EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 7 December 2011 
on securities markets legislation  
(CON/2011/101) 
 
Introduction and legal basis  
On 28 October 2011, the European Central Bank (ECB) received a request from the Finnish Ministry of 
Finance for an opinion on the following draft government proposals: (a) the draft law on the book-entry system and clearing and settlement, (b) the draft law on investment services; (c) the draft law on trading 
in financial instruments; (d) the draft law amending the Law on book-entry accounts
1; (e) the draft law 
amending the Law on the financial supervisory authority2 (hereinafter collectively referred to as the ‘draft 
laws’).  
The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and fifth 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 provisions3, as the draft law relates to Suomen Pankki and payment and 
settlement systems. 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 
1.1 The ECB notes that the draft laws are aimed pr imarily at improving the technical quality of the 
legislation without making substantive changes a nd at implementing Union directives. The draft 
laws are part of a comprehensive reform of securities markets legislation, the main objectives of which are to improve the clarity and comprehensibi lity of securities markets legislation, to foster 
the competitiveness of securities markets legisla tion, to make custody and settlement operation 
more effective and more competitive, and to ease the administrative burden of listed companies
4. 
The remaining part of the reform, which incl udes the main substantive legislative changes5, is 
expected to be carried out in the near future.  
                                                 
1  Laki arvo-osuustileistä 17.5.1991/827. 
2  Laki finanssival vonnasta 19.12.2008/878. 
3  OJ L 189, 3.7.1998, p. 42.  
4  Report by the Working Group on Reform of the securities mark ets legislation, Ministry of Finance Publications 12/2011, 
p. 63.  
5  The remaining part of the reform includes, inter alia , a structural reform whereby indire ct holding of securities would be 
made available alongside the direct holding system in Finla nd and whereby the nominee registration of securities issued 
in Finland would be permitted also for Finnish investors.  
ECB-PUBLIC  
2 1.2 As regards the draft law on the book-entry system  and clearing and settlement, the main substantive 
amendments relate to the book-entry system and in particular to protection of investors’ rights as well as ensuring that authorities have access to info rmation on the ultimate holder of securities. In 
addition, the draft law on the book-entry sy stem and clearing and settlement introduces 
amendments aimed at ensuring that the central se curities depository (CSD) can act as a custodian. 
It also specifies under which circumstances a CSD may take a security off the book-entry system 
and further specifies the framework for the outsour cing of activities significant to CSD operations.  
1.3 As regards the draft law on investment services, the main substantive amendments relate to the 
custody and management of financial instruments,  which are defined as an investment service that 
cannot be provided without prior authorisation. In addition, for investment firms offering custodian 
services, it introduces a duty of emergency prepared ness planning as well as a duty to provide non-
professional clients with sufficient information on th e custody of client funds and risks associated 
with such custody. 
1.4 The main substantive amendment introduced by  the draft law amending the Law on the financial 
supervisory authority relates to clarifying the syst em of administrative sanctions available to the 
Financial Supervisory Authority and making the sanctions significantly more stringent. The 
maximum amount of administrative sanctions that the Financial Supervisory Authority can impose 
is being raised to EUR 10 000 000 for legal pe rsons and EUR 100 000 for natural persons. Under 
the current law, the maximum amounts are EUR 200 000 and EUR 1 000, respectively. 
1.5 The draft law on trading in financial instrume nts introduces a duty for the Ministry of Finance to 
request a statement from Suomen Pankki before making a decision to grant a license to operate a 
stock exchange, to revoke such a license or to  interrupt the operation of a stock exchange. 
1.6 As for the draft law amending the Law on book-entry accounts, the ECB notes that it does not 
contain relevant amendments beyond editorial changes and implementation of Union directives. 
 2. General observations 
The ECB welcomes the general objectives of the dr aft laws and notes that the new and substantive 
amendments do not raise general concerns for the ECB. 
 
3. Specific observations 3.1 Provision of clearing services by foreign clearing organisations  
Relating to the provision of clearing services by foreign clearing organisations offering services in 
Finland, the ECB reiterates its comments in paragraph 3 in its Opinion CON/2009/66
6, as these 
comments have not been taken into account in the law of 15 January 2010 and in the current draft 
laws. 
                                                 
6  All ECB opinions are published on th e ECB’s website at: www.ecb.europa.eu. 
ECB-PUBLIC  
3 3.2 Outsourcing of operational activities  
The ECB recognises that the ability of CSDs to  outsource certain operational activities is an 
important element for the development of an e fficient securities settlement  infrastructure across 
CSDs in Europe. 
3.3 Account-holding structures 
The ECB notes that the Finnish securities holding sy stem, which is also a book-entry based system,  
builds on the principle of direct holding, where the rights pertaining to the book entries are registered directly in each account holder’s book-entry account. Book-entry securities owned by a foreign individual, corporation or foundation ma y be entered in a custodial nominee account 
administered by a custodial account holder on beha lf of a beneficial owner on the basis of an 
authorisation. The ECB understands that the draf t laws are not intended to amend these securities-
holding structures and that it is planned that the possibilities to develop the indirect holding model will be examined in phase two of the compre hensive reform of Finnish securities markets 
legislation, which will follow in 2012.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 7 December 2011. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI