Opinion of the European Central Bank of 4 January 2013 on the financial market supervision framework (CON/2013/1)
Date: 2013-01-04
Institutions: European Central Bank
Subjects: Poland, financial stability, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 January 2013 

on the financial market supervision framework 

(CON/2013/1) 

Introduction and legal basis 

On  23  October  2012,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Polish  Parliament 

(Sejm) for an opinion on a draft law amending the Law on supervision of the financial market and certain 

other  laws  (hereinafter  the  ‘draft  law  on  supervision’)  and  a  draft  law  amending  the  Law  on  trading  in 

financial instruments (hereinafter the ‘draft law on trading’) (collectively referred to as the ‘draft laws’). 

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

Functioning of the European Union and the sixth 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  law  relates  to  the  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.  

Purpose of the draft laws 

The draft laws introduce several changes which, if implemented, would have a significant impact on the 

regulation of financial services and on the institutional framework for financial supervision in Poland. 

1.1  The draft law on supervision proposes the following arrangements. 

(a)  The establishment of the Council for the Public Interest in the Financial Market (hereinafter 

the ‘Public Interest Council’) as a new consultative body to the Prime Minister. Members of 

the Public Interest Council are to be appointed by the Prime Minister from among candidates 

nominated by: (i) professional and non-governmental organisations with an interest in issues 

relating  to  financial  markets; (ii)  national  trade  unions;  (iii) national  employer  associations 

whose  activities  are  linked  to  the  operation  of  the  financial  markets;  (iv)  individuals 

nominated  by  certain  higher  education  establishments.  The  competences  of  the  Public 

Interest  Council  include:  (i)  playing  a  role  in  selecting  members  of  the  Polish  Financial 

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OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
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Supervision Authority (KNF); (ii) monitoring financial market transactions and providers of 

financial  services  and  reporting  on  perceived  risks  to  the  public  interest  to  the  KNF; 

(iii) submitting an annual report on the KNF’s functioning to the Prime Minister.  

(b)  The KNF and the KNF Office will be financed from the State budget and no longer from the 

fees  paid  by  the  supervised  entities.  These  supervised  entities  will  make  payments  to  the 

State budget calculated by reference to the cost of supervision. 

1.2  The draft law on trading proposes the following arrangements. 

(a) 

Financial instruments will be categorised into five groups, each with a different overall risk 

level,  which  takes  into  account  price  risk,  liquidity  risk,  interest  rate  risk  and  credit  risk. 

Entities seeking admission of financial instruments to trading will be obliged to assign a risk 

category to the instrument. KNF will maintain a public register of financial instruments and 

their  risk  categories  and  will  have  the  power  to  change  the  risk  category  of  a  given 

instrument.  

(b)   A list of ‘prohibited market practices’ that are to be combated by KNF will be introduced. 

2.   General observations 

The  ECB  notes  that  the  draft  laws  were  submitted  for  consultation  at  an  early  stage  of  the  legislative 

process.  Since  it  is  likely  that  the  draft  laws  will  undergo  further  amendments  in  the  course  of  the 

legislative  process,  which  makes  it  difficult  to  fully  assess  their  impact  on  the  Polish  financial  market 

regulation and supervision at this time, this Opinion only addresses issues related to the general approach 

adopted in the draft laws. If significant changes are introduced in the draft laws as they proceed further 

through the legislative process, the ECB expects to be consulted on the amended versions. 

3.   Objectives of financial supervision and role of the Public Interest Council 

3.1  The  draft  law  introduces  a  new  primary  objective  of  financial  supervision  in  Poland,  i.e.  ‘the 

protection  of  the  public  interest’.  This  objective  will  be  supported  by  actions  implementing  the 

present  objectives  of  financial  supervision,  including  the  ‘proper  functioning  of  the  financial 

market, its stability, security and transparency, confidence in financial markets, and protection of 
the interests of market participants’2. Moreover, the newly established Public Interest Council is to 
provide opinion on the actions of KNF from the perspective of protecting the public interest3.  The 

Public Interest Council will pursue this objective essentially through continuous auditing of KNF 

activities and through recommending measures to be taken by the Prime Minister in relation to the 

KNF.  

2  

3  

See  Article  2  of  the  Law  of  21  July  2006  on  supervision  of  financial  market  (Dz.  U.  of  4  September  2006  No  157, 
item 1119), as amended by Article 1(2) of the draft law on supervision. 
See Article 6b(2) of Law on supervision of financial markets, as inserted by Article 1(4) of the draft law on supervision. 

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3.2  The ECB notes that the introduction of the broad and ambiguous concept of ‘public interest’ as an 

objective of the financial supervision, as well as the corresponding wide definition of the role of the 

Public  Interest  Council,  including  its  powers  to  review  KNF  actions,  would  affect  KNF’s 

operational independence and result in a dilution of the supervisory objectives pursued by KNF in 

accordance  with  its  statutory  mandate.  The  ECB  points  to  international  standards  in  the  area  of 

financial market supervision, such as the Core Principles for Effective Banking Supervision, which 

emphasise  the  need  for  supervisors  to  be  operationally  independent  and  for  supervisory 
responsibilities and objectives to be clearly defined4. 

4. 

Financing supervisory activities 

4.1   Currently,  the  operating  costs  of  the  KNF  and  the  KNF  Office  are  covered  by  fees  paid  for  the 

benefit of the KNF by the supervised entities, in the amount specified annually by the budgetary 

law, and in accordance with individual fee calculations based on separate sectoral laws. The draft 

law  on  supervision  requires  supervised  entities  to  contribute  to  the  State  budget,  hence 

discontinuing the direct allocation of those payments to finance KNF’s supervisory activities. 

4.2   The  ECB  notes  that  the  proposed  model  significantly  differs  from  that  applied  by  most  Member 

States,  where  the  supervisory  authorities  are  not  financed  from  the  general  State  budget  or  this 

financing is limited. If the proposed model were to be introduced in Poland, the ECB recommends, 
in line with the Core Principles5, that appropriate measures are taken to secure adequate resources 

for  the  conduct  by  KNF  of  effective  supervision,  ensuring  its  autonomy  and  operational  

independence. 

5. 

Categorisation of financial products and services and the list of prohibited market practices 

The declared objective behind the requirement that financial institutions categorise financial products and 

services  they  offer  by  economic  risk  and  the  introduction  of  a  list  of  prohibited  market  practices  is  to 

strengthen  consumer  protection.  In  both  cases,  generally  worded  clauses  are  used  to  define  the  new 
measures6. While the ECB supports the general objective of strengthening the protection of consumers of 

financial  services,  it  recommends  that  the  proposals  contained  in  the  draft  laws  are  carefully  assessed 

from  the  perspective  of  their  compatibility  with  the  existing  instruments  of  Union  law  in  the  area  of 

financial  services  and  with  the  current  legislative  initiatives  at  Union  level  which  define  instances  for 

4  

5  
6 

See  Basel  Committee  for  Banking  Supervision,  ‘Core  Principles  for  Effective  Banking  Supervision’,  September  2012, 
Principle  1  (hereinafter  the  ‘Core  Principles’),  available  at  the  Bank  for  International  Settlements’  website  at 
www.bis.org. 
See Core Principles, principle 2, essential criterion 6. 
For example, a financial instrument in the ‘heightened risk’ category is defined as ‘a financial instrument with a medium 
price  volatility,  medium  liquidity  risk,  medium  to  high  interest  rate  risk  and  medium  credit  risk’  and  a  category  of 
prohibited practice defined as ‘dishonest or imprudent behaviour not respecting the justified interests of the clients and of 
the general good of the financial markets’; see Article 13a(3) and Article 118a(1)(1) introduced in the Law of 29 July 
2005 on trading in financial instruments (Dz. U. of 23 September 2005 No 183 item 1538) by the draft law on trading. 

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supervisory intervention aimed at protection of consumers of financial services in a specific manner. In 

particular,  the  ECB  draws  the  consulting  authority’s  attention  to  the  ongoing  review  of  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/EEC  and  93/6/EEC  and  Directive  2000/12/EC  of  the 
European  Parliament  and  of  the  Council  and  repealing  Council  Directive  93/22/EEC7,  Directive 

2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be 

published  when  securities  are  offered  to  the  public  or  admitted  to  trading  and  amending  Directive 
2001/34/EC8, and Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 
on insider dealing and market manipulation (market abuse)9, as well as to the proposal for a Regulation of 
the  European  Parliament  and  of  the  Council  on  key  information  documents  for  investment  products10. 

Such Union legislative instruments and initiatives, together with the relevant delegated and implementing 

measures,  contribute  to  the  harmonised  protection of  consumers  of  financial  services  within  the  Union, 

while respecting a need for legal certainty on the part of the providers of such services.  

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

Done at Frankfurt am Main, 4 January 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

7  
8  
9  
10  

OJ L 145, 30.4.2004, p. 1. 
OJ L 345, 31.12.2003, p. 64. 
OJ L 96, 12.4.2003, p. 16. 
COM(2012) 352 final. 

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