from the Swedish Mi nistry of Finance under Article 109f(6) of the
Treaty establishing the European Community and Article 5.3 of the Statute of the EMI on a Bill
for new Swedish legislation concerning collatera l when dealing in fina ncial instruments and
currencies (“Regeringens prop osition 1996/97:42, Tilläggssäkerhet er vid handel med finansiella
instrument och valuta”).
CON/96/15
1. The present consultation was initiated by a letter from the Swedish Ministry of Finance dated
22 October 1996, enclosing a Government Bill for new Swedish legislation concerning
collateral provided in relation to  dealings in financial instruments and currencies (“Regeringens
proposition 1996/97:42, Tilläggssäkerheter vid handel med finansiella instrument och valuta”)
(“the Bill”). The Bill includes a comprehensive explanatory description of the proposedlegislative amendments and appendices containing  inter alia a compilation of views expressed
by consulted parties. The Bill was presented by  the Swedish Government to the Parliament on
10 October 1996.
2. The main content of the Bill is that it will not be possible under normal circumstances to set
aside (“återvinna”) in accordance with Section 12, Chapter 4, of the Swedish Bankruptcy Act
(“konkurslagen”) additional security (“tillä ggssäkerhet”) which has been provided in
connection with trading of fina ncial instruments or currencies.
3. The EMI is competent to deliver an opinion on this consultation on the basis of Article 109f(6)
of the Treaty, Article 5.3 of the EMI Statute and Article 1.1, fourth  and fifth indents, of Council
Decision 93/717/EC of 22 November  1993 since the Bill contains draft legislative provisions
applicable to additional security provided for cross-border transactions during trading in
financial instruments or currencies, including  security provided through participation in
clearing operations organised by a central ba nk or by a Swedish or foreign clearing
organisation.
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4. The Bill states that, if additional security is  provided in relation to trading in financial
instruments or currencies effected through par ticipation in clearing operations organised by a
central bank or by a Swedish or foreign clear ing organisation, the security shall be protected
from being set aside under Section 12, Chapter 4, of the Bankruptcy Act (“konkurslagen”),
provided that the security has been given in accordance with the agreed  rules for the clearing
operations. The same shall apply if such additiona l security is provided directly between two
parties in accordance with contractual conditions  normally applicable to trade in financial
instruments or currencies, provided the secu rity has been given in accordance with the
agreement. However, additional security may be  set aside if it has not been provided without
delay relative to a shortfall arising in the releva nt security arrangement or if the security has
been provided under circumstances whereby the m easure cannot be considered to be ordinary.
The Swedish Government proposes that provisions  therefore are introduced in a new Section 2
of Chapter 5 of the Financial Instruments Trading Act (“lagen om handel med finansiellainstrument” (1991:980) as reprinted).
5. The EMI notes the discussion in the Bill as to the appropriate manner in which the legislative
amendment is to be effectuated. The EMI also notes the comments concerning the scope of the
new legal provisions, whereby the suggested legislative amendment as presently drafted wouldcover and protect additional security provided not only when trading is taking place under the
auspices of clearing organisations , but also as regards security provided in respect of OTC
trading.
6. The EMI agrees that financial markets play an important role in the economy and welcomes
legislative amendments which may enhance legal certainty which, in turn, contributes to thestability of financial institutions and markets. On  the basis of the Bill, the EMI considers that
the proposed new Section 2 of Chapter 5 of the Financial Instruments Trading Act would
provide greater certainty in respect of collatera l and security arrangements in the context of
trading with financial instruments and curren cies within, inter alia, clearing systems and,
therefore, welcomes the proposed legal amendments.
7. The EMI has no objection to this opinion being made public.
20 November 1996