Opinion of the European Central Bank of 26 October 2009 on supervision by De Nederlandsche Bank of clearing and settlement services (CON/2009/84)
Date: 2009-10-26
Institutions: European Central Bank
Subjects: Netherlands, banking supervision, central bank, financial institution, financial stability, national law, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 October 2009 

on supervision by De Nederlandsche Bank of clearing and settlement services  

(CON/2009/84) 

Introduction and legal basis 

The  Dutch  Ministry  of  Finance  did  not  consult  the  ECB  on  an  amended  draft  law  concerning  the 

supervision of clearing and settlement institutions (hereinafter the ‘amended draft law’).  

The ECB’s competence to be consulted on the amended draft law is based on Article 105(4) of the Treaty 

establishing the European Community and 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  legislation  relates  to  De  Nederlandsche  Bank  (DNB)  and 

payment and settlement systems. 

On 5 February 2007, the ECB received a request from the Dutch Ministry of Finance for an opinion on a 

draft  law  concerning  systemic  supervision  of  clearing  and  settlement  institutions  (hereinafter  the  ‘draft 

law’). The draft law stated, inter alia, that it is forbidden to provide clearing and settlement services in the 

Netherlands  without  an  authorisation  from  DNB,  that  DNB  provides  prudential  supervision  of  the 

clearing  and  settlement  institutions  and  that  the  Authority  Financial  Markets  (AFM)  performs  market 

conduct supervision (defined as the promotion of orderly and transparent financial market processes). The 
ECB responded by adopting and communicating its Opinion CON/2007/72.  

The initial draft law sent for an opinion to the Dutch Council of State did not include a separate provision 

on  clearing  and  settlement  institutions  established  in  another  State.  It  only  prohibited  the  provision  of 

clearing  and  settlement  services  in  the  Netherlands  without  DNB’s  authorisation  for  that  purpose.  This 

prohibition  applied  to  clearing  and  settlement  institutions  whether  established  in  the  Netherlands  or 

another  State,  whereby  no  distinction  was  made  between  other  Member  States  and  third  countries.  As 

regards clearing and settlement institutions established in another State, no distinction was made between 

conducting business from a branch situated in the Netherlands and providing services to the Netherlands. 

Hence  the  prohibition  against  unauthorised  provision  of  clearing  and  settlement  services  applied  to  all 

these situations. 

At the advice of the Dutch Council of State (Raad van State), the Ministry of Finance has subsequently 

amended, in particular, the cross-border aspects of the draft law as regards the authorisation obligations 

1  
2  

OJ L 189, 3.7.1998, p. 42. 
All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 

 
 
 
                                                 
and  requirements  for  providing  clearing  and  settlement  services  to  participants  with  whom  the  party 

providing the services is not affiliated in a group for the following cases: 

 

for clearing and settlement institutions established in the Netherlands intending to provide clearing 

and settlement services to participants, 

 

for  clearing  and  settlement  institutions  established  outside  the  Netherlands  intending  to  provide 

clearing and settlement services to participants from a branch situated in the Netherlands, 

 

for  clearing  and  settlement  institutions  established  in  a  designated  State  intending  to  provide 

clearing  and  settlement  services  in  the  Netherlands  to  participants  from  a  branch  situated  in  the 

Netherlands who must notify DNB, 

 

for clearing and settlement institutions established in a non-designated State intending to provide 

clearing  and  settlement  services  in  the  Netherlands  to  participants  by  providing  services  to  the 

Netherlands, 

 

for clearing and settlement institutions established in the Netherlands which have an authorisation 

as  referred  to  in  Section  2:3.0a  of  the  amended  draft  law  and  intending  to  provide  clearing  and 

settlement  services  from  a  branch  situated  outside  the  Netherlands  to  participants;  these  clearing 

and settlement institutions require prior approval.  

This  amendment  to  the  scope  of  the  draft  law  does  not  differentiate  between  clearing  and  settlement 

institutions located in and outside the euro area. 

The amendments to the authorisation obligation and requirements for clearing and settlement institutions 

are  substantive  changes  which  the  Ministry  of  Finance  should  have  submitted  for  consultation  to  the 

ECB.  

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. 

Current situation and purpose of the amended draft law 

1.1  Under  the  legislation  in  force,  oversight  of  clearing  and  settlement  institutions  covers  the 

promotion of the smooth operation of payment systems, the prevention of systemic risk, overseeing 

safety, reliability and efficiency of systems and products, maintaining consumers’ confidence and 

targeting (parts) of infrastructure providers. Within this oversight environment, DNB is competent 

for prudential aspects and the Authority Financial Markets (AFM) for market conduct aspects.  

1.2  The ECB understands that the legislative changes contained in the amended draft law introduce the 

supervisory  framework  and  are  justified  on  page  5  of  the  Explanatory  Memorandum  to  the 

amended draft law. Nevertheless, the ECB stresses that the changes in the supervisory framework 

must not prejudice the Eurosystem’s competences, in particular in relation to oversight. 

1.3  The intended purpose of the amended draft law is to introduce direct supervision of clearing and 

settlement  institutions  to  strengthen  and  complement  the  existing  oversight  framework.  By 

introducing direct supervision, the legislator aims to promote the solidity and continuity of clearing 

2 

 
2. 

General observations 

The  draft  law  is  intended  to  establish  a  consistent  legal  framework  for  the  supervision  of  clearing  and 

settlement institutions providing clearing and settlement services in and to the Netherlands to promote the 

reliability and stability of the market. The ECB notes the proposed introduction of direct supervision of 

clearing and settlement services to be conducted by DNB and views this as a means to complement and 

strengthen DNB’s oversight role. With a view to implementing the core tasks of the European System of 

Central  European  Banks  (ESCB)  under  the  Treaty  and  the  Statute  of  the  European  System  of  Central 

Banks  and  of  the  European  Central  Bank  (hereinafter  the  ‘Statute  of  the  ESCB’),  the  ECB  has  serious 

concerns  relating  to  the  proposed  authorisation  requirements  for  clearing  and  settlement  institutions. 

Although  the  enforcement  of  the  Eurosystem  location  policy  is  not  the  aim  of  the  draft  law,  the  ECB 

would like to point out that the way in which the  authorisation requirements  are  set out  may adversely 

affect the location policy of the Governing Council for infrastructures offering services in euro. 

3. 

Location of infrastructures 

3.1  The Governing Council’s location policy 

3.1.1  The  location  policy  has  been  publicly  expressed  on  a  number  of  occasions  since  the  ECB’s 
establishment.  Already  in  November  1998,  the  first  policy  statement3  was  made  in  which  it  was 

stressed, inter alia, that ‘As is the case with every central bank, the ECB has a direct interest in the 

prudent  design  and  management  of  any  payment  and  settlement  system  processing  its  own 

currency, the euro. Indeed, the smooth functioning of payment and settlement systems is a crucial 

aspect  of  a  sound  currency  and  essential  to  the  conduct  of  monetary  policy.  These  systems  also 

have  a  significant  bearing  on  the  functioning  of  financial  markets.  Changes  in  payment  systems 

may cause unpredictable shifts in the demand for, or supply of, base  money. Moreover, safe and 

efficient payment systems are critical to the maintenance of banking and financial stability. Against 

this  background,  …  the  Governing  Council  of  the  ECB  wishes  to  underline  that,  as  in  any  other 

3  

See  ‘Policy  statement  on  euro  payment  and  settlement  systems  located  outside  the  euro  area’,  available  on  the  ECB’s 
website. 

3 

 
 
                                                 
monetary system, central bank money in euro can only be provided by the central banks that belong 

to the euro area.’ 

3.1.2  The  November  1998  statement  was  followed  up  by  another  policy  statement  in  September  2001 
relating to central counterparty clearing4. Section 2(b) of this statement stated, inter alia, that the 

‘logical  geographical  scope  of  a  market  infrastructure  is  in  practice  the  currency  area’,  and  that 
domestic infrastructures for the euro5 ‘should logically be located in the euro area, as is the case 

with  core  infrastructures  in  other  monetary  areas.  This  would  be  preferable  from  a  regulatory 

perspective and would help the Eurosystem, as the “central bank” of the euro, to ensure the smooth 

functioning of payment systems, efficient monetary policy implementation and financial stability.’ 

It  also  stated  that  the  ‘location  of  central  counterparties  in  the  euro  area  would  facilitate  the 

provision, when deemed necessary and appropriate, of central bank money in euro.’ In this regard, 

point b) of the conclusions stresses that ‘The natural geographical scope for any “domestic” market 

infrastructure  (including  central  counterparty  clearing)  for  securities  and  derivatives  denominated 

in  euro  is  the  euro  area.  Given  the  potential  systemic  importance  of  securities  clearing  and 

settlement systems, this infrastructure should be located within the euro area.’ 

3.1.3  The Governing Council’s location policy is expressly based on the premise that ‘the ECB and the 

national central banks of the Eurosystem (the central banks of issue) need to retain, in any event, 

ultimate control over their currency, the euro. Therefore, from both a general policy and systemic 

risk  perspective,  the  Eurosystem  cannot,  as  a  matter  of  principle,  accept  that  payment 

infrastructures  for  euro  transactions  which  are  located  outside  the  euro  area  (the  home  currency 

area) have the potential to develop into major euro payment infrastructures, particularly if this were 
to put at stake the Eurosystem’s control over the euro’6.  

3.1.4  The  Governing  Council  confirmed  its  location  policy  more  recently  in  relation  to  central 

counterparties for over-the-counter derivatives in December 2008 and July 20097.  

3.2  Location policy and Treaty freedoms 

3.2.1  As  to  whether  the  Governing  Council’s  location  policy  could  be  seen  to  pose  any  regulatory  or 

legal  issues  related  to  the  concept  of  the  internal  market,  it  is  recalled  that  Article  14(2)  of  the 

Treaty states that the internal market comprises ‘an area without internal frontiers in which the free 

movement of goods, persons, services and capital is ensured in accordance with the provisions of 

this  Treaty’.  These  freedoms  are  further  regulated  in  particular  in  Title  III  of  the  Treaty 

(Articles 39-60) and also apply to the Eurosystem (because Article 1.1 of the Statute of the ESCB 

provides  that  the  ESCB  and  the  ECB  must  perform  their  tasks  and  carry  out  their  activities  ‘in 

4  

5  

6  

7  

See ‘The Eurosystem’s policy line with regard to consolidation in central counterparty clearing’, available on the ECB’s 
website. 
A  domestic  system  is  defined  in  the  policy  statement  as  a  system  ‘which  handles  mainly  or  exclusively  assets 
denominated in one currency’. 
See  paragraphs  2  and  3  of  ‘The  Eurosystem  policy  principles  on  the  location  and  operation  of  infrastructures  settling 
euro-denominated payment transactions’, published on 19 July 2007 and available on the ECB’s website. 
See  ‘Decisions  taken  by  the  Governing  Council  of  the  ECB  (in  addition  to  decisions  setting  interest  rates)’  for 
December 2008 and July 2009, available on the ECB’s website. 

4 

                                                 
accordance with the provisions of [the] Treaty and [the] Statute’). Furthermore, Article 3(1)(c) of 

the Treaty provides that the establishment of an internal market characterised by the abolition, as 

between Member States, of obstacles to the free movement of, inter alia, services and capital is one 

of the activities of the Community. Moreover, under Article 4(1) of the Treaty, the activities of the 

Member  States  and  the  Community  include  the  adoption  of  an  economic  policy  which  is  based, 

inter  alia,  on  the  internal  market.  From  the  foregoing,  it  is  evident  that  the  establishment  and 

functioning of the internal market is one of the core activities of the Community itself. 

3.2.2  The Treaty freedoms underlying the internal market must be seen in the context of the Treaty as a 

whole.  In  this  respect,  the  ECB  emphasises  that  the  tasks  of  the Community  are  identified under 

Article 2 of the Treaty as being achieved ‘by establishing a common market and an economic and 

monetary union’. Moreover, Article 4(2) of the Treaty states that ‘concurrently with the foregoing’ 

(i.e. with the adoption of an economic policy based, inter alia, on the internal market), the activities 

of the Member States and the Community include, inter alia, the introduction of a single currency 

and the definition and conduct of a single monetary policy, the primary objective of which is ‘to 

maintain  price  stability  and,  without  prejudice  to  this  objective,  to  support  the  general  economic 

policies in the Community, in accordance with the principle of an open market economy with free 

competition’. 

3.2.3  The  Eurosystem’s  tasks  relating  to  monetary  policy,  payment  systems  and  financial  stability  are 

inextricably  linked  to  the  Governing  Council’s  abovementioned  statement  in  July  2007  that  the 

Eurosystem  central  banks  ‘need  to  retain,  in  any  event,  ultimate  control  over  their  currency,  the 

euro’. While the Eurosystem generally has to comply with the Treaty freedoms and, in particular, 

has to consider their implications if it wishes to make use of its regulatory power to ensure efficient 

and  sound  clearing  and  payment  systems,  this  does  not  mean  that  the  ECB  may  not  impose 

measures  that  would  have  an  impact  on  the  Treaty  freedoms,  if  such  measures  are  strictly 

warranted in order to perform the Eurosystem’s basic tasks. In this respect, the ECB considers that 

it is highly significant that, under the Treaty, the Eurosystem’s monetary policy, financial stability 

and oversight tasks only apply to those Member States that have adopted the euro. 

3.3  Location policy and oversight of clearing and settlement systems 

3.3.1  In  order  to  perform  its  core  tasks,  the  Eurosystem  needs  to  ensure  the  safety  and  efficiency  of 

systems  processing  the  euro.  In  the  case  of  an  infrastructure  located  outside  the  euro  area,  the 

Eurosystem’s  ability  to  oversee  these  systems  and  to  detect  risks  that  could  jeopardise  the 

performance of its abovementioned core tasks at an early stage is undermined due to a mismatch 

between public responsibilities and public powers. For instance, as highlighted by the ‘Eurosystem 
Oversight  Policy  Framework’  of  February  20098,  cooperative  oversight  arrangements  at 

international level  can  mitigate  the  loss  of  direct  influence  to  some  extent,  but cannot  ensure  the 

same  level  of  influence  of  the  issuing  central  bank  as  direct  oversight,  especially  in  a  crisis 

situation, where access to timely information by the issuing central bank may not be possible.  

8  

Available on the ECB’s website. 

5 

                                                 
3.3.2  Consequently, if such risks are not identified and addressed at an early stage, the malfunctioning of 

infrastructures located outside the euro area processing the euro could lead to spill-over effects to 

infrastructures within the euro area. Direct Eurosystem oversight, which is possible provided that 

infrastructures  are  located  in  the  euro  area,  is  key  to  ensuring  the  safety  and  efficiency  of 

infrastructures processing the euro and thus to maintaining ultimate control over the euro.  

3.3.3  It  is  appreciated  that  the  requirements  that  need  to  be  met  to  obtain  an  authorisation  to  provide 

clearing and settlement services in or to the Netherlands will ensure that the clearing and settlement 

institutions do not constitute a risk to the investors’ interests and to financial stability in general. 

DNB  grants  the  authorisation.  These  requirements  are  to  ensure  the  safety  and  efficiency  of  the 

systems in question.  

3.3.4  Furthermore,  under  the  draft  law  an  authorisation  is  required  to  provide  clearing  and  settlement 

services in the Netherlands to participants with whom the clearing and settlement institution is not 

affiliated  in  a  group  by  providing  these  services  to  the  Netherlands.  This  does  not  prevent  these 

services  from  being  provided  from  outside  the  euro  area,  including  through  a  branch  outside  the 

Netherlands.  Considering  that  clearing  and  settlement  institutions  are  vital  in  ensuring  and 

promoting  the  stability  of  the  financial  system,  the  ECB  considers  that  the  Eurosystem’s  direct 

oversight over infrastructures processing transactions in euro is crucial and that the need for this is 

also more necessary as the draft law does not directly address crisis management. 

3.3.5  Consequently, the ECB is of the view that the possibility for clearing and settlement institutions not 

located in the euro area to provide services processing the euro, without requiring the Eurosystem 

to have sufficient means to ensure their safety, has the potential of undermining the Eurosystem’s 

control over the euro and the proper performance of its core tasks. 

3.3.6  Finally, the ECB reiterates its advice in Opinion CON/2007/7, and also in Opinion CON/2006/20, 

according to which oversight over payment systems, including market conduct, should be explicitly 

assigned  to  DNB  in  accordance  with  Article  105(2)  of  the  Treaty  and  Article  22  of  the  ESCB 

Statute. 

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

Done at Frankfurt am Main, 26 October 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

6