Opinion of the European Central Bank of 4 February 2009 at the request of Magyar Nemzeti Bank on three draft regulations on the terms and conditions and the operating rules of organisations providing central securities depository, clearing house and central counterparty activities (CON/2009/9)
Date: 2009-02-04
Institutions: European Central Bank
Subjects: Hungary, national law, payment system, securities

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 February 2009 

at the request of Magyar Nemzeti Bank 

on three draft regulations on the terms and conditions and the operating rules of organisations 

providing central securities depository, clearing house and central counterparty activities 

(CON/2009/9) 

Introduction and legal basis 

On  7  January  2009  the  European  Central  Bank  (ECB)  received  a  request  from  Magyar  Nemzeti  Bank 

(MNB)  for  an  opinion  on  three  draft  MNB  regulations:  the  draft  regulation  on  the  central  securities 

depository’s  terms  and  conditions  and  operating  rules,  the  draft  regulation  on  the  terms  and  conditions 

and  operating  rules  for  organisations  providing  clearing  house  activities  under  the  Law  on  the  capital 

market,  and  the  draft  regulation  on  the  terms  and  conditions  and  operating  rules  of  organisations 

providing  central  counterparty  activities  under  the  Law  on  the  capital  market  (hereinafter  together  ‘the 

draft regulations’). 

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

European Community and the fifth indent 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 regulations relate to payment and 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. 

1.  

Purpose of the draft regulations 

Until its very recent re-structuring on 1 January 2009, as a specialised credit institution KELER Zrt. acted 

not  only  as  a  clearing  house  (CH)  and  a  central  securities  depository  (CSD)  operating  the  securities 

settlement system in Hungary, but also as a central counterparty (CCP). In the course of 2002 and 2003, 

the  ECB  prepared  a  comprehensive  assessment  of  KELER  Zrt.  along  with  assessments  of  the  central 
securities depositories and settlement systems of all other countries joining the European Union in 20042. 

According  to  the  assessment  published  in  2004,  the  performance  of  the  CSD  function  and  the  CCP 

function by a single legal entity presented certain risks, in particular if a CCP were to take a principal risk 

equal  to  or  exceeding  its  capital  base,  using  up  its  own  funds  if  this  risk  were  to  be  crystallised.  The 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Assessment  of  accession  countries’  securities  settlement  systems,  January  2004.  Available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

 
 
 
 
 
                                                 
consequent  insolvency  of  the  CCP  could  also  disrupt  the  CSD’s  functioning.  Consequently,  the  ECB 

recommended allocating the CSD and CCP functions to independent legal entities.  

Furthermore, in its Opinion CON/2006/1 of 4 January 2006 at the request of Magyar Nemzeti Bank on a 

draft  regulation  on  the  general  terms  and  conditions  and  operating  rules  of  organisations  providing 

clearing  house  activities,  the  ECB  drew  the  consulting  authority’s  attention  to  its  recommendation  for 

creating  for  KELER  ‘a  legal  structure  which  prevents  any  spillover  of  risks  from  the  entity  providing 

CCP services to the entity providing securities settlement services’. Hence the ECB suggested amending 

the draft regulation to take account of this recommendation, among other things by separating the legal 

provisions  governing  the  general  terms  and  conditions  and  operating  rules  for  CCP  and  for  CSD 

functions. 

In  view  of  the  risks  involved  and  at  the  ECB’s  recommendation,  the  MNB  supported  the  idea  of 

separating  KELER  Zrt.’s  CCP  and  CSD  functions  into  legally  independent  companies.  Under  the  new 

regime, a newly established company, KELER KSZF Kft., acts as the CCP, while KELER Zrt. retains its 

CSD and CH functions. The amendments to Law CXX of 2001 on the capital market in 2007 served as 

the basis for separating these functions. 

The sound and smooth operation of the Hungarian securities clearing and settlement system is of utmost 

importance  for  ensuring  the  efficient  implementation  of  monetary  policy,  the  smooth  operation  of 

payment systems and financial markets, and thus financial stability, and the draft regulations will regulate 

the  terms  and  conditions  and  the  operating  rules  for  the  organisations  performing  CSD,  CH  and  CCP 

functions.  

According to the general provisions of the draft regulations, the Rules ‘shall define the parties’ rights and 

obligations as well the procedures in such a way that the legal, financial and operational risks … are clear 

and  unambiguous’.  The  draft  regulations  include  certain  definitions,  such  as  those  for  a  securities 

settlement system, liquid assets, etc. The draft regulations lay down various general rules, such as rules 

for granting access and terminating business relationships and the financial and technical requirements for 

participation,  etc.  They  also  govern  certain  risk  management  measures,  such  as  the  management  of 

principal risk related to securities transactions, securities lending, the market, futures and options, and the 

clearing  members and the  emergency-handling rules, etc. The draft regulations also lay down the basic 

principles  for  determining  fees.  It  is  proposed  that  the  draft  regulations  should  enter  into  force  on 

28 February 2009. 

2. 

General observations  

2.1  The ECB welcomes the allocation of the CSD and the CCP functions to independent legal entities 

to avoid spill-over risks. It understands that the allocation process has been completed and the new 

scheme started operating on 1 January 2009. 

2 

 
 
2.2 

In  the  opinion  of  the  ECB,  the  draft  regulations  follow,  as  far  as  possible,  the  legal  rules  and 

standards established by the Eurosystem for payment and settlement systems. 

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

Done at Frankfurt am Main, 4 February 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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