EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 4 January 2013 
on the financial market supervision framework 
(CON/2013/1) 
 
Introduction and legal basis 
On 23 October 2012, the European Central Bank (ECB)  received a request from the Polish Parliament 
(Sejm) for an opinion on a draft law amending the La w on supervision of the financial market and certain 
other laws (hereinafter the ‘draft law on supervis ion’) and a draft law amending the Law on trading in 
financial instruments (hereinafter the ‘draft law on tr ading’) (collectively referre d to as the ‘draft laws’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to the rules app licable to financial institutions insofar as 
they 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, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft laws The draft laws introduce several changes which, if implemented, would have a significant impact on the 
regulation of financial services and on the institutiona l framework for financial supervision in Poland. 
1.1 The draft law on supervision pr oposes the following arrangements. 
(a) The establishment of the Council for the Public Interest in the Financial Market (hereinafter 
the ‘Public Interest Council’) as a new consulta tive body to the Prime Minister. Members of 
the Public Interest Council are to be appointed  by the Prime Minister from among candidates 
nominated by: (i) professional and non-governmental  organisations with an interest in issues 
relating to financial markets; (ii) national trade unions; (iii) national employer associations 
whose activities are linked to the operation of  the financial markets; (iv) individuals 
nominated by certain higher education establis hments. The competences of the Public 
Interest Council include: (i) playing a role in selecting members of the Polish Financial 
                                                 
1 OJ L 189, 3.7.1998, p. 42. 
ECB-PUBLIC  
2 Supervision Authority (KNF); (ii) monitoring fi nancial market transactions and providers of 
financial services and reporting on perceived risks to the public interest to the KNF; (iii) submitting an annual report on the KNF’s  functioning to the Prime Minister.  
(b) The KNF and the KNF Office will be financed from the State budget and no longer from the 
fees paid by the supervised entities. These s upervised entities will make payments to the 
State budget calculated by reference to the cost of supervision. 
1.2 The draft law on trading propo ses the following arrangements. 
(a) Financial instruments will be categorised in to five groups, each with a different overall risk 
level, which takes into account price risk, liquidi ty risk, interest rate risk and credit risk. 
Entities seeking admission of financial instruments to trading will be obliged to assign a risk 
category to the instrument. KNF will maintain a public register of financial instruments and 
their risk categories and will have the power to change the risk category of a given instrument.  
(b)  A list of ‘prohibited market practices’ that  are to be combated by KNF will be introduced. 
 2.  General observations The ECB notes that the draft laws were submitted for consultation at an early stage of the legislative 
process. Since it is likely that the draft laws will  undergo further amendments in the course of the 
legislative process, which makes it difficult to full y assess their impact on the Polish financial market 
regulation and supervision at this tim e, this Opinion only addresses issu es related to the general approach 
adopted in the draft laws. If significant changes are in troduced in the draft laws as they proceed further 
through the legislative process, the ECB expect s to be consulted on the amended versions. 
  3.  Objectives of financial supervisio n and role of the Public Interest Council 
3.1 The draft law introduces a new primary objective of financial supervision in Poland, i.e. ‘the 
protection of the public interest’. This objectiv e will be supported by actions implementing the 
present objectives of financial supervision, incl uding the ‘proper functioning of the financial 
market, its stability, security and transparency, c onfidence in financial markets, and protection of 
the interests of market participants’
2. Moreover, the newly established Public Interest Council is to 
provide opinion on the actions of KNF from the perspective of protecting the public interest3.  The 
Public Interest  Council will pursue this objective essentially  through continuous auditing of KNF 
activities and through recommending measures to be ta ken by the Prime Minister in relation to the 
KNF.  
                                                 
2  See Article 2 of the Law of 21 July 2006 on supervision of  financial market (Dz. U.  of 4 September 2006 No 157, 
item 1119), as amended by Article 1(2)  of the draft law on supervision. 
3  See Article 6b(2) of Law on supervision of financial markets, as inserted by Articl e 1(4) of the draft law on supervision. 
ECB-PUBLIC  
3 3.2 The ECB notes that the introduction of the broad and ambiguous concept of ‘public interest’ as an 
objective of the financial supervision, as well as th e corresponding wide definition of the role of the 
Public Interest  Council, including its powers to review  KNF actions, would affect KNF’s 
operational independence and result in a dilution of  the supervisory objectives pursued by KNF in 
accordance with its statutory mandate. The ECB poin ts to international standards in the area of 
financial market supervision, such as the Core Principles for Effective Banking Supervision, which 
emphasise the need for supervisors to be operationally independent and for supervisory 
responsibilities and objectives to be clearly defined4. 
 4. Financing supervisory activities 4.1  Currently, the operating costs of the KNF and the KNF Office are covered by fees paid for the 
benefit of the KNF by the supervised entities, in the amount specified annually by the budgetary law, and in accordance with individual fee calcul ations based on separate sectoral laws. The draft 
law on supervision requires supervised entities to contribute to the State budget, hence 
discontinuing the direct allocation of those pa yments to finance KNF’s supervisory activities. 
4.2  The ECB notes that the proposed model significan tly differs from that applied by most Member 
States, where the supervisory authorities are not financed from the general State budget or this financing is limited. If the proposed model were to be introduced in Poland, the ECB recommends, 
in line with the Core Principles
5, that appropriate measures are taken to secure adequate resources 
for the conduct by KNF of effective supervis ion, ensuring its autonomy and operational  
independence. 
 5. Categorisation of financial products and servic es and the list of prohibited market practices 
The declared objective behind the requirement that fi nancial institutions categorise financial products and 
services they offer by economic risk and the introducti on of a list of prohibited market practices is to 
strengthen consumer protection. In both cases, genera lly worded clauses are used to define the new 
measures
6. While the ECB supports the general objective of  strengthening the protection of consumers of 
financial services, it recommends that the proposals contained in the draft laws are carefully assessed 
from the perspective of their compatibility with the existing instruments of Union law in the area of 
financial services and with the current legislative initiatives at Union level which define instances for 
                                                 
4  See Basel Committee for Banking Supervis ion, ‘Core Principles for Effectiv e Banking Supervision’, September 2012, 
Principle 1 (hereinafter the ‘Core Principles’), availabl e at the Bank for International Settlements’ website at 
www.bis.org. 
5  See Core Principles, principle 2, essential criterion 6. 
6 For example, a financial instrument in the ‘heightened risk’ ca tegory is defined as ‘a financ ial instrument with a medium 
price volatility, medium liquidity risk, medium to high interest rate risk and medium credit risk’ and a category of 
prohibited practice defined as ‘dishonest or  imprudent behaviour not respecting the ju stified interests of the clients and of 
the general good of the financial markets’; see Article 13a(3 ) and Article 118a(1)(1) introduced in the Law of 29 July 
2005 on trading in financial instruments (Dz. U. of 23 Sept ember 2005 No 183 item 1538) by the draft law on trading. 
ECB-PUBLIC  
4 supervisory intervention aimed at protection of consum ers of financial services in a specific manner. In 
particular, the ECB draws the consulting authority’ s attention to the ongoing review of Directive 
2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial 
instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC
7, Directive 
2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be 
published when securities are offered to the public or admitted to trading and amending Directive 
2001/34/EC8, and Directive 2003/6/EC of the European Par liament and of the Council of 28 January 2003 
on insider dealing and market manipulation (market abuse)9, as well as to the proposal for a Regulation of 
the European Parliament and of the Council on key information documents for investment products10. 
Such Union legislative instruments and initiatives, toge ther with the relevant delegated and implementing 
measures, contribute to the harmonised protection of consumers of financial services within the Union, 
while respecting a need for legal certainty on th e part of the providers of such services.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 4 January 2013. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
7  OJ L 145, 30.4.2004, p. 1. 
8  OJ L 345, 31.12.2003, p. 64. 
9  OJ L 96, 12.4.2003, p. 16. 
10  COM(2012) 352 final.