European Monetary Institute Opinion on a consultation from the Irish Ministry of finance under Article 109f (6) of the Treaty establishing the European Community as amended by the Treaty on European Union and Article 5.3 of the Statute of the EMI on a proposal for a Stock exchange bill (CON/94/11)
Date: 1995-01-03
Institutions: European Monetary Institute
Subjects: European System of Central Banks, Ireland, accountant, central bank, financial institution, financial stability, financial supervision, stock exchange

EUROPEAN MONETARY INSTITUTE

OPINION ON A CONSULTATION FROM THE IRISH MINISTRY OF FINANCE UNDER ARTICLE

109F (6) OF THE  TREATY ESTABLISHING THE EUROPEAN COMMUNITY AS AMENDED BY

THE TREATY ON EUROPEAN UNION AND ARTICLE 5.3 OF THE STATUTE OF THE EMI

ON A PROPOSAL FOR A STOCK EXCHANGE BILL (CON/94/11)

1

On 16th December 1994 the Irish Ministry of Finance consulted the EMI under Article 109f (6) of

the  Treaty  establishing  the  European  Community  as  amended  by  the  Treaty  on  European  Union

(the “Treaty”) and Article 5.3 of the Statute of the EMI on a proposal for a Stock Exchange Bill

of  which  the  text  and  an  explanatory  memorandum  were  submitted  to  the  EMI.  Pursuant  to

Article 4 of the Council Decision of 22nd November 1993 on the consultation of the EMI by the

authorities  of  the  Member  States  on  draft  legislative  provisions  (93/717/EC)  a  time  limit  of  one

month was set for the submission of the EMI’s opinion.

2

The  proposed  Bill  transfers  the  regulatory  and  supervisory  authority  for  Irish  stock  exchanges  to

the Central Bank of Ireland. This includes the competence for the approval to operate as a stock

exchange,  the  granting  of  membership  of  stock  exchanges,  certain  aspects  concerning  the

appointment of auditors and the authority to impose various requirements on member firms. Thus,

the status and powers of a national central bank in the sense of Article 1, Section 1, second indent,

of  the  above  Council  Decision  are  at  stake  and  the  EMI  is  therefore  competent  to  deal  with  the

subject matter. In  this  respect,  reference  may  also  be  made  to  Article  109j  of  the  Treaty  (which

empowers  the  EMI  to  monitor  and  report  on  progress  made  by  Member  States  towards  the

compatibility of national legislation, including the statutes of its  national central bank, with Articles

107  and  108  of  the  Treaty  and  the  Statute  of  the  ESCB/ECB)  as  well  as  Article  14.4  of  the

Statute  of  the  ESCB/ECB  (which  states  that  national  central  banks  may  perform  functions  other

than  those  specified  in  the  Statute  of  the  ESCS/ECB,  unless  the  Governing  Council  finds,  by  a

majority  of  two  thirds,  that  these  interfere  with  the  objectives  and  tasks  of  the  ESCB).  Finally,

another basis for the EMI’s competence might be found in the fifth indent of Article 1, Section 1,

of  the  above  Council  Decision  as  supervision  of  stock  exchanges  and  the  stability  of  financial

markets may be considered as interrelated.

3

It  is  recognised  that  the  institutional  organisation  of  prudential  supervision  differs  in  the  Member

States  of  the  European  Union.  As  well  known,  the  main  distinction  is  between  those  Member

States  in  which  prudential  supervision  is  attributed  to  the  central  bank  and  those  in  which  an

agency  of  the  executive  power  is  entrusted  with  such  supervision.  Whilst  attribution  to  central

banks  of  supervision  of  stock  exchanges  and  their  members  is  not  a  common  feature  in  the

institutional  organisation  of  prudential  supervision  in  the  Member  States,  the  proposed  Bill  is  not

incompatible with the Treaty on European Union and in particular the Protocol on the Statute of

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the ESCB/ECB. The Treaty accepts the idea that the national central banks and also the ECB (at

least  to  a  certain  extent)  are  involved  in  prudential  supervision  of  credit  institutions  and  other

financial institutions (see, inter alia, Article 105 (5) and (6) of the Treaty). The manner in which

this  supervisory  framework  is  elaborated  for  Irish  stock  exchanges  in  the  proposed  Bill  does  not

give rise to any specific issues which, in the EMI’s view, need to be addressed in this opinion.

3rd January 1995