EN Official Journal of the European Union C 13/1

OPINION OF THE EUROPEAN CENTRAL BANK

of 8 January 2010

on three proposals for regulations of the European Parliament and of the Council establishing a European Banking Authority, a European Insurance and Occupational Pensions Authority and a European Securities and Markets Authority

(CON/2010/5)

2010/C 13/01

Introduction and legal basis

On 6 October 2009 the European Central Bank (ECB) received a request from the Council of the European Union for an opinion on: 1. a proposal for a regulation of the European Parliament and of the Council establishing a European Banking Authority (1) (hereinafter the ‘proposed EBA regulation’); 2. a proposal for a regulation of the European Parliament and of the Council establishing a European Insurance and Occupational Pensions Authority (2) (hereinafter the ‘proposed EIOPA regulation’); and 3. a proposal for a regulation of the European Parliament and of the Council establishing a European Securities and Markets Authority (3) (hereinafter the ‘proposed ESMA regulation’).

The ECB’s competence to deliver an opinion on each of the three proposed regulations (hereinafter the ‘proposed regulations’) is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union since the proposed regulations contain provisions affecting the European System of Central Banks’ (ESCB’s) contribution to the smooth conduct of policies relating to the prudential supervision of credit institutions and the stability of the financial system, as referred to in Article 127(5) of the Treaty. Since the three texts relate to the establishment of the three new European supervisory authorities (ESAs) which will form part of the European System of Financial Supervision (ESFS), the ECB has, for the sake of simplicity, adopted a single opinion on the proposed regulations.

The observations contained in this opinion must be read in conjunction with ECB Opinion CON/2009/88 of 26 October 2009 on a proposal for a regulation of the European Parliament and of the Council on Community macro-prudential oversight of the financial system and establishing a European Systemic Risk Board and a proposal for a Council decision entrusting the European Central Bank with specific tasks concerning the functioning of the European Systemic Risk Board (hereinafter the ‘proposed ESRB regulation’ and the ‘proposed ESRB decision’ respectively); these two proposals form part of the legislative package adopted by the Commission on 23 September 2009 in view of the reform of European financial supervision (4).

Furthermore, these observations are without prejudice to the future ECB opinion on the amendments proposed by the Commission to the Community financial sector legislation as a necessary complement to the abovementioned legislative package (hereinafter the ‘proposed Omnibus directive’) (5) and possible other ECB opinions on any other draft legislation adopted in the context of this package.

The issues covered in the present opinion are limited to those related to the establishment and functioning of the ESAs which are of direct relevance to the ECB/ESCB and to the ESRB.

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.

General observations

The proposed European Union institutional framework for supervision

1. The proposed regulations are part of a comprehensive review of the EU institutional framework for supervision, which includes both the enhancement of micro-prudential supervision through the establishment of the ESAs, and the designation of the ESRB as a new independent body, responsible for safeguarding financial stability by conducting macro-prudential supervision at the European level, with the conferral of specific related tasks on the ECB on the basis of Article 127(6) of the Treaty. The ECB broadly welcomes the proposed institutional framework. The ECB takes note in this respect that the Ecofin Council agreed on a general approach on the proposed framework on 2 December 2009 (6).

The ESAs and approximation of laws in the financial sector

2. On 18-19 June 2009, the European Council called for the establishment of a European single rulebook applicable to all financial institutions in the single market (7). The proposed regulations reflect the need to introduce an effective instrument to establish harmonised technical standards in financial services to ensure, through a single rulebook, a level playing field and an adequate protection of depositors, investors and consumers in Europe (8). The ECB welcomes this approach in view of its long-standing support for the development of an EU financial services rulebook. Moreover, the ESAs, as bodies with highly specialised expertise, are well placed to assist in the process of harmonisation in the financial sector by contributing to the establishment of high quality common regulatory and supervisory practices, in particular by providing opinions to the EU institutions and by developing guidelines, recommendations, and draft technical standards (9).

Specific observations

Relation between the ESAs and the ESRB

3. The ECB strongly supports efficient institutional arrangements for cooperation between the ESAs and the ESRB. This requires effective information sharing procedures in order to ensure a smooth interaction of supervision at the macro-prudential and micro-prudential levels and the timely access of the ESRB to all relevant information required to perform its duties, including micro-prudential information relevant for macro-prudential analysis (10). The ECB notes in this respect that one of the main tasks of the ESAs will concern cooperation with the ESRB, in particular by providing the latter with the information necessary for the achievement of its tasks (11). In this context, while the ECB welcomes the fact that the proposed regulations provide for the close involvement of the ESRB within the new micro-prudential institutional framework, it suggests an amendment with a view to ensuring that any obstacles to smooth flows of information between the ESRB and the ESFS are removed (see in this respect the proposed amendment 7). These proposed rules on exchange of confidential information under the proposed regulations will complement the other relevant EU rules on these matters, including the proposed ESRB regulation.

Relation between the ESAs and the ESCB

4. In line with Article 127(5) of the Treaty, the ECB and the national central banks (NCBs) of the ESCB are closely involved, given their competences and technical expertise, in the current EU financial architecture. The proposed regulations should also ensure an adequate institutional involvement and participation of the ECB and, where appropriate, of the NCBs of the ESCB, as regards the ESAs and newly established committees.

5. More specifically, the ESCB’s involvement in payment, clearing and settlement systems reflects the task assigned to it by Article 127(2) of the Treaty of promoting the ‘smooth operation of payment systems’. Safe and efficient post-trading infrastructures for securities markets are a critical component of the financial system and any malfunctioning of securities clearing and settlement systems can have serious systemic repercussions for the smooth functioning of payments systems, as well as for financial stability. In the light of the central banks’ oversight tasks concerning payment, clearing and settlement systems, effective cooperation between central banks in their oversight capacity and supervisory authorities is required (12).

6. Recent events have confirmed that central banks may be extensively involved in the context of a crisis situation as suppliers of liquidity to the banking system. This is particularly the case when a crisis materialises through an event relating to the liquidity conditions in the money markets and/or to the functioning of payment or securities settlement systems (13). Against this backdrop, central bank access to supervisory information on financial institutions may be relevant to the conduct of macro-prudential monitoring, the oversight of payment, clearing and settlement systems and the safeguarding of financial stability in general (14). While gateways for information sharing already exist in the context of EU financial sector legislation between competent authorities and central banks (15), it should be ensured for both substantive and consistency reasons that the proposed regulations provide for equivalent arrangements as regards the exchange of information between the ESAs and the ESCB when conducting their respective tasks.

ESAs and compliance with the monetary financing prohibition

7. When an NCB is a competent authority for the supervision of credit and/or financial institutions under national law, the NCB’s performance of this task cannot constitute prohibited monetary financing under Article 123 of the Treaty. Insofar as the financing of each ESA consists, in particular, of obligatory contributions from the national authorities competent for the supervision of credit and/or financial institutions (16), it is not contrary to the prohibition of monetary financing for an NCB to contribute to the revenues of the ESA which, in such circumstances, would only involve the financing by the NCB of the performance of its own supervisory tasks.

Drafting proposals

Where the ECB recommends that the proposed regulations are amended, a specific drafting proposal (based on the text of the proposed EBA regulation (17)) is set out in the Annex accompanied by explanatory text to this effect.

Done at Frankfurt am Main, 8 January 2010. The President of the ECB Jean-Claude TRICHET

(1) COM(2009) 0501 final.

(2) COM(2009) 0502 final.

(3) COM(2009) 0503 final.

(4) Following the entry into force of the Treaty on European Union and the Treaty on the Functioning of the European Union (‘TFEU’) on 1 December 2009, the new legal basis for the proposed regulations and for the proposed ESRB regulation is Article 114 TFEU (ex Article 95 of the Treaty Establishing the European Community (‘TEC’)). The new legal basis for the proposed ESRB decision is Article 127(6) TFEU (ex Article 105(6) TEC)), which implies that the proposed ESRB decision will be converted into a regulation.

(5) The ECB was formally consulted by the Council on 25 November 2009 on the proposal for a Directive of the European Parliament and of the Council amending Directives 1998/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC, and 2009/65/EC in respect of the powers of the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, COM(2009) 0576 final.

(6) See the proposal for a regulation of the European Parliament and of the Council establishing a European Banking Authority (EBA) — Presidency compromise agreed by the Ecofin Council [2009/0142(COD) — 16748/1/09 REV1], the proposal for a regulation of the European Parliament and of the Council establishing a European Insurance and Occupational Pensions Authority (EIOPA), Presidency compromise (2009/0143(COD) — 16749/1/09 REV1) and the proposal for a regulation of the European Parliament and of the Council establishing a European Securities and Markets Authority (ESMA), Presidency compromise (2009/0144(COD) — 16751/1/09 REV1).

(7) See the Presidency Conclusions of the European Council of 18-19 June 2009, p. 8 and the Conclusions of the Ecofin Council of 9 June 2009, available at http://www.europa.eu

(8) See recital 14 of the proposed EBA regulation, recital 14 of the proposed ESMA regulation and recital 13 of the proposed EIOPA regulation.

(9) See Article 6(1)(a) of the proposed regulations.

(10) See in this respect the de Larosière High-Level Group report on financial supervision in the EU of February 2009, the Communication of the Commission of 27 May 2009 on European financial supervision (COM(2009) 0252 final), the Ecofin Council Conclusions of 9 June 2009, and the proposed regulations (paragraphs 6.2.2 and 6.3 of the explanatory memorandum to the proposed EBA regulation and the corresponding paragraphs in the explanatory memoranda to the two other proposed regulations).

(11) See, for instance, Article 6(1)(d) of the proposed regulations.

(12) See Eurosystem Oversight Report 2009, November 2009, available at: http://www.ecb.europa.eu

(13) See in this respect the Memorandum of Understanding on cooperation between the financial supervisory authorities, central banks and finance ministries of the EU on cross-border financial stability, June 2008, available at http://www.ecb.europa.eu

(14) See in this respect paragraphs 2.1 to 2.4 of ECB Opinion CON/2006/15 of 9 March 2006 at the request of the Polish Minister of Finance on a draft law on the supervision of financial institutions. See also paragraphs 13 to 15 of ECB Opinion CON/2009/17 of 5 March 2009 at the request of the Council of the European Union on a proposal for a Directive of the European Parliament and of the Council amending Directives 2006/48/EC and 2006/49/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements and crisis management.

(15) See, for instance, Article 12 of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (OJ L 35, 11.2.2003, p. 1), Article 58(5) 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 (OJ L 145, 30.4.2004, p. 1), Article 49 of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (OJ L 177, 30.6.2006, p. 1), and Article 70 of the Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II) (recast) (OJ L 335, 17.12.2009, p. 1).

(16) See Article 48(1)(a) of the proposed regulations.

(17) Except for the last three amendments since Amendments 11 and 12 relate to the proposed ESMA regulation and Amendment 13 relates both to the proposed ESMA and EIOPA regulations. Amendments 9 and 10 only relate to the proposed EBA regulation.