EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 26 October 2009 
on supervision by De Nederlandsche 
Bank of clearing and settlement services  
(CON/2009/84) 
 
Introduction and legal basis  
The Dutch Ministry of Finance did not consult the ECB on an amended draft law concerning the 
supervision of clearing and settlement instituti ons (hereinafter the ‘amended draft law’).  
The ECB’s competence to be consulted on the amended draft law is based on Article 105(4) of the Treaty 
establishing the European Community and the third and fifth indents 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 provisions
1, as the legislation relates to De Nederlandsche Bank (DNB) and 
payment and settlement systems. 
On 5 February 2007, the ECB received a request from the Dutch Ministry of Finance for an opinion on a 
draft law concerning systemic supervision of clearing and settlement institutions (hereinafter the ‘draft 
law’). The draft law stated, inter alia , that it is forbidden to provide cl earing and settlement services in the 
Netherlands without an authorisation from DNB, that DNB provides prudential supervision of the 
clearing and settlement institutions and that the Au thority Financial Markets (AFM) performs market 
conduct supervision (defined as the promotion of orde rly and transparent financial market processes). The 
ECB responded by adopting and communicating its Opinion CON/2007/72.  
The initial draft law sent for an opinion to the Dutch Council of State did not include a separate provision 
on clearing and settlement institutions established in another State. It only prohibited the provision of clearing and settlement services in the Netherlands w ithout DNB’s authorisation for that purpose. This 
prohibition applied to clearing and settlement ins titutions whether established in the Netherlands or 
another State, whereby no distinction was made between other Member States and third countries. As regards clearing and settlement institutions established in another State, no distinction was made between conducting business from a branch situated in the Ne therlands and providing services to the Netherlands. 
Hence the prohibition against unauthorised provision of clearing and settlement services applied to all 
these situations. 
At the advice of the Dutch Council of State (Raad van State), the Ministry of Finance has subsequently 
amended, in particular, the cross-border aspects of th e draft law as regards the authorisation obligations 
                                                 
1  OJ L 189, 3.7.1998, p. 42. 
2  All ECB opinions are available on th e ECB’s website at www.ecb.europa.eu. 
and requirements for providing clear ing and settlement services to par ticipants with whom
 the party 
providing the services is not affiliated in a group for the following cases: 
 for clearing and settlement institutions established in  the Netherlands intending to provide clearing 
and settlement services to participants, 
 for clearing and settlement institutions establishe d outside the Netherlands intending to provide 
clearing and settlement services to participants from a branch situated in the Netherlands, 
 for clearing and settlement institutions establishe d in a designated State intending to provide 
clearing and settlement services in the Netherlands to participants from a branch situated in the 
Netherlands who must notify DNB, 
 for clearing and settlement institutions established in a non-designated State intending to provide 
clearing and settlement services in the Netherlands to participants by providing services to the 
Netherlands, 
 for clearing and settlement institutions established in  the Netherlands which have an authorisation 
as referred to in Section 2:3.0a of the amende d draft law and intending to provide clearing and 
settlement services from a branch situated outside  the Netherlands to participants; these clearing 
and settlement institutions require prior approval.  
This amendment to the scope of the draft law does not differentiate between clearing and settlement institutions located in and outside the euro area. 
The amendments to the authorisation obligation and requirements for clearing and settlement institutions 
are substantive changes which the Ministry of Fina nce should have submitted for consultation to the 
ECB.  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. Current situation and purpose of the amended draft law  
1.1 Under the legislation in force, oversight of clearing and settlement institutions covers the 
promotion of the smooth operation of payment systems, the prevention of systemic risk, overseeing 
safety, reliability and efficiency of systems and products, maintaining c onsumers’ confidence and 
targeting (parts) of infrastructure providers. Within this oversight environment, DNB is competent for prudential aspects and the Authority Financia l Markets (AFM) for market conduct aspects.  
1.2 The ECB understands that the legislative changes contained in the amended draft law introduce the 
supervisory framework and are justified on page 5 of the Explanatory Memorandum to the amended draft law. Nevertheless, the ECB stresses that the changes in the supervisory framework 
must not prejudice the Eurosystem’s competence s, in particular in relation to oversight. 
1.3 The intended purpose of the amended draft law is to  introduce direct supervision of clearing and 
settlement institutions to strengthen and comp lement the existing oversight framework. By 
introducing direct supervision, the legislator aims to promote the solidity and continuity of clearing 
2 
 
2.
 General observations  
The draft law is intended to establish a consistent legal framework for the supervision of clearing and 
settlement institutions providing clearing and settlement services in and to the Netherlands to promote the 
reliability and stability of the market. The ECB notes the proposed introduction of direct supervision of 
clearing and settlement services to be conducted by DNB and views this as a means to complement and 
strengthen DNB’s oversight role. With a view to implementing the core tasks of the European System of Central European Banks (ESCB) under the Treaty and the Statute of the European System of Central 
Banks and of the European Central Bank (hereinafter  the ‘Statute of the ES CB’), the ECB has serious 
concerns relating to the proposed authorisation requirements for clearing and settlement institutions. Although the enforcement of the Eurosystem location policy is not the aim of the draft law, the ECB would like to point out that the way in which the authorisation requirements are set out may adversely 
affect the location policy of the Governing Coun cil for infrastructures offering services in euro. 
 
3. Location of infrastructures 3.1 The Governing Council’s location policy 
3.1.1 The location policy has been publicly expr essed on a number of occasions since the ECB’s 
establishment. Already in November 1998, the first policy statement
3 was made in which it was 
stressed, inter alia , that ‘As is the case with every central ba nk, the ECB has a direct interest in the 
prudent design and management of any paym ent and settlement system processing its own 
currency, the euro. Indeed, the smooth functioning of payment and settlement systems is a crucial 
aspect of a sound currency and essential to the conduct of monetary policy. These systems also 
have a significant bearing on the functioning of fi nancial markets. Changes in payment systems 
may cause unpredictable shifts in the demand for, or supply of, base money. Moreover, safe and efficient payment systems are critical to the main tenance of banking and financial stability. Against 
this background, … the Governing Council of the ECB wishes to underline that, as in any other 
                                                 
3  See ‘Policy statement on euro payment and settlement systems located outside the euro area’, available on the ECB’s 
website. 
3 
m
onetary system, central bank money in euro can onl y be provided by the central banks that belong 
to the euro area.’ 
3.1.2 The November 1998 statement was followed up by another policy statement in September 2001 
relating to central counterparty clearing4. Section 2(b) of this statement stated, inter alia , that the 
‘logical geographical scope of a market infrastruct ure is in practice the currency area’, and that 
domestic infrastructures for the euro5 ‘should logically be located in  the euro area, as is the case 
with core infrastructures in other monetary areas. This would be preferable from a regulatory 
perspective and would help the Eurosystem, as the “central bank” of the euro, to ensure the smooth 
functioning of payment systems, efficient moneta ry policy implementation and financial stability.’ 
It also stated that the ‘location of central c ounterparties in the euro area would facilitate the 
provision, when deemed necessary and appropriate, of  central bank money in euro.’ In this regard, 
point b) of the conclusions stresses that ‘The natural geographical scope for any “domestic” market infrastructure (including central counterparty clearing) for securities and derivatives denominated in euro is the euro area. Given the potentia l systemic importance of securities clearing and 
settlement systems, this infrastructure s hould be located within the euro area.’ 
3.1.3 The Governing Council’s location policy is expressly based on the premise that ‘the ECB and the 
national central banks of the Eurosystem (the centra l banks of issue) need to retain, in any event, 
ultimate control over their currency, the euro. Therefore, from both a general policy and systemic risk perspective, the Eurosystem cannot, as a matter of principle, accept that payment 
infrastructures for euro transactions which are located outside the euro area (the home currency area) have the potential to develop into major euro payment infrastructures, particularly if this were 
to put at stake the Eurosystem’s control over the euro’
6.  
3.1.4 The Governing Council confirmed its location policy more recently in relation to central 
counterparties for over-the-counter derivatives in December 2008 and July 20097.  
3.2 Location policy and Treaty freedoms 
3.2.1 As to whether the Governing Council’s locati on policy could be seen to  pose any regulatory or 
legal issues related to the concept of the internal  market, it is recalled that Article 14(2) of the 
Treaty states that the internal market comprises ‘an area without internal frontiers in which the free 
movement of goods, persons, services and capital is  ensured in accordance with the provisions of 
this Treaty’. These freedoms are further regulated  in particular in Title III of the Treaty 
(Articles 39-60) and also apply to the Eurosystem  (because Article 1.1 of the Statute of the ESCB 
provides that the ESCB and the ECB must perform  their tasks and carry out their activities ‘in 
                                                 
4  See ‘The Eurosystem’s policy line with regard to consolidation in central counterparty clearing’, available on the ECB’s 
website. 
5  A domestic system is defined in the policy statement as a system ‘which handles mainly or exclusively assets 
denominated in one currency’. 
6  See paragraphs 2 and 3 of ‘The Eurosystem policy principles on the location and operation of infrastructures settling 
euro-denominated payment transact ions’, published on 19 July 2007 and available on the ECB’s website. 
7  See ‘Decisions taken by the Governing Council of the E CB (in addition to decisions setting interest rates)’ for 
December 2008 and July 2009, available on the ECB’s website. 
4 
accordance
 with the provisions of [the] Treaty and [t he] Statute’). Furthermore, Article 3(1)(c) of 
the Treaty provides that the establishment of an in ternal market characterised by the abolition, as 
between Member States, of obstacles to the free movement of, inter alia , services and capital is one 
of the activities of the Community. Moreover, under Ar ticle 4(1) of the Treaty, the activities of the 
Member States and the Community include the ad option of an economic policy which is based, 
inter alia , on the internal market. From the foregoing,  it is evident that the establishment and 
functioning of the internal market is one of  the core activities of the Community itself. 
3.2.2 The Treaty freedoms underlying the internal market  must be seen in the context of the Treaty as a 
whole. In this respect, the ECB emphasises that the tasks of the Community are identified under 
Article 2 of the Treaty as being achieved ‘by establishing a common market and an economic and monetary union’. Moreover, Article 4(2) of the Treaty states that ‘concurrently with the foregoing’ (i.e. with the adoption of an economic policy based, inter alia , on the internal market), the activities 
of the Member States and the Community include, inter alia , the introduction of a single currency 
and the definition and conduct of a single monetary policy, the primary objective of which is ‘to maintain price stability and, without prejudice to  this objective, to support the general economic 
policies in the Community, in acco rdance with the principle of an open market economy with free 
competition’. 
3.2.3 The Eurosystem’s tasks relating to monetary policy, payment systems and financial stability are 
inextricably linked to the Governing Council’s a bovementioned statement in July 2007 that the 
Eurosystem central banks ‘need to retain, in an y event, ultimate control over their currency, the 
euro’. While the Eurosystem generally has to comp ly with the Treaty freedoms and, in particular, 
has to consider their implications if it wishes to make use of its regulatory power to ensure efficient and sound clearing and payment systems, this does not mean that the ECB may not impose 
measures that would have an impact on the Treaty freedoms, if such measures are strictly warranted in order to perform the Eurosystem’s basi c tasks. In this respect, the ECB considers that 
it is highly significant that, under the Treaty, the Eurosystem’s monetary policy, financial stability and oversight tasks only apply to those Member States that have adopted the euro. 
3.3 Location policy and oversight of clearing and settlement systems 
3.3.1 In order to perform its core tasks, the Eurosystem needs to en sure the safety and efficiency of 
systems processing the euro. In the case of an in frastructure located outside the euro area, the 
Eurosystem’s ability to oversee these systems an d to detect risks that could jeopardise the 
performance of its abovementioned core tasks at an  early stage is undermined due to a mismatch 
between public responsibilities and public powers. Fo r instance, as highlighted by the ‘Eurosystem 
Oversight Policy Framework’ of February 2009
8, cooperative oversight arrangements at 
international level can mitigate the loss of direct  influence to some extent, but cannot ensure the 
same level of influence of the issuing central bank as direct oversight, especially in a crisis 
situation, where access to timely information by  the issuing central bank may not be possible.  
                                                 
8  Available on the ECB’s website. 
5 
6 3.3.2 Consequently, if such risks ar e not identified and addressed at an early stage, the malfunctioning of 
infrastructures located outside the euro area proce ssing the euro could lead to spill-over effects to 
infrastructures within the euro ar ea. Direct Eurosystem oversight, which is possible provided that 
infrastructures are located in th e euro area, is key to ensuri ng the safety and efficiency of 
infrastructures processing the euro and thus to maintaining ultimate control over the euro.  
3.3.3 It is appreciated that the requirements that n eed to be met to obtain an authorisation to provide 
clearing and settlement services in or to the Netherlands will ensure that the clearing and settlement 
institutions do not constitute a risk to the investors’ interests and to financial stability in general. DNB grants the authorisation. These requirements  are to ensure the safety and efficiency of the 
systems in question.  
3.3.4 Furthermore, under the draft law an authorisa tion is required to provide clearing and settlement 
services in the Netherlands to participants with whom the clearing and settlement institution is not 
affiliated in a group by providing these services to  the Netherlands. This does not prevent these 
services from being provided from outside the euro area, including through a branch outside the Netherlands.  Considering that clearing and settlement institutions are vital in ensuring and 
promoting the stability of the financial system, the ECB considers that the Eurosystem’s direct oversight over infrastructures processing transactions in euro is crucial and that the need for this is 
also more necessary as the draft law does not directly address crisis management. 
3.3.5 Consequently, the ECB is of the view that the possibility for clearing and settlement institutions not 
located in the euro area to provide services proc essing the euro, without requiring the Eurosystem 
to have sufficient means to ensure their safety, has the potential of undermining the Eurosystem’s control over the euro and the prope r performance of its core tasks. 
3.3.6 Finally, the ECB reiterates its advice in Op inion CON/2007/7, and also in Opinion CON/2006/20, 
according to which oversight over payment systems, including market conduct, should be explicitly assigned to DNB in accordance with Article 105(2)  of the Treaty and Article 22 of the ESCB 
Statute. 
 
This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 26 October 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET