EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 13 August 2013   
on the provision of collateral to Danmarks Nationalbank through automatic collateralisation  
(CON/20 13/60) 
 
Introduction and legal basis  
On 12 July 2013 , the European Central Bank (ECB) received a requ est from the Danish Financial 
Supervisory Authority ( Finanstilsynet ) (FSA)  for an opinion on a draft law amending the financial 
legislation  (hereinafter the ‘draft law ’)1. 
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 third , fifth and sixth 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 p rovisions2, as the draft law relates to Danmarks Nationalbank , 
payment and settlement systems  and rules applicable to financial institutions insofar as they materially 
influence the stability of financial institutions and markets . In accordance with the fi rst 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 law  
1.1 The draft law introduces a number of amendments to the Danish financial legislation , of which the 
main purpose is to improv e private enterprises ’ access to funding3. The following issues covered by  
the draft law fall within the ECB ’s competence.  
1.2 The draft law amends the rules on automatic collateralisation4, which is a special procedure fo r the 
provision of collateral to Danmarks Nationalbank. Established pursuant to Section 55 of the Law 
on securities  trading , automatic collateralisation is an intraday credit operation in central bank 
money which the buyer may choose when  settling payments  or securities transactions. Intraday 
credit provision is collateralised with securities already held by the debtor  (collateral -on-stock), or 
through the eligible securities that are being purchased (collateral -on-flow).  
                                                 
1  The draft  law amends the Law on financial business, the Law on securities trading, the Criminal Act, the Law on 
administration of justice, the Law on a lternative investment fund managers and other laws and is expected to  be 
submitted to Parliament in the autumn session  of 2013 . 
2  OJ L 189, 3.7.1998, p.  42. 
3  This is to be done by establishing an improv ed framework for developing the corporate bond market.  
4  See Section  2(7) of the  draft law and part 2.8 of the explanatory m emorandum of the draft law . 
ECB -PUBLIC  
2 1.3 Automatic collateralisation can not currently be used for loans outside the scope of Section 55 of 
the Law on securities trading , i.e. monetary -policy loans, intraday -credit granted by Danmarks 
Nationalbank not used for settlement or loans for cash depots . The d raft law extends the appli cation 
of the rules on automatic collateralisation to all intraday -credit granted by Danmarks Nationalbank 
to participants with a  current account at Danmarks Nationalbank. The amendment is motivated by 
the need to ensure that retail payments and large paym ents made by consumers and retailer s can be 
settled considerably faster than at present. It is also envisaged that this more flexible settlement 
model  will be needed to facilitate future use of TARGET2 -Securities for settlement of financial 
transactions . 
1.4 The draft law also introduces further measures to strengthen the financial sector and ensure 
efficient enforcement by the FSA:  
(a) In order to avoid conflicts of interest and to ensure the independence of the board of 
directors of a foundation or an associa tion owning a mortgage -credit limited company , the 
procedure for appoint ing the  members f or the  board of directors of these  foundations or 
associations is made more transparent5.  
(b) The FSA may publish the orders it has given a financial entity to correct mi sleading 
information that the entity  has published about itself6. This will be done by extending the 
scope of this rule to financial entities not already  covered in the Law on financial business . 
(c) The procedures used for appeals to the FSA with regard to  decisions taken  by operators of 
regulated markets, multilateral trading facilities, clearing depositories and central securities 
depositories  in accordance with such  entities' own rules  are amended7. Consequently, it will 
no longer be possible to appeal to t he FSA against decisions made in accordance with these 
entities' own rules , which are of a private law character . Instead , their rules will be 
interpreted in accord ance with  standard private law rules of interpretation and disputes 
arising from those  decis ions will be decided by the courts. The FSA’s competence will 
continue to cover decisions made by  these entities take n in accordance with the law or rules 
issued pursuant to  the law8. 
 
2. General observations   
2.1 The ECB welcomes the proposed amendments t o the Danish financial legislation, which provide 
for the moderni sation of the Danish payment and settlement infrastructures , better use of available 
collateral  and enhanced transparency of the financial sector.  
                                                 
5  See Section  1(55) of the draft law and part 2.4 of the explanatory memorandum.  
6  See Section s 2(10 ), 6(7), 7(5), 10(5), 11(4), 12(1), 13(1), 14(5), 15(3), 16(3), 17(2) and 18(3)  of the draft law as well as  
part 2. 14 of the explanatory memorandum . 
7  See Section 2(11) a nd (12) of the draft law , which amend Section 88 of the Law on securities trading , and part 2.11 of the 
explanatory memorandum.  
8  See part 2.11 of the explanatory memorandum.  
ECB -PUBLIC  
3 2.2 In line with  Opinion CON/2012/1049, the ECB notes the increased openness regarding the work of 
the FSA , which aims to bring about greater transparency , as well as efficient enforcement in the 
financial area. When considering measures aimed t o achiev e increased openness and information -
sharing, i t is however necessary to ensure that confidential information is adequately protected10. 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 13 August 2013 . 
 
[signed]  
 
The Vice-President of the ECB  
Vítor CONSTÂNCIO  
                                                 
9  See paragraph 3.2 of Opinion CON/2012/104. All ECB o pinions are published  on the ECB's website at 
www.ecb.europa.eu.  
10  See paragraph 3.10 of Opinion CON/2011/5.