Opinion of the European Central Bank of 13 August 2013 on the provision of collateral to Danmarks Nationalbank through automatic collateralisation (CON/2013/60)
Date: 2013-08-13
Institutions: European Central Bank
Subjects: Denmark, central bank, financial stability, guarantee, national law, payment system, securities

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 August 2013  

on the provision of collateral to Danmarks Nationalbank through automatic collateralisation 

(CON/2013/60) 

Introduction and legal basis 

On  12  July  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Danish  Financial 

Supervisory  Authority  (Finanstilsynet)  (FSA)  for  an  opinion  on  a  draft  law  amending  the  financial 
legislation (hereinafter the ‘draft law’)1. 

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  third,  fifth  and  sixth  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  provisions2,  as  the  draft  law  relates  to  Danmarks  Nationalbank, 

payment  and  settlement  systems  and  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 law 

1.1  The draft law introduces a number of amendments to the Danish financial legislation, of which the 
main purpose is to improve private enterprises’ access to funding3. The following issues covered by 

the draft law fall within the ECB’s competence. 

1.2  The draft law amends the rules on automatic collateralisation4, which is a special procedure for the 

provision of collateral to Danmarks Nationalbank.  Established pursuant to Section 55 of the Law 

on  securities  trading,  automatic  collateralisation  is  an  intraday  credit  operation  in  central  bank 

money  which  the  buyer  may  choose  when  settling  payments  or  securities  transactions.  Intraday 

credit provision is collateralised with securities already held by the debtor (collateral-on-stock), or 

through the eligible securities that are being purchased (collateral-on-flow). 

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The  draft  law  amends  the  Law  on  financial  business,  the  Law  on  securities  trading,  the  Criminal  Act,  the  Law  on 
administration  of  justice,  the  Law  on  alternative  investment  fund  managers  and  other  laws  and  is  expected  to  be 
submitted to Parliament in the autumn session of 2013. 
OJ L 189, 3.7.1998, p. 42. 
This is to be done by establishing an improved framework for developing the corporate bond market. 
See Section 2(7) of the draft law and part 2.8 of the explanatory memorandum of the draft law. 

 
 
 
 
                                                 
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1.3  Automatic collateralisation cannot currently be used for  loans outside the scope of Section 55 of 

the  Law  on  securities  trading,  i.e.  monetary-policy  loans,  intraday-credit  granted  by  Danmarks 

Nationalbank not used for settlement or loans for cash depots. The draft law extends the application 

of the rules on automatic collateralisation to all intraday-credit granted by Danmarks Nationalbank 

to participants with a current account at Danmarks Nationalbank. The amendment is motivated by 

the need to ensure that retail payments and large payments made by consumers and retailers can be 

settled  considerably  faster  than  at  present.  It  is  also  envisaged  that  this  more  flexible  settlement 

model  will  be  needed  to  facilitate  future  use  of  TARGET2-Securities  for  settlement  of  financial 

transactions. 

1.4  The  draft  law  also  introduces  further  measures  to  strengthen  the  financial  sector  and  ensure 

efficient enforcement by the FSA: 

(a) 

In  order  to  avoid  conflicts  of  interest  and  to  ensure  the  independence  of  the  board  of 

directors of a foundation or an association owning a  mortgage-credit limited company, the 

procedure  for  appointing  the  members  for  the  board  of  directors  of  these  foundations  or 
associations is made more transparent5.  

(b)  The  FSA  may  publish  the  orders  it  has  given  a  financial  entity  to  correct  misleading 
information  that  the  entity  has  published  about  itself6.  This  will  be  done  by  extending  the 

scope of this rule to financial entities not already covered in the Law on financial business. 

(c)  The procedures used for appeals to  the FSA with regard to decisions taken by operators of 

regulated markets, multilateral trading facilities, clearing depositories and central securities 
depositories in accordance with such entities' own rules are amended7. Consequently, it will 

no longer be possible to appeal to the FSA against decisions made in accordance with these 

entities'  own  rules,  which  are  of  a  private  law  character.  Instead,  their  rules  will  be 

interpreted  in  accordance  with  standard  private  law  rules  of  interpretation  and  disputes 

arising  from  those  decisions  will  be  decided  by  the  courts.  The  FSA’s  competence  will 

continue to cover decisions made by these entities taken in accordance with the law or rules 
issued pursuant to the law8. 

2. 

General observations  

2.1  The  ECB  welcomes the  proposed  amendments  to the  Danish financial legislation,  which  provide 

for the modernisation of the Danish payment and settlement infrastructures, better use of available 

collateral and enhanced transparency of the financial sector. 

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See Section 1(55) of the draft law and part 2.4 of the explanatory memorandum. 
See Sections 2(10), 6(7), 7(5), 10(5), 11(4), 12(1), 13(1), 14(5), 15(3), 16(3), 17(2) and 18(3) of the draft law as well as 
part 2.14 of the explanatory memorandum. 
See Section 2(11) and (12) of the draft law, which amend Section 88 of the Law on securities trading, and part 2.11 of the 
explanatory memorandum. 
See part 2.11 of the explanatory memorandum. 

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2.2 

In line with Opinion CON/2012/1049, the ECB notes the increased openness regarding the work of 

the  FSA,  which  aims  to  bring  about  greater  transparency,  as  well  as  efficient  enforcement  in  the 

financial area. When considering measures aimed to achieve increased openness and information-
sharing, it is however necessary to ensure that confidential information is adequately protected10. 

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

Done at Frankfurt am Main, 13 August 2013. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO  

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10  

See  paragraph  3.2  of  Opinion  CON/2012/104.  All  ECB  opinions  are  published  on  the  ECB's  website  at 
www.ecb.europa.eu. 
See paragraph 3.10 of Opinion CON/2011/5. 

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