Opinion of the European Central Bank of 10 March 2006 at the request of Lietuvos bankas on a draft law supplementing Article 45 of the Law on the securities market (CON/2006/16)
Date: 2006-03-10
Institutions: European Central Bank
Subjects: Lithuania, national law, payment system, securities

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 March 2006  

at the request of Lietuvos bankas 

on a draft law supplementing Article 45 of the Law on the securities market 

(CON/2006/16) 

1. 

On 20 January 2006 the European Central Bank (ECB) received a request from Lietuvos bankas for 

an opinion on a draft law supplementing Article 45 of the Law on the securities market (hereinafter 

the ‘draft law’). The ECB’s competence to deliver an opinion is based on 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 provisions1, as the draft law relates 

to  Lietuvos  bankas  and  securities  settlement  systems.  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. 

2. 

The  ECB  understands  that  the  main  objective  of  the  draft  law  is  to  provide  a  possibility  for 

Lietuvos  bankas  to  join  the  correspondent  central  banking  model  (CCBM).  The  draft  law  is 

intended to enter into force on adoption of the euro in Lithuania. In particular, the draft law amends 

Article  45  of  the  Law  on  the  securities  market  by  expressly  providing  for  cases  where  securities 

held  with  the  Lithuanian  Central  Securities  Depository  (LCSD)  are  pledged  or  transferred  under 

repurchase  agreements  to  the  ECB  or  the  national  central  banks  (NCBs).  The  draft  law  also 

provides that the accounts in which book-entries are made will be opened in the name of Lietuvos 

bankas  and  that  Lietuvos  bankas  may  give  instructions  to  the  LCSD  regarding  the  disposition  of 

securities in these accounts.  

3. 

The CCBM, which has been established and developed by the European System of Central Banks 

(ESCB),  enables  NCBs  to  hold  collateral  on  behalf of  other  ESCB  members.  In  this  context,  the 

ECB welcomes the proposed amendment to Article 45 of the Law on the securities market which 

will prove useful for securities held with the LCSD as collateral for Eurosystem credit operations.  

4.  With respect to collateralisation techniques in the draft law, Lietuvos bankas may consider broader 

wording  covering  all  possible  title  transfer  techniques,  as  well  as  outright  transfer  of  securities 

which  may  be  used  in  the  CCBM  framework,  and  not  only  pledge  and  repurchase  agreements 

which are currently mentioned in Article 1(2) of the draft law.  

1  

OJ L 189, 3.7.1998, p. 42. 

 
 
 
                                                      
5. 

The ECB understands that the scope of the draft law is restricted to securities. Lietuvos bankas may 

consider evaluating whether the Lithuanian legal framework would allow for the handling of other 

assets eligible as collateral for Eurosystem credit operations, e.g. bank loans.  

6. 

The ECB also understands that the draft law does not intend to regulate the possibility to transfer 

securities  to  the  ECB  and  NCBs  through  direct  links  between  the  LCSD  and  other  securities 

settlement systems. However, the draft law may appear to imply that the use of direct links is not 

possible.  In  order  to  avoid  any  misinterpretation,  the  draft  law  should  contain  broader  wording 

clarifying that securities may also be transferred by using such links.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 10 March 2006. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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