EN
OPINION OF THE EUROPEAN CENTRAL BANK
of 18 March 2002
at the request of the Danish Financial Supervisory Authority on a draft act
amending the Financial Services Act and other financial Acts
(CON/2002/10)
1. On 22 February 2002 the European Central Bank (ECB) received a request via Danmarks
Nationalbank from the Finanstilsynet  (Danish Financial Supervisory Authority) on behalf of the
Økonomi- og Erhvervsministeriet (Ministry of Economics and Business Affairs)  for an opinion
on a draft act amending the Lov om finansiel virksomhed  (Financial Services Act) and other
financial Acts (hereinafter referred to as 'the draft act').
2. The ECBs competence to deliver an opinion is based on Article 105(4) of the Treaty
establishing the European Community and the third and sixth  indents concerning national
central banks and the stability of financial institutions and markets of Article 2(1) of the CouncilDecision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank bynational authorities regarding draft legislative provisions
1, as the draft act, amongst others,
contains provisions concerning the supervision of company pension funds, demarcation of thepowers to issue rules on best practices for securities traders, and the legal position of creditorsof bonds and currency swaps issued and entered into by Danish Ship Finance ( Danmarks
Skibskreditfond ) in case of the latter's insolvency. Some of the provisions of the draft act will
also apply to Danmarks Nationalbank. In accordance with the first sentence of Article 17.5 ofthe Rules of Procedure of the European Central Bank, the Governing Council of the ECB hasadopted this opinion.
3. In December 2000 the ECB was consulted on the draft Lov om finansiel virksomhed  (Financial
Services Act) (CON/00/32). The intention of the draft was to ensure simplification andincreased consistency of the financial services legislation. On that occasion the ECB welcomedthe intention to further review at a later stage the financial services legislation which is now oneof the intentions of the draft act. Likewise, the ECB also on this occasion welcomes the
                                                     
1 OJ L 189, 3.7.1998, p. 42.
2intention to continue the legal reform work with further harmonisation and codification, as well
as restructuring of legislation. 
4. The draft act ensures that the rules on best practices for securities traders are further harmonised
and intends to remove overlapping of the powers of the relevant Danish authorities in this field.As regards the calculation of solvency ratios, the draft act amends the definition of capital inline with international agreements reached within the Basel Committee. The draft act alsoensures that bonds issued by Danish Ship Finance obtain the same preferential position in caseof insolvency as that currently enjoyed by bonds issued by mortgage credit institutions. Finally,the draft act contains several amendments to other financial laws of minor importance for theECB. To the extent that the draft act implem ents directives such as Council Directive
93/22/EEC of 10 May 1993 on investment services in the securities field
2, as last amended by
Directive 2000/64/EC of the European Parliament and the Council3, and Directive 2000/12/EC
of the European Parliament and of the Council of 20 March 2000 relating to the taking up andpursuit of the business of credit institutions
4, as last amended by Directive 2000/28/EC5, the
Danish authorities are not obliged to consult the ECB, in accordance with Article 1(2) ofCouncil Decision 98/415/EC.
5. The draft act ensures in Section 1(9)-(10) demarcation of the competence to issue rules on best
practices for securities traders. Det Finansielle Virksomhedsråd  (Financial Services Council),
which is empowered to take decisions regarding supervisory matters of general publicimportance and provides advice to the Danish Financial Supervisory Authority on issuingregulations, will have the exclusive power to issue rules on best practices applying in general tofinancial services equivalent to the power to issu e rules on best practices specifically in the field
of securities trading held by the Fondsrådet  (Securities Council), which operates to ensure the
smooth functioning of the Danish securities market and compliance with the lov om
værdipapirhandel  (Securities Trading Act). As a consequence, the Forbrugerombudsmanden
(Consumer Ombudsman) will no longer be empowered to issue such rules, but will be able toattend without the right to vote the meetings of the Financial Services Council when casesconcerning best practices are discussed. The ECB welcomes these efforts for a cleardemarcation of authority and thus greater legal certainty.
6. In Opinion CON/00/32 the ECB mentioned that in adopting the rules on best practices,
particular attention might be paid to their convergence with respective rules of other countriesso as to ensure high standards in business practices. In addition, close cooperation with therespective rule-making authorities of other Member States was encouraged by the ECB in orderto achieve a high degree of convergence of practices throughout the Community. In this respect
                                                     
2OJ L 141, 11.6.1993, p. 27.
3OJ L 290, 17.11.2000, p. 27.
4OJ L 126, 26.5.2000, p. 1.
5OJ L 275, 27.10.2000, p. 37.
3it is noted that the provisions on best practice in the draft act are based on the principles on best
practices issued by the International Organisation of Securities Commissions (IOSCO). 
7. It is noted that although Danmarks Nationalbank is not a securities trader, the provisions
governing such traders apply to it, however, wi th the exemptions required due to the special
nature of the central bank. 
8. The ECB welcomes the amendments to the definition of own funds when calculating the
solvency ratio, which are intended, first, to simplify the regulations and, secondly, to increaseaccess by institutions to funding sources. On the former, the rules on capital adequacy will besimplified by the repeal of the existing but unused provision according to which subordinatecapital with a short maturity is part of the solvency statement. On the latter, the possibility isintroduced of raising capital in a foreign currency, which receives supervisory recognition incalculating the solvency ratio. Improved market access will tend to improve the solvency ofbanks and thus will, with due regard to the quality of the funds, contribute to the stability of thefinancial system. The ECB notes, however, that the general remarks in the draft act refer toguidance from the Basel Committee. Given the focus and scope of application of the FinancialServices Act, a reference to the relevant EU directive appears desirable. 
9. It is noted that Section 4(12) of the draft act repeals the  lov om tilsyn med firmapensionskasser
(Act on Supervision of Company Pension Funds) but that equivalent provisions are inserted in
the Financial Services Act and lov om forsikringsvirksomhed  (Insurance Services Act) as a
further step towards harmonisation of regulation of the financial markets. 
10. Section 16(1)-(2) of the draft act is intended to ensure that bonds issued by Danish Ship Finance
can continue to be considered as being financially sound. The objective of Danish Ship Financeis to finance ships. Most loans are granted in US dollars and funded through bond issues. Thesebonds will obtain the same preferential treatment in case of insolvency as bonds issued bymortgage credit institutions, which is better than would be the case according to the generalapplicable provision under the konkursloven  (Insolvency Act). The ECB has no objections to
the proposed amendment. It is noted that such bonds, denominated in Danish kroner, are eligibleas collateral for ECB intraday credit to Danmarks Nationalbank and also to three nationalcentral banks of the Eurosystem. 
411. The ECB confirms that it has no objection to the competent national authorities making this
opinion publicly available at their discretion.
Done at Frankfurt am Main on 18 March 2002.
The President of the ECB
[signed]
Willem F. DUISENBERG