Opinion of the European Central Bank of 21 May 2008 at the request of the Polish Minister for Finance on a draft law amending the Law on trading in financial instruments and other legislation (CON/2008/20)
Date: 2008-05-21
Institutions: European Central Bank
Subjects: Poland, central bank, financial supervision, national law, payment system, securities

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 21 May 2008 

at the request of the Polish Minister for Finance on a draft law amending the  

Law on trading in financial instruments and other legislation 

(CON/2008/20) 

Introduction and legal basis 

On 28 February 2008 the European Central Bank (ECB) received a request from the Polish Minister for 

Finance for an opinion on draft legislative provisions amending Polish laws in the area of capital market 
regulation1.  

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community 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  provisions2,  as  the  draft  law  relates  to  Narodowy  Bank  Polski  (NBP),  to  payment  and 

settlement systems and to rules applicable to financial institutions insofar as they materially influence the 

stability of financial institutions and markets. 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.  

The purpose of the draft law and the scope of the consultation 

1.1   The  legislative  package  subject  to  the  current  ECB  consultation  will  transpose  a  number  of 
Community  directives  into  the  Polish  legal  system3  and  make  other  amendments  that  do  not 

directly relate to implementation requirements. The ECB was already consulted on draft provisions 
contained in the legislative package in 20064. Currently, the consulting authority has requested an 

ECB opinion on certain new amendments and provisions which have been proposed since the time 

1  

2  
3  

4  

The proposed amendments are divided into three separate draft laws: (i) draft law amending the Law of 29 July 2005 on 
trading  in  financial  instruments  (Dz.U.  2005,  No  183,  item  1538,  as  amended)  and  other  legislation;  (ii)  draft  law 
amending  the  Law  of  29  July  2005  on  public  offerings  and  the  conditions  for  admitting  financial  instruments  into  the 
organised system of trading and on public companies (Dz.U. 2005, No 184, item 1539, as amended); and (iii) draft law 
amending the Law of 24 May 2004 on investment funds (Dz.U. 2004, No 146, item 1546, as amended). 
OJ L 189, 3.7.1998, p. 42. 
The  implemented  Directives  include:  (i)  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/EC 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); (ii) Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital 
adequacy of investment firms and credit institutions (recast) (OJ L 177, 30.6.2006, p. 201); and (iii) other Community 
directives (2004/25/EC, 2004/109/EC, 2006/73/EC, 2007/14/EC and 2004/16/EC). 
See ECB Opinion CON/2006/53 of 16 November 2006 at the request of the Polish Minister for Finance on a draft law 
amending the Law on trading in financial instruments.  

 
 
 
 
                                                 
of  the  original  ECB  consultation5.  The  present  ECB  opinion  is  limited  to  one  of  the  draft  laws 

submitted with the current consultation request (hereinafter, the ‘draft law’), which is amending the 

Law of 29 July 2005 on trading in financial instruments (hereinafter, the ‘current Law on trading in 
financial instruments’)6 and other legislation, including the Law of 24 August 2001 on settlement 

finality in payment and settlement systems and on the supervision of such systems (hereinafter, the 
‘Law on settlement finality’)7.  

1.2  The  draft  law  introduces  new  elements  inter  alia  as  regards  the  following  issues  related  to 

securities  clearing  and  settlement:  (i)  Krajowy  Depozyt  Papierów  Wartościowych  (KDPW,  the 

Polish central securities depository and settlement system) is to change its shareholder structure in 
that NBP will be obliged to dispose of its shares currently possessed in KDPW8; (ii) in view of the 

forced  sale  of  KDPW  shares,  NBP’s  oversight  powers  over  KDPW  will  be  reduced,  while  NBP 

will  obtain  certain  limited  consultation  and  information  powers  in  relation  to  KDPW  and  other 
clearing  and  settlement  operators,  as  a  result  of  the  proposed  public  law  provisions9;  and 
(iii) outsourcing  of  KDPW’s  activities  to  third  parties  is  to  be  restricted10.  Additionally,  the 
statutory  definition  and  procedure  for  recognition  of  payment  and  settlement  systems11  and 
licensing requirements for banks conducting brokerage activities12 are amended. 

2. 

General remarks 

The ECB would like to reiterate its comments in Opinion CON/2006/53 to the extent they have not been 

incorporated in the current version of the draft law, particularly on the following: (i) the need to adapt the 

statutory definitions of ‘clearing’ and ‘settlement’ to standards developed by the Committee on Payment 

5  

6  
7  

8  

9  

10  

11  

12  

Such amendments were either added in the text of the legislative draft submitted to the Parliament (Sejm) following ECB 
Opinion  CON/2006/53  (see  Sejm  document  No  64)  or  are  proposed  in  the  separate  Governmental  submission  of 
15 February 2008, complementing the original draft.  
See publication references in the footnote 1 above.  
Dz.U. 2001, No 123, item 1351, as amended. One of the other laws subject to the amendmnets proposed by the draft law 
is the Law on banking of 29 August 1997 (consolidated text: Dz.U. 2002, No 72, item 665, as amended). 
See  Article  46  of  the  Law  on  trading  in  financial  instruments  following  the  amendments  introduced  in  this  Law  by 
Article  1(37) of the draft law, as amended by point 1(15) of the Governmental submission of 15 February 2008, and by 
Article 18a of the draft law, as added by point 8 of the abovementioned Governmental submission.  
See  Articles  48(16),  50(2),  64a,  68a(5)  and  68b(1)  of  the  Law  on  trading  in  financial  instruments  following  the 
amendments introduced in this Law by Article 1(38), (50a), (51a) (added by point 1(22) of the Governmental submission 
of 15 February 2008) and Article 56 of the draft law.  
The draft law will allow KDPW only to outsource to its own subsidiaries. See Article 48(7) to (15) of the Law on trading 
in financial instruments following the amendments introduced in this Law by Article 1(38) of the draft law, as partially 
amended by point 1(17) of the Governmental submission of 15 February 2008.  
In certain cases, in view of the systemic risk considerations, the following competence will be given to NBP’s President 
in relation to payment systems and to the Financial Supervision Commission in relation to securities settlement systems: 
(i) recognition of arrangements involving only two participants as a ‘system’; and (ii) recognition of indirect participants 
as  participants  in  the  system;  see  Articles  2  and  Articles  2a  and  17a  and  Article  19  of  the  Law  on  settlement  finality 
following  the  amendments  introduced  in  this  Law  by  Article  13(1)-(2a),  (7a)  and  (9)  of  the  draft  law,  as  partially 
amended by point 4 of the Governmental submission of 15 February 2008. 
In  particular,  certain  amendments  will  be  introduced  to  the  applicant  bank’s  initial  capital  and  the  organisational 
separation of banking and brokerage activities; see Article 111 of the Law on trading in financial instruments following 
the amendments introduced in this Law by Article 1(96) of the draft law, as amended by point 1(44) of the Governmental 
submission of 15 February 2008. 

2 

 
                                                 
and Settlement Systems (CPSS) of the Bank for International Settlements (BIS) and by the ECB13; (ii) the 

need  to  prevent  spillover  of  risks  from  the  entity  providing  central  counterparty  services  to  the  entity 
providing security settlement services14; (iii) the need to assign tasks related to ensuring proper operation 

of the clearing and settlement process not only to KDPW but also to other clearing or settlement system 
operators which may be established in Poland15; (iv) the need for clearing and settlement system operators 

to submit rules on business continuity measures and on secondary sites as a prerequisite for obtaining a 
licence16; and (v) the need to ensure express coverage of clearing houses under the provisions of the Law 
on  settlement  finality17.  The  ECB  recommends  taking  into  account  past  ECB  comments  at  the  current 

stage of the legislative work, in addition to the more detailed remarks presented below.  

3. 

Central bank ownership and oversight of securities clearing and settlement systems 

3.1  At  present,  the  sole  securities  clearing  and  settlement  operators  in  Poland  are:  (i)  KDPW;  and 
(ii) NBP, for certain types of securities18. KDPW, which performs a whole range of depository and 

settlement functions, is owned in equal parts by the State Treasury, the Warsaw Stock Exchange 
and  NBP19.  KDPW  is  supervised  by  the  Financial  Supervision  Commission  (FSC)20  and  is  also 

subject to oversight exercised by NBP through: (i) participation of one NBP representative in the 
FSC21; and (ii) wide corporate-law control measures available to NBP due to its holding of KDPW 
shares, such as being represented in KDPW Supervisory Board22 and exercising rights available to 
the Supervisory Board members23. 

13  

14  

15  

16  

17  

18  

19  
20  

21  

22  

23  

See paragraph 2.3 of ECB Opinion CON/2006/53, as currently relating to Article 45b of the Law on trading in financial 
instruments, as amended by Article 1(36) of the draft law. 
See  paragraph  2.4  of  ECB  Opinion  CON/2006/53,  as  currently  relating  to  Article  68a(11)  of  the  Law  on  trading  in 
financial instruments, as amended by Article 1(56) of the draft law. 
See paragraph 2.5 of ECB Opinion CON/2006/53, as currently relating to Article 48 and Article 68a(1) to (2) of the Law 
on trading in financial instruments, as amended by Article 1(33) and (56) of the draft law. 
See paragraph 2.6 of ECB Opinion CON/2006/53, as currently relating to Article 68c(2) to (3) of the Law on trading in 
financial instruments, as amended by Article 1(56) of the draft law. 
See paragraph 2.10 of ECB Opinion CON/2006/53, as currently relating to Article 15(1) to (2) of the Law on settlement 
finality, as amended by Article 13(5) of the draft law. 
NBP may register and settle transactions in securities: (i) issued by itself or by the State Treasury; or (ii) incorporating 
derivative  rights  based  on  such  securities  (Article  49  of  the  current  Law  on  trading  in  financial  instruments;  cf. 
Article 45c of the Law on trading in financial instruments following the amendments introduced by Article 1(36) of the 
draft law).  
See the KDPW Annual Report 2006, p. 6 and its English translation available on KDPW’s website at www.kdpw.com.pl. 
See  Article  5(6)  of  the  Law  of  29  July  2005  on  supervision  of  the  capital  market  (Dz.U.  2005  No  183,  item  1537,  as 
amended, hereinafter the ‘Law on supervision of the capital market’). 
Article  5(2)  of  the  Law  of  21  July  2006  on  supervision  of  the  financial  market  (Dz.U.  2006,  No  157,  item  1119,  as 
amended).  
KDPW  Supervisory  Board  comprises  six  to  nine  members  appointed  for  a  three-year  term  by  KDPW  Shareholders’ 
General  Meeting  (see  paragraph  15  of  the  KDPW  Statute,  as  last  amended  by  Resolution  No  5/2007  of  the  KDPW 
Extraordinary  General  Shareholders’  Meeting  of  22  August  2007,  hereinafter,  the  ‘KDPW  Statute’  (available  with  its 
English translation on KDPW’s website at www.kdpw.com.pl)).  
The KDPW Supervisory Board continuously monitors KDPW’s activities. The responsibilities of the Supervisory Board 
include, inter alia: (i) review of KDPW financial statements and KDPW Management Board accounts; (ii) suspension of 
Management  Board  members  from  their  duties;  (iii)  adopting  the  KDPW  Rules,  the  Rules  of  the  KDPW  Settlement 
Guarantee Fund and the Rules of the Investor Compensation Scheme; (iv) appointing a certified auditor; (v) approving 
the  KDPW  business  plans  and  financial  plans;  and  (vi)  approving  the  establishment  of  KDPW  subsidiaries  (see 
paragraph 20 of the KDPW Statute). 

3 

 
                                                 
3.2  Article 18a of the draft law requires NBP to dispose of its shares held in KDPW’s capital within 12 

months  of  the  draft  law’s  entry  into  force.  If  NBP  does  not  dispose  of  its  shares  in  KDPW,  the 

sanction of not being able to exercise shareholder rights would apply to NBP. This would result in 

NBP  losing  its  current  oversight  powers  over  KDPW  stemming  from  its  rights  as  a  KDPW 

shareholder. The explanatory memorandum to the draft law suggests that such discontinuation of 

NBP’s oversight powers exercised on the basis of its shareholder status may be compensated by the 
assignment  of  certain  public  law  competences  to  the  NBP,  as  proposed  by  the  draft  law24.  It 

proposes that the NBP President will have a right to issue a non-binding opinion on: (i) the KDPW 

rules  and  amendments  to  such  rules,  presented  to  the  FSC  for  approval,  to  the  extent  such  rules 

concern  clearing  and  settlement  of  transactions  in  financial  instruments;  and  (ii)  within  the  same 

scope  –  rules  of  KDPW’s  subsidiaries  conducting  securities  clearing  and  settlement  functions 

delegated  by  KDPW  and  rules  of  other  clearing  houses  or  settlement  houses,  established  on  the 
basis  of  the  Law  on  trading  in  financial  instruments,  once  it  is  amended25.  Further,  at  the  NBP 

President’s  request,  members  of  the  KDPW  management  and  staff  will  be  obliged  to  disclose  in 

writing  information  regarding  KDPW’s  activities  related  to  the  clearing  and  settlement  of 
transactions in financial instruments26.  

3.3  Central bank financial independence 

The ECB wishes to point out that the concept of central bank financial independence in Article 108 

of  the  Treaty  should  be  seen  from  the  perspective  of  whether  any  third  party  is  able  to  exercise 

either direct or indirect influence over the ability of the national central bank (NCB) to fulfill its 
mandate27. The draft law does not comply with the principle of central bank independence as it forces 

NBP to dispose of its assets, namely all its shares held in KDPW. The ECB is of the view that the 

NBP’s  shareholder  status  may  be  modified,  if  and  when  needed,  in  agreement  with  the  NBP’s 

decision-making bodies, at the market price.  

3.4  Recognition of NBP’s oversight functions 

The ECB understands that the draft law does not substantially affect NBPs’ supervision of payment 
systems  under  the  Law  on  settlement  finality28.  However,  the  draft  law  foresees  express 

specification of certain NBP’s oversight powers over securities clearing and settlement systems. As 

recalled  in  previous  ECB  opinions,  an  oversight  function  is  inherent  in  the  central  bank  task  of 

promoting a sound market infrastructure, in order to safeguard the effectiveness of monetary policy 

24  

25  

26  

27  

28  

See  page  53  of  the  explanatory  memorandum  to  the  Governmental  submission  of  15  February  2008.  The  ECB 
understands that the assignment to NBP of certain public law oversight competences was already proposed in the version 
of the draft law consulted in 2006, whereby it was not linked with the proposal to force NBP’s sale of KDPW shares. 
The NBP President may also issue a non-binding opinion on the operating licence to be given by the FSC to such clearing 
houses and settlement houses (see provisions referred to in footnote 9 above). 
See new Article 64a of the Law on trading in financial instruments, introduced by Article 1(51a) of the draft law, added 
by point 1(22) of the Governmental submission of 15 February 2008.  
See  paragraph  9  of  ECB  Opinion  CON/2004/16  of  11  May  2004  at  the  request  of  the  Italian  Ministry  of  Economic 
Affairs and Finance on a draft law on the protection of savings. 
See Article 16(1) and (3) and Articles 17 to 19 of the Law on settlement finality. As a result of provisions introduced by 
the  draft  law,  the  NBP  President  will  obtain  certain  new  competences  relating  to  the  recognition  of  arrangements 
involving only two participants as a ‘system’ (see provisions listed in footnote 11 above).  

4 

                                                 
and  the  overall  stability  of  the  financial  system29.  It  should  be  recognised  in  this  context  that 

payment  systems  and  security  settlement  systems  (SSSs)  are  interlinked  given  the  use  of  the 

mechanism  of  ‘delivery  versus  payment’  under  which  settlements  of  securities  and  transfers  of 

funds take place simultaneously. There is therefore a strong argument for integrating the oversight 

of payment and securities settlement systems, and for the NCB to perform this function. Settlement 

of both legs of such transactions should be subject to similar safeguards to avoid asymmetries with 

systemic implications. The role of NCBs in SSS oversight is evident given SSSs’ crucial role in the 

functioning  of  the  financial  markets  and,  therefore,  the  need  for  them  to  be  safe  and  efficient. 

Oversight  of  payment  and  clearing  systems  is  one  of  the  core  competencies  attributed  to  the 

Eurosystem,  with  its  legal  basis  specified  in  Article  105(2)  of  the  Treaty  and  Article  3.1  and 

Article 22  of  the  Statute  of  the  European  System  of  Central  Banks  and  of  the  European  Central 
Bank30. In particular, the Eurosystem central banks perform oversight of payment systems in line 

with the common oversight policy defined by the Governing Council, which will also apply to NBP 
once Poland adopts the euro31. As noted in previous ECB opinions32, the central bank oversight role 

is also reflected: (i) at international level, in the joint work on SSSs concluded by the CPSS and the 
International Organization of Securities Commissions (IOSCO)33; and (ii) at Community level, in 

the  joint  work  of  the  ESCB  and  the  Committee  of  European  Securities  Regulators  (CESR)  in 
establishing common standards for EU SSSs34, the mandate for which has recently been reaffirmed 
by the Council35.  

3.5  The ECB further notes that in the particular case of NBP’s oversight of KDPW the need to ensure 

the effectiveness of the oversight functions is supported by the systemic importance of KDPW in 

maintaining financial market stability in Poland, by the key role of KDPW settlement services in 

the  operations  implementing  NBP’s  monetary  policy  and  by  the  close  operational  link  between 

KDPW  and  the  NBP-operated  payment  systems,  including  the  SORBNET-EURO  system 
connected with the Eurosystem’s TARGET system36. In view of the above, the ECB recommends 

29  

30  

31  

32  
33  

34  

35  

36  

Paragraph 2.8 of ECB Opinion CON/2006/53; cf. paragraph 3.2 of ECB Opinion CON/2006/20 of 25 April 2006 on the 
Dutch  draft  law  concerning  financial  sector  supervision  and  paragraphs  4  to  14  of  ECB  Opinion  CON/1999/19  of 
20 January  2000  at  the  request  of  the  Luxembourg  Ministry  for  the  Treasury  and  the  Budget  on  a  draft  legislative 
proposal  implementing  Directive  98/26/EC  [title  shortened];  cf.  CPSS,  ‘Central  Bank  Oversight  of  Payment  and 
Settlement Systems’, May 2005, point 1.1; publication available on the BIS website at www.bis.org. 
See paragraph 5 of ECB opinion CON/2003/14 of 7 August 2003 at the request of the Banca d’Italia on a draft regulation 
on payment systems, payment infrastructures and payment instruments. 
Cf. paragraph 14 of ECB Opinion CON/2005/24 of 15 July 2005 at the request of the Ministry of Finance of the Czech 
Republic  on  a  draft  law  on  the  integration  of  financial  market  supervisors;  see  also  paragraph  4.2  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. 
Cf. paragraph 15 of ECB Opinion CON/2005/24. 
See  e.g.  joint  CPSS-IOSCO  publications  ‘Recommendations  for  securities  settlement  systems’,  November  2001  and 
‘Recommendations  for  Central  Counterparties’,  November  2004;  publications  available  on  the  BIS  website  at 
www.bis.org. 
See  e.g.  joint  ESCB-CESR  publication  ‘Standards  for  securities  clearing  and  settlement  in  the  European  Union’, 
September 2004; publication available on the ECB website at www.ecb.europa.eu. 
See  the  informal  ECOFIN  Council  meeting  of  4  to  5  April  2008,  ‘EU  financial  markets  infrastructures’,  point  3; 
publication available on the website of the Slovenian Presidency of the EU at www.eu2008.si. 
The SORBNET-EURO is soon to be replaced by TARGET2-NBP system. 

5 

                                                 
that the Polish authorities adopt solutions ensuring NBP’s capacity to perform its oversight tasks, 

including  in  particular  meaningful  and  direct  access  by  NBP  to  information  relevant  for  the 

performance  of  its  financial  stability  role  and  NBP’s  long-term  capacity  to  ensure  the  smooth 

functioning  of  the  payment  and  settlement  infrastructure  relevant  to  its  monetary  policy  and 

intraday credit operations. In particular, the ECB makes the following comments: 

(i) 

The ECB reiterates its earlier recommendation37 for NBP to be expressly made responsible, 

as  one  of  its  tasks,  for  the  oversight  of  all  securities  clearing  and  settlement  systems  that 

operate  or  will  operate  in  Poland,  including  the  systems’  rules,  and  given  access  to  all 

information and data relevant to the performance of such oversight tasks. In this context, the 

ECB also draws the Polish legislator’s attention to the following provisions proposed by the 
draft  law:  (i)  Article  64a  of  the  Law  on  trading  in  financial  instruments38,  which  requires 

only  KDPW  and  not  any  other  operators  to  provide  NBP  with  information  in  writing  as 

regards their clearing and settlement activities; and (ii) Article 2(2) of the Law on settlement 
finality39,  which  does  not  provide  for  any  NBP  involvement  in  the  exercise  of  the 

competence  to  recognise  the  legal  arrangements  between  two  participants  as  securities 

settlement systems.  

(ii) 

It needs to be further considered how the NBP’s oversight competences should be adequately 

exercised in cooperation with the FSC exercising its supervisory competences on the basis of 
the  provisions  amended  by  the  draft  law40.  If  other  authorities  have  legal  or  other 

responsibilities  for  aspects  of  payment  and  settlement  systems,  central  banks  are  open  to 

cooperation with these authorities.  

4. 

Delegation of securities clearing and settlement services to third parties 

The ECB draws the Polish legislator’s attention to the proposed provision of Article 48(7) of the Law on 
trading in financial instruments41, which specifies that the listed KDPW tasks may be delegated solely to 

KDPW’s  own  subsidiaries.  The  ECB  notes  that  while  national  laws  may  provide  for  authorisation  or 

review requirements in respect of delegating or outsourcing to third parties of the activities of the central 

securities depositories (CSDs) conducting settlement functions, such laws normally do not require legal 

dependence  by  the  CSD  on  third  parties  to  which  CSD  activities  are  delegated  or  outsourced.  Any 

provisions proposed in this regard should not prejudice further evolution of the securities infrastructure in 

Poland, its integration with the European securities infrastructure and further market harmonisation, as it 

could negatively affect Polish investors and issuers.  

37  
38  

39  

40  

41  

See paragraph 4.3 of ECB Opinion CON/2006/15, as also repeated in the paragraph 2.8 of ECB Opinion CON/2006/53. 
As  introduced  by  Article  51a  of  the  draft  law,  amended  by  point  1(22)  of  the  Governmental  submission  of 
15 February 2008.  
As  introduced  by  Article  13(2)  of  the  draft  law,  amended  by  point  4  of  the  Governmental  submission  of 
15 February 2008.  
See Article 16 of the draft law in the wording proposed by point 5 of the Governmental submission of 15 February 2008, 
amending relevant provisions of the Law on supervision of the capital market. 
As amended by Article 1(38) of the draft law.  

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

Done at Frankfurt am Main, 21 May 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

7