Opinion of the European Central Bank of 7 December 2011 on securities markets legislation (CON/2011/101)
Date: 2011-12-07
Institutions: European Central Bank
Subjects: Finland, administrative sanction, financial instrument, national law, payment system, securities

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 December 2011 

on securities markets legislation  

(CON/2011/101) 

Introduction and legal basis 

On 28 October 2011, the European Central Bank (ECB) received a request from the Finnish Ministry of 

Finance for an opinion on the following draft government proposals: (a) the draft law on the book-entry 

system and clearing and settlement, (b) the draft law on investment services; (c) the draft law on trading 
in financial instruments; (d) the draft law amending the Law on book-entry accounts1; (e) the draft law 
amending the Law on the financial supervisory authority2 (hereinafter collectively referred to as the ‘draft 

laws’).  

The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  third  and  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  provisions3,  as  the  draft  law  relates  to  Suomen  Pankki  and  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 laws 

1.1  The  ECB  notes  that  the  draft  laws  are  aimed  primarily  at  improving  the  technical  quality  of  the 

legislation  without  making  substantive  changes  and  at  implementing  Union  directives.  The  draft 

laws  are  part  of  a  comprehensive  reform  of  securities  markets  legislation,  the  main  objectives  of 

which are to improve the clarity and comprehensibility of securities markets legislation, to foster 

the  competitiveness  of  securities  markets  legislation,  to  make  custody  and  settlement  operation 
more effective and more competitive, and to ease the administrative burden of listed companies4. 
The  remaining  part  of  the  reform,  which  includes  the  main  substantive  legislative  changes5,  is 

expected to be carried out in the near future.  

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2  
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4  

5  

Laki arvo-osuustileistä 17.5.1991/827. 
Laki finanssivalvonnasta 19.12.2008/878. 
OJ L 189, 3.7.1998, p. 42.  
Report by the Working Group on Reform of the securities markets legislation, Ministry of Finance Publications 12/2011, 
p. 63.  
The remaining part of the reform includes, inter alia, a structural reform whereby indirect holding of securities would be 
made available alongside the direct holding system in Finland and whereby the nominee registration of securities issued 
in Finland would be permitted also for Finnish investors.  

 
 
 
 
                                                 
ECB-PUBLIC 

1.2  As regards the draft law on the book-entry system and clearing and settlement, the main substantive 

amendments relate to the book-entry system and in particular to protection of investors’ rights as 

well as ensuring that authorities have access to information on the ultimate holder of securities. In 

addition,  the  draft  law  on  the  book-entry  system  and  clearing  and  settlement  introduces 

amendments aimed at ensuring that the central securities depository (CSD) can act as a custodian. 

It also specifies under which circumstances a CSD may take a security off the book-entry system 

and further specifies the framework for the outsourcing of activities significant to CSD operations.  

1.3  As  regards  the  draft  law  on  investment  services,  the  main  substantive  amendments  relate  to  the 

custody and management of financial instruments, which are defined as an investment service that 

cannot be provided without prior authorisation. In addition, for investment firms offering custodian 

services, it introduces a duty of emergency preparedness planning as well as a duty to provide non-

professional clients with sufficient information on the custody of client funds and risks associated 

with such custody. 

1.4  The main substantive amendment introduced by the draft law amending the Law on the financial 

supervisory  authority  relates  to  clarifying  the  system  of  administrative  sanctions  available  to  the 

Financial  Supervisory  Authority  and  making  the  sanctions  significantly  more  stringent.  The 

maximum amount of administrative sanctions that the Financial Supervisory Authority can impose 

is being raised to EUR 10 000 000 for legal persons and EUR 100 000 for natural persons. Under 

the current law, the maximum amounts are EUR 200 000 and EUR 1 000, respectively. 

1.5  The draft law on trading in financial instruments introduces a duty for the Ministry of Finance to 

request a statement from Suomen Pankki before making a decision to grant a license to operate a 

stock exchange, to revoke such a license or to interrupt the operation of a stock exchange. 

1.6  As  for  the  draft  law  amending  the  Law  on  book-entry  accounts,  the  ECB  notes  that  it  does  not 

contain relevant amendments beyond editorial changes and implementation of Union directives. 

2. 

General observations 

The ECB welcomes the general objectives of the draft laws and notes that the new and substantive 

amendments do not raise general concerns for the ECB. 

3. 

Specific observations 

3.1  Provision of clearing services by foreign clearing organisations  

Relating to the provision of clearing services by foreign clearing organisations offering services in 
Finland,  the  ECB  reiterates  its  comments  in  paragraph  3  in  its  Opinion  CON/2009/666,  as  these 

comments have not been taken into account in the law of 15 January 2010 and in the current draft 

laws. 

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All ECB opinions are published on the ECB’s website at: www.ecb.europa.eu. 

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ECB-PUBLIC 

3.2  Outsourcing of operational activities 

The  ECB  recognises  that  the  ability  of  CSDs  to  outsource  certain  operational  activities  is  an 

important  element  for  the  development  of  an  efficient  securities  settlement  infrastructure  across 

CSDs in Europe. 

3.3  Account-holding structures 

The ECB notes that the Finnish securities holding system, which is also a book-entry based system, 

builds  on  the  principle  of  direct  holding,  where  the  rights  pertaining  to  the  book  entries  are 

registered directly in each account holder’s book-entry account. Book-entry securities owned by a 

foreign  individual,  corporation  or  foundation  may  be  entered  in  a  custodial  nominee  account 

administered  by  a  custodial  account  holder  on  behalf  of  a  beneficial  owner  on  the  basis  of  an 

authorisation. The ECB understands that the draft laws are not intended to amend these securities-

holding structures and that it is planned that the possibilities to develop the indirect holding model 

will  be  examined  in  phase  two  of  the  comprehensive  reform  of  Finnish  securities  markets 

legislation, which will follow in 2012.  

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

Done at Frankfurt am Main, 7 December 2011. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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