Opinion of the European Central Bank of 7 August 2008 on a proposal for a directive amending Directive 98/26/EC and Directive 2002/47/EC (CON/2008/37)
Date: 2008-08-07
Institutions: European Central Bank
Subjects: European Central Bank, banking, central bank, contract, financial control, financial legislation, financial solvency, guarantee, intra-EU payment

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I

(Resolutions, recommendations and opinions)

OPINIONS

EUROPEAN CENTRAL BANK

OPINION OF THE EUROPEAN CENTRAL BANK

of 7 August 2008

on a proposal for a directive amending Directive 98/26/EC and Directive 2002/47/EC

(CON/2008/37)

(2008/C 216/01)

Introduction and legal basis

On 22 May 2008 the European Central Bank (ECB) received a request from the Council of the European
Union for an opinion on a proposal for a Directive of the European Parliament and of the Council amending
Directive 98/26/EC on settlement finality in payment and securities settlement systems and Directive
2002/47/EC on financial collateral arrangements as regards linked systems and credit claims (1) (hereinafter
the ‘proposed directive’).

The ECB's competence to deliver an opinion is based on the first indent of Article 105(4) of the Treaty
establishing the European Community. 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.

Amendments to Directive 98/26/EC

1. Night-time settlement

The ECB supports extending the protection of Article 3(1) of Directive 98/26/EC (2) to night-time
settlement services, which is essential given that the night-time settlement procedure is used more and
more frequently by systems to facilitate the settlement of bulk and retail transfers.

2.

Protection of collateral from the effects of insolvency

2.1. The ECB proposes further amending Article 9(1) of Directive 98/26/EC for the following reasons.
Under Article 9(1), the rights of the ECB and the Member State central banks to collateral security
provided to them are not affected by insolvency proceedings brought against the participant or counter-
party that has provided the collateral security. Such collateral security may be realised for the satisfac-
tion of these claims. Some ambiguity would arise if Article 9(1) were to be interpreted as meaning that
including emergency
the collateral security provided in connection with central bank operations,

(1) COM(2008) 213 final.
(2) Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and

securities settlement systems (OJ L 166, 11.6.1998, p. 45).

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transactions, is only insulated from the effects of insolvency proceedings brought against a central
bank's participant or counterparty which has provided the central bank with the collateral security.
When assessing the protection of collateral provided to central banks for central bank credit operations
under Directive 98/26/EC, uncertainty arises as to whether the protection accorded to central banks
covers the provision of collateral security originating from a third party which is not a participant in a
central bank operated system or a central bank counterparty.

2.2. Currently, it seems that some Member States have transposed Article 9(1) of Directive 98/26/EC in a
manner which does not protect collateral provided to central banks by a third party which is not one
of
the central bank's participants or counterparties, while most Member States have transposed
Article 9(1) so as to explicitly protect collateral security provided to central banks by such third parties.
In addition, some Member States have transposed the wording of the provision in question literally,
and in these jurisdictions, the question of whether collateral provided to central banks by such third
parties is protected is subject to interpretation.

2.3. In view of the above, clarifying the wording of Article 9(1) of Directive 98/26/EC would ensure the
harmonised insulation of collateral security provided to central banks by any third party including, but
not limited to, affiliates of the participants in a central bank operated system or central bank counter-
parties. This would ensure legal certainty with respect to collateralised credit provided by central banks
and, more specifically, protect modern liquidity pooling services, for example in TARGET2, against the
insolvency of any third party providing collateral security on behalf of a participant in a central bank
system. This reform could be of particular relevance to central bank liquidity operations during times
of financial difficulty, where it can be expected that liquidity extended to a counterparty might be
collateralised by a third party on behalf of the counterparty.

3.

Par ticipation in a system

3.1. Article 2(f) of Directive 98/26/EC allows Member States to treat an ‘indirect participant’ as a ‘partici-
pant’, if warranted due to systemic risk and on condition that the indirect participant is known to the
system. Being ‘known to the system’ is a useful requirement, as the system would not otherwise be able
to identify which indirect participants fall within the scope of protection accorded to the system. A
proviso should therefore be introduced into the definition of ‘indirect participant’ requiring that indirect
participants should be known to the system operator. This will also facilitate the system operator's obli-
gation, under the second paragraph of Article 10, to disclose to the Member State whose law is appli-
cable the participants in the relevant system, including any possible indirect participants, as well as any
change in them.

3.2. For the avoidance of doubt, the definitions of both participant and indirect participant should be
amended to clarify that these definitions are exhaustive and include only the specific kinds of entities
enumerated by the defined terms. Any differences in application could put at risk the protection
afforded by Directive 98/26/EC to systems that operate cross border.

3.3. Also, the term ‘system’ in the definitions of participant and indirect participant should be replaced,
where appropriate, by the newly defined term ‘system operator’, since systems usually lack legal person-
ality and it is the system operator that acts as a participant in another system thus ensuring cross-parti-
cipation between systems.

4.

The definiti on of a system

4.1. The definition of a system under Article 2(a) of Directive 98/26/EC should be amended. The term
‘system’ should adequately reflect the full range of existing arrangements, so that the protection
afforded by Directive 98/26/EC will apply to the widest possible range of systems, thereby minimising
systemic risk. In particular, the current definition in the first and second indents of Article 2(a) does
not accurately reflect the way in which a majority of systems are established. In most systems, the
arrangement establishing the system is not simply a contract between participants, but a set of rules

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and regulations for the system's operation as adopted by the system operator or through legal acts. The
participants are expected to adhere to these rules. Systems based on a multilateral contractual arrange-
ment are the exception, not the norm, as assumed under the current wording of Article 2(a). A system
operator, such as a central securities depository, stock exchange or central bank, generally sets up a
system unilaterally. In this context, Article 2(a) should be drafted so that a formal arrangement can be
established either by contract, by standard business conditions or by legislation, i.e. statute or imple-
menting regulation. Therefore, the definition of a system should refer to a formal arrangement
‘comprising’, instead of ‘between’, three or more participants and this change necessitates a consequen-
tial amendment to the second indent of Article 2(a).

4.2. Under the current definition of a system it is unclear whether clearing systems such as central counter-
parties or clearing houses are protected against systemic risk under Directive 98/26/EC. Although, in
order to avoid uncertainty, a number of Member States have notified clearing systems to the Commis-
sion as provided for under the third indent of Article 2(a), the words ‘clearing or’ should be added
before ‘execution of transfer orders’ in the first indent of Article 2(a), so that these types of entities can
also be clearly considered as systems in their own right.

4.3. Furthermore, the term system should be defined flexibly in order to cover any future developments in
the organisation of systems. In particular, it should be sufficiently widely defined as to cover any future
system that may be developed by the Eurosystem or designated by the ECB when established by an
ECB legal instrument which is binding on participants by virtue of an arrangement entered into with
the ECB and governed by the law of a Member State. In any event, a system established by an ECB legal
instrument
term system in Article 2(a) of
Directive 98/26/EC.

should also fall within the definition of

the

5. Moment of entr y, ir revocability and interoperable systems

5.1. The ECB considers that the concept of the ‘moment of entry’

into a system for the purposes of
Article 3(3) of Directive 98/26/EC requires clarification. More specifically, Article 3(3) states that the
moment of entry of a transfer order into a system is defined by the rules of that system. The moment
of entry itself is not defined and therefore varies between systems both in relation to its definition and
the actual moment of entry. Where national law governing the system defines the moment of entry,
the system's rules must be in line with such definitions. However, national law should allow sufficient
flexibility for system rules on the moment of entry to be adjustable to take account of the specific
nature of a particular system's operations and to protect sophisticated settlement/optimisation proce-
dures. Furthermore, it is important that between interoperable systems, the rules of all the systems that
are involved should be allowed to define the moment of entry with sufficient flexibility in order to
protect cross-system settlement and hence ensure interoperability. The ECB recommends clarifying
Article 3(4) accordingly to remove any ambiguity surrounding the fact that systems do have a certain
degree of discretion in specifying the appropriate moment of entry, without being constrained in this
respect by national law, which may be rigid and difficult to change. Similar considerations apply to the
concept of irrevocability for the purposes of Article 5 of Directive 98/26/EC.

5.2. The ECB supports the amendments relating to interoperable systems, given that the number and impor-
tance of such systems has increased significantly since the adoption of Directive 98/26/EC. In particular,
systems have established links and even relayed links between each other and they access other systems
as participants or through other interfaces. However, the ECB suggests replacing the term ‘system’ in
the definition of ‘interoperable system’ with ‘arrangements’ between two or more systems to cater for
all possible types of connections while at the same time avoiding giving the impression that a new cate-
gory of systems is created. To give a practical example, the TARGET2 payment infrastructure (1) of the
Eurosystem consists of a multiplicity of legally separate payment systems that are interconnected by a
single technical platform based on an ECB guideline. Further, more than 60 other systems, including
those of non-euro area countries, are connected to TARGET2 either by way of participation or through
bilateral arrangements through the ancillary system interface.

(1) Guideline ECB/2007/2 of 26 April 2007 on a Trans-European Automated Real-time Gross settlement Express Transfer

system (TARGET2) (OJ L 237, 8.9.2007, p. 1).

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6. Notif ication of system operators and oversight

The ECB welcomes the definition of system operator in the new Article 2(o) although it considers that
this definition should be slightly amended to ensure that it also covers systems that consist of several
participants without any single system operator. For the same reason, the second subparagraph of
Article 3(1) of the Directive should also be slightly amended to ensure that the burden of proof
regarding knowledge of insolvency is laid on the relevant system operator. Moreover, the ECB also
agrees to the proposal to amend Article 10 of Directive 98/26/EC so that Member States, in addition
to notifying systems to the Commission, will also indicate the operator of the system. However, in line
with the ECB's suggestion in paragraph 4.3 above, proposing that the definition of system should
include systems established by an ECB legal instrument, paragraph 1 of Article 10 should be amended
to allow Member States or the ECB, as appropriate, to notify systems and system operators to the
Commission. The ECB considers that Article 10(3) and (4), which are omitted from the Commission
proposal, should be reinstated. In addition, Article 10(3), which recognises the powers of competent
national authorities to authorise and supervise systems, should state that the oversight competence of
central banks, based on their financial stability tasks, should be respected.

7.

E-money institutions as par ticipants of systems

The definition of ‘credit institution’ in amended Article 2(b) of Directive 98/26/EC, which cross-refers
to the definition contained in 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) (1), has
the effect of enabling e-money institutions to become participants in systems designated in accordance
with Directive 98/26/EC, provided the e-money institutions are regulated as credit institutions. The ECB
regards this as a positive legislative amendment that will enhance the stability of systems. A change in
the status of e-money institutions as credit institutions would require a further review of Directive
98/26/EC.

8.

Conf lict of laws

A clear and simple conflict of laws rule for all aspects of book entry securities is important for the effi-
cient and secure cross-border holding and transfer of financial
instruments. The ECB shares the
Commission's view that the current conflict of laws rules contained in Directive 98/26/EC, Directive
2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and
winding up of credit institutions (2) and Directive 2002/47/EC of the European Parliament and of the
Council of 6 June 2002 on financial collateral arrangements (3) have increased legal certainty with
regard to determining the applicable law. The ECB also notes the observations made by the Commis-
sion in its paper ‘Conflict of laws: modernisation of the PRIMA-rule for intermediated securities’ that
the practical application of a single conflict of laws regime for cross-border securities clearing and
settlement in the Community continues to reveal differences between Member States on the interpreta-
tion of ‘location of an account’. Thus, the Community regime still does not deliver the highest possible
degree of predictability and certainty as to which laws apply.

Accordingly, the ECB is following with great interest the Commission's initiative to improve the clarity
of the existing Community regime. Given the complexity of this matter, the ECB considers that such a
general review should not take place in the context of the proposed directive.

Amendments to Directive 2002/47/EC

9.

Credit claims

9.1. The ECB strongly welcomes the proposed amendments to Directive 2002/47/EC, where they are aimed
at facilitating the use of credit claims as collateral by central banks. These changes make the legal posi-
tion of central banks in the European Union more secure when taking credit claims as collateral, given
the otherwise non-harmonised sets of rules on credit claims in the different EU jurisdictions. The

(1) OJ L 177, 30.6.2006, p. 1.
(2) OJ L 125, 5.5.2001, p. 15.
(3) OJ L 168, 27.6.2002, p. 43.

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possibility of using credit claims as collateral in central bank operations is of great significance to credit
institutions in the euro area, which have large amounts of credit claims on their balance sheets. It
would be of great importance for the Eurosystem to be able to use credit claims as collateral under the
regime established by Directive 2002/47/EC, thereby facilitating an informal and efficient operational
handling of that kind of asset, in particular through electronic means and including in cross-border
constellations. Therefore, in this respect, the ECB advocates the adoption of the text as proposed by the
Commission without granting the Member States any options for implementation, which would under-
mine the validity and legal certainty of such collateral taking.

9.2. The changes proposed to Article 1(4)(a) of Directive 2002/47/EC restrict its applicability to credit
claims eligible for the collateralisation of central bank credit operations. For the purposes of the ECB
and the Eurosystem this is sufficient. However, the proposed amendment goes beyond the use of credit
claims solely for central bank operations, proposing to make the rules of Directive 2002/47/EC apply
to any credit claim that could be eligible for the collateralisation of central bank credit operations in
the EU. An issue of transparency arises about the extent to which the proposed change would also
allow non-central bank collateral takers to use such central bank eligible credit claims for collateral
purposes. In particular, not all EU central banks may have easily accessible eligibility criteria for
accepting credit claims as collateral, which would make it difficult for a non-central bank collateral
taker to determine efficiently whether the credit claim it intends to collateralise is in fact eligible.
Furthermore, the eligibility criteria used by the Eurosystem and the central banks located outside the
euro area could differ and such criteria could also be amended over time. Accordingly, to ensure legal
certainty and a level playing field across the EU, the ECB recommends that a simple and uniform defi-
nition for credit claims covered by Directive 2002/47/EC should be established, which does not link
such credit claims to eligibility criteria used by the central banks. Such a definition of credit claims for
the purposes of defining the scope of Directive 2002/47/EC should be broad enough to include credit
claims made eligible by the Eurosystem. If no such uniform definition can be adopted, it is at least
important to ensure that credit claims actually mobilised as collateral to the Eurosystem fall under the
new definition in Directive 2002/47/EC.

9.3. The proposed amendments do not include a clarification of the conflict of laws rules applying to the
cross-border use of credit claims as collateral. The current text of Article 9 of Directive 2002/47/EC on
conflict of laws rules only relates to book entry securities and clearly does not apply to credit claims.
For the cross-border mobilisation of credit claims as collateral it is extremely important to harmonise
the applicable conflict of laws rules. Credit claims used as collateral may involve several jurisdictions,
e.g. that of the debtor, the creditor, the agreement, etc., and for legal certainty the parties need to know
exactly which law applies for the purposes of validity and priority of mobilising credit claims as col-
lateral. Presently, the conflict of laws rules on the third party effects of assignments of claims in the EU
are not harmonised; uncertainty exists as to the applicable laws and the parties may need to comply
with the requirements of more than one jurisdiction in order to achieve some certainty about the legal
soundness of their collateral taking. This is a significant obstacle and it would greatly facilitate the
cross-border EU-wide use of credit claims as collateral if there were a uniform set of conflict of laws
rules agreed for such third party effects. As there was no such change in the Rome I Regulation (1), it is
particularly important to include such rules in Directive 2002/47/EC. To have such common rules
would bring significant benefits.

9.4. The ECB also makes the following technical suggestions to ensure consistency within the proposed
directive as regards the inclusion of credit claims under Directive 2002/47/EC. To ensure that not only
the assignment of credit claims but also the pledge of credit claims is covered by the scope of applica-
tion of Directive 2002/47/EC, Article 2(1)(c) should be amended to refer to full entitlement to financial
collateral in order to clarify that the pledge or charging of credit claims is also covered by the term
‘security financial collateral arrangement’. Furthermore, a reference to credit claims in Article 2(1)(e)
should be added to the definition of financial instruments. Finally, Article 3 should be amended in

(1) COM(2005) 650 final.

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order to refer to ‘transfer of possession’ in addition to registration and notification in connection with
the condition of validity of a financial collateral arrangement.

10. Netting

The proposed directive does not include any amendment of the provisions on insolvency netting in
either Directive 2002/47/EC or Directive 98/26/EC. It remains true, however, that the ability to close
out on a counterparty's insolvency is of critical importance in the financial markets. The issue of the
enforceability of close-out netting is therefore not restricted to individual financial collateral arrange-
ments, but is relevant to all kinds of arrangements aimed at reducing credit risk and exposure. There is
a need for further progress on the treatment of netting, not just in Directive 2002/47/EC, but also
generally across the EU financial acquis. It would be beneficial, for instance, if greater consistency could
be achieved between the various definitions of netting and set-off across different EU legal acts. At the
same time, in view of the systemic significance of the exercise of automatic close-out rights against
systemically significant credit and financial
institutions operating in international financial markets,
there needs to be a wider discussion at EU level on the application of close-out netting provisions to
financial institutions in the over-the-counter derivatives market, and not only in the context of financial
collateral arrangements.

11. Draf ting proposals

Where the above advice would lead to changes in the proposed directive, drafting proposals are set out
in the Annex.

Done at Frankfurt am Main, 7 August 2008.

The President of the ECB

Jean-Claude TRICHET

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ANNEX

DRAFTING PROPOSALS (1)

Text proposed by the Commission (1)

Amendments proposed by the ECB (2)

Amendment 1

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 2(a)

Article 2

Article 2

For the purpose of this Directive:

For the purpose of this Directive:

(a)

‘system’ shall mean a formal arrangement:

(a)

‘system’ shall mean a formal arrangement:

— between three or more participants, without
counting a possible settlement agent, a possible
central counterparty, a possible clearing house or a
possible indirect participant, with common rules
and standardised arrangements for the execution of
transfer orders between the participants,

— between comprising three or more participants,
without counting a possible settlement agent, a
possible central counterparty, a possible clearing
house or
indirect participant, with
common rules and standardised arrangements for
the clearing or execution of transfer orders between
the participants,

a possible

— governed by the law of a Member State chosen by
the participants;
the participants may, however,
only choose the law of a Member State in which at
least one of them has its head office, and

— designated, without prejudice to other more strin-
gent conditions of general application laid down by
national
law, as a system and notified to the
Commission by the Member State whose law is
applicable, after that Member State is satisfied as to
the adequacy of the rules of the system.

— governed by the law of a Member State chosen by
the participants; the participants may, however, only
choose the law of a Member State in which at least
one of them has its head office or established by
an ECB legal act, which is binding on participants
by virtue of an arrangement entered into with
the ECB and governed by the law of a Member
State, and

— designated, without prejudice to other more stringent
conditions of general application laid down by
national law as a system and notified to the Commis-
sion, either (i) by the Member State whose law is
applicable, after that Member State is satisfied as to
the adequacy of the rules of the system and without
prejudice to other more stringent conditions of
general application laid down by national law, or
(ii) by the ECB as a system established by an
ECB legal act.

Justification — See paragraph 4 of the opinion

Amendment 2

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 2(f) and (g)

Article 2

Article 2

(f)

‘participant’ shall mean an institution, a central coun-
terparty, a settlement agent, a clearing house or a
system. […]

(f)

‘participant’ shall mean only an institution, a central
counterparty, a settlement agent, a clearing house or a
system operator. […]

(1) The drafting proposals in the Annex are based on the text of the proposed directive and on the text of Directive 98/26/EC and Directive
2002/47/EC which, in ECB's view, also require amendment. The drafting proposals are limited to amendments made to reflect the ECB's
proposals in this opinion. The proposals should apply mutatis mutandis and where relevant, to the other Community directives amended by
the proposed directive.

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Text proposed by the Commission (1)

Amendments proposed by the ECB (2)

(g)

‘indirect participant’ shall mean an institution, a central
counterparty, a settlement agent, a clearing house or a
system with a contractual relationship with an institu-
tion participating in a system executing transfer orders
which enables the indirect participant to pass transfer
orders through the system;

(g)

‘indirect participant’ shall mean only an institution, a
central counterparty, a settlement agent, a clearing
house or a system operator with a contractual relation-
ship with an institution participating in a system
executing transfer orders which enables the indirect
participant to pass transfer orders through the system,
provided, however, that the indirect participant
shall be known to the system operator;

Justification — See paragraph 3 of the opinion

Amendment 3

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 2(n)

Article 2

Article 2

(n) ‘interoperable system’ shall mean a system that enters
into an agreement with one or more systems that
entail the establishment of mutual solutions and not
simply connecting to existing standard service offe-
rings;

(n) ‘interoperable

arrangementssystem’
shall mean a
system that enters into an agreement with one or more
systems any arrangements entered between two or
more systems operators that entails the establishment
of mutual solutions and not simply connecting to
existing standard service offerings;

Justification — See paragraph 5.2 of the opinion

Amendment 4

Article 1(2)(f) of the proposed directive

Amendment to Directive 98/26/EC, Article 2(o)

(o)

‘system operator’ shall mean the entity in charge of the
day to day operation of a system. A system operator
may also act as a settlement agent, central counterparty
or clearing house.

(o)

‘system operator’ shall mean the entity or, where rele-
vant, entities in charge of the day-to-day operation of
a system. A system operator may also act as a settle-
ment agent, central counterparty or clearing house.

Justification — See paragraph 6 of the opinion

Amendment 5

Article 1(3) of the proposed directive

Amendment to Directive 98/26/EC, subparagraph 2 of Article 3(1)

Where, exceptionally, transfer orders are entered into a
system after the moment of opening of insolvency procee-
dings and are carried out within the business day, as
defined by the rules of
the system, during which the
opening of such proceedings occur, they shall be legally
enforceable and binding on third parties only if, after the
time of settlement, the system operator can prove that it
was not aware, nor should have been aware, of
the
opening of such proceedings.

Where, exceptionally,
transfer orders are entered into a
system after the moment of opening of insolvency procee-
dings and are carried out within the business day, as
defined by the rules of
the system, during which the
opening of such proceedings occur, they shall be legally
enforceable and binding on third parties only if, after the
time of settlement, the relevant system operator can prove
that it was not aware, nor should have been aware, of the
opening of such proceedings.

Justification — See paragraph 6 of the opinion

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Text proposed by the Commission (1)

Amendments proposed by the ECB (2)

Amendment 6

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, new Article 3(4)

Article 3

Article 3

4.
In case of interoperable systems, each system deter-
mines its own rules on the moment of entry in its system.
One system's rules on moment of entry shall not be
affected by any rules of the other systems with which it is
interoperable.

In the case of

4.
interoperable arrangements, each
system determines in its own rules the moment of entry in
its system. One system's rules on moment of revocation
shall not be affected by any rules of the other systems with
which it is interoperable, so as to ensure, to the extent
possible, that the rules of all systems that are party to
the interoperable arrangement are coordinated in this
regard.

Unless expressly provided for by the rules of the
systems concerned, one system's rules on the moment of
entry shall not be affected by any rules of the other systems
with which it is interoperable.

Justification — See paragraph 5.1 of the opinion

Amendment 7

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 5

Article 5

Article 5

A transfer order may not be revoked by a participant in a
system, nor by a third party, from the moment defined by
the rules of that system.

A transfer order may not be revoked by a participant in a
system, nor by a third party, from the moment defined by
the rules of that system.

In case of interoperable systems, each system determines its
own rules on the moment of revocation in its system. One
system's rules on moment of revocation shall not be
affected by any rules of the other systems with which it is
interoperable.

In the case of interoperable arrangements, each system
determines in its own rules the moment of revocation in
its system. One system's rules on moment of revocation
shall not be affected by any rules of the other systems with
which it is interoperable.irrevocability, so as to ensure,
to the extent possible, that the rules of all systems that
are party to the interoperable arrangement are coordi-
nated in this regard.

Unless expressly provided for by the rules of the
systems concerned, one system's rules on the moment of
irrevocability shall not be affected by any rules of the
other systems with which it is interoperable.

Justification — See paragraph 5.1 of the opinion

Amendment 8

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 9(1)

Article 9

Article 9

The rights of a system or of a participant to collateral
1.
security provided to it in connection with a system, and the
rights of central banks of the Member States or the Euro-
pean Central Bank to collateral security provided to them,
shall not be affected by insolvency proceedings against the
participant or counterparty to central banks of the Member
States or the European Central Bank, which provided the
collateral security. Such collateral security may be realised
for the satisfaction of these rights.

The rights of a system operator or of a participant to
1.
collateral security provided to it
in connection with a
system, and the rights of central banks of the Member
States or the European Central Bank to collateral security
provided to them, shall not be affected by insolvency
the participant or counterparty to
proceedings against
central banks of
the European
Central Bank or against any third party, including but
not limited to affiliates of such participant or counter-
party, which provided the collateral security. Such collateral
security may be realised for the satisfaction of these rights.

the Member States or

Justification — See paragraph 2 of the opinion

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Text proposed by the Commission (1)

Amendments proposed by the ECB (2)

Amendment 9

Article 1 of the proposed directive

Amendment to Directive 98/26/EC, Article 10

Article 10

Article 10

Member States shall specify the systems, and the respective
system operators, which are to be included in the scope of
this Directive and shall notify them to the Commission and
inform the Commission of the authorities they have chosen
in accordance with Article 6(2).

Member States or the ECB, where a system is esta-
blished by an ECB legal act, shall specify the systems, and
the respective system operators, which are to be included in
the scope of this Directive and shall notify them to the
Commission and inform the Commission of the authorities
they have chosen in accordance with Article 6(2).

The system operator shall
indicate to the Member State
whose law is applicable the participants in the system,
including any possible indirect participants, as well as any
change in them.

The system operator shall
indicate to the Member State
whose law is applicable the participants in the system,
including any possible indirect participants, as well as any
change in them.

In addition to the indication provided for in the
second subparagraph, Member States may impose
supervision or authorisation requirements on system
operators, which fall under their jurisdiction. It should
be also ensured that the oversight competences of the
European Central Bank and of the national central
banks are respected.

Anyone with a legitimate interest may require an insti-
tution to inform him of the systems in which it parti-
cipates and to provide information about the main
rules governing the functioning of those systems.

Justification — See paragraph 6 of the opinion

Amendment 10

Amendment to Directive 2002/47/EC, Article 2(1)(c)

Article 2(1)(c)

Article 2(1)(c)

(c)

‘security financial collateral arrangement’ means an
arrangement under which a collateral provider provides
financial collateral by way of security in favour of, or
to, a collateral taker, and where the full ownership of
the financial collateral
remains with the collateral
provider when the security right is established;

(c)

‘security financial collateral arrangement’ means an
arrangement under which a collateral provider provides
financial collateral by way of security in favour of, or
to, as collateral taker, and where the full ownership of,
or full entitlement to, the financial collateral remains
with the collateral provider when the security right is
established;

Justification — See paragraph 9 of the opinion

Amendment 11

Amendment to Directive 2002/47/EC, Article 2(1)(e)

Article 2(1)(e)

Article 2(1)(e)

(e)

‘financial instruments’ means shares in companies and
other securities equivalent to shares in companies and
bonds and other forms of debt instruments if these are
negotiable on the capital market, and any other securi-
ties which are normally dealt in and which give the
right to acquire any such shares, bonds or other securi-
ties by subscription, purchase or exchange or which
give rise to a cash settlement (excluding instruments of
payment),
in collective investment
undertakings, money market instruments and claims
relating to or rights in or in respect of any of the fore-
going;

including units

(e)

‘financial instruments’ means shares in companies and
other securities equivalent to shares in companies and
bonds and other forms of debt instruments if these are
negotiable on the capital market, and any other securi-
ties which are normally dealt in and which give the
right to acquire any such shares, bonds or other securi-
ties by subscription, purchase or exchange or which
give rise to a cash settlement (excluding instruments of
payment),
in collective investment
undertakings, money market instruments and claims
relating to or rights in or in respect of any of the fore-
going, as well as credit claims to the extent
provided for by this Directive;

including units

Justification — See paragraph 9 of the opinion

23.8.2008

EN

Official Journal of the European Union

C 216/11

Text proposed by the Commission (1)

Amendments proposed by the ECB (2)

Amendment 12

Article 2(3) of the proposed directive

Amendment to Directive 2002/47/EC, Article 3

Article 3

New subparagraph

Article 3

New subparagraph

When credit claims are provided as financial collateral,
Member States shall not require that the creation, validity
or admissibility in evidence of their provision as financial
collateral under a financial collateral arrangement be depen-
dent on the performance of any formal act such as the
registration or the notification of the debtor of the credit
claim provided as collateral

When credit claims are provided as financial collateral,
Member States shall not require that the creation, validity
or admissibility in evidence of their provision as financial
collateral under a financial collateral arrangement be depen-
dent on the performance of any formal act such as the
registration, transfer of possession or the notification of
the debtor of the credit claim provided as collateral

(1) Strikethrough in the body of the text indicates where the ECB proposes deleting text.
(2) Bold in the body of the text indicates where the ECB proposes inserting new text.

Justification — See paragraph 9 of the opinion