Opinion of the European Central Bank of 12 February 2014 on dematerialised securities accounts denominated in foreign currency (CON/2014/13)
Date: 2014-02-12
Institutions: European Central Bank
Subjects: Belgium, foreign currency, intra-EU payment, money, national law, payment system, securities

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 February 2014 

on accounts for dematerialised securities denominated in foreign currency  

(CON/2014/13) 

Introduction and legal basis 

On 17 January 2014, the European Central Bank (ECB) received a request from the Nationale Bank van 

België/Banque Nationale de Belgique (NBB) acting on behalf of the Minister for Finance for an opinion 

on a draft royal decree (hereinafter the ‘draft royal decree’) amending the Royal Decree of 14 June 1994 

laying  down  the  rules  for  maintaining  accounts  for  dematerialised  securities  denominated  in  foreign 

currency or units of account (hereinafter the ‘Royal Decree of 14 June 1994’) and the Royal Decree of 

26 May 1994 on the collection and payment of the withholding tax on movable property in accordance 

with Chapter I of the Law of 6 August 1993 on transactions in certain securities (hereinafter the ‘Royal 

Decree of 26 May 1994’). The ECB was asked to deliver an opinion within one month in order for the 

Belgian government to be able to take the ECB opinion into consideration before submitting the draft law 

to the Belgian Parliament. 

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 first, second, third and fifth indents of Article 2(1) of Council 
Decision  98/415/EC1,  since  the  draft  law  relates  to  currency  matters,  means  of  payment,  the  NBB  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 law 

1.1   The  draft  royal  decree  aims  to  increase  the  number  of  intermediaries  authorised  to  maintain 

accounts with the NBB-administrated securities settlement system (hereinafter ‘the NBB-SSS’) for 
dematerialised  public  debt  securities  denominated  in  foreign  currency2  (hereinafter  ‘securities 

denominated in foreign currency’). By virtue of the draft royal decree, all participants in the NBB-

SSS  will  be  authorised  to  maintain  accounts  for  securities  denominated  in  foreign  currency. 

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Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
See  Article  4  of  the  Law  of  2  January  1991  on  the  public  debt  market  and  instruments  for  monetary  policy,  which 
designates  the  NBB  as  the  settlement  institution  entrusted  with  the  holding  and  settlement  of  dematerialised  Belgian 
public debt securities. 

 
 
 
 
 
                                                 
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Foreign  currencies 

to  be  processed  on 

the  TARGET2-Securities  platform  (hereinafter, 

‘T2S platform’) are to be governed by rules identical to those governing securities denominated in 

euro,  whereas  other  foreign  currencies  will  be  governed  by  different  rules.  According  to  the 

explanatory  memorandum  for  the  draft  royal  decree,  the  suppression  of  any  limitation  as  to  the 

participants  who  may  hold  accounts  for  securities  denominated  in  foreign  currency  improves  the 

marketability of such securities as well as the functioning of the NBB-SSS. Such suppression also 

aims at harmonising the processing of all cash transfer orders on the T2S platform, irrespective of 

the currency in which such transfer orders are denominated. 

1.2.  Article  3  of  the  Royal  Decree  of  14  June  1994  provides  that,  unless  otherwise  stipulated  in  the 

issuance agreement, the counter-value in euro of securities denominated in foreign currency will be 

calculated on the basis of the last foreign exchange reference rates published by the ECB. Since the 

data for such foreign exchange reference rates are now automatically transmitted to the NBB-SSS, 

there  will  be  shorter  cash  settlement  processes  for  all  corporate  actions  regarding  securities 

denominated  in  foreign  currency  that  are  held  in  the  NBB-SSS.  More  particularly,  the  NBB  will 

notify its participants of the amount of interest and capital due in euro for securities denominated in 

foreign currency that are held in the NBB-SSS one business day prior to the maturity date of such 
securities,  rather  than  two  business  days  before  that  maturity  date3.  As  a  consequence,  the 

prohibition  against  the  transfer  of  such  securities  will  only  apply  one  business  day  prior  to  the 

maturity date concerned, instead of two business days prior to that maturity date, as is currently the 
case4. The withholding tax due for such transactions will also be calculated on the euro value of the 
securities  denominated  in  foreign  currency  one  business  day  before  the  maturity  date5.  For  the 
purposes of these provisions, ‘business day’ is defined as a day on which the NBB-SSS operates6. 

2.   General observations 

2.1  The  ECB  welcomes  the  fact  that  the  draft  royal  decree  allows  a  much  wider  range  of  financial 

institutions  participating  in  the  NBB-SSS  to  maintain  accounts  for  securities  denominated  in 

foreign currency. Such an amendment of the legal framework governing the NBB-SSS has already 

been  recommended  by  a  T2S  taskforce  investigating obstacles  to  smooth  cross-Central  Securities 
Depositories  (CSD)  settlement7.  In  addition,  this  development  will  ensure  non-discriminatory, 

objective and transparent access to clearing and settlement facilities in accordance with Article 34 
of Directive 2004/398, Article 30 of the proposal for a regulation on improving securities settlement 

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Article 2(1) of the Royal Decree of 14 June 1994, as amended by Article 2.1° of the draft royal decree. 
Article 2(2) of the Royal Decree of 14 June 1994, as amended by Article 2.2° of the draft royal decree. 
Article 11 of the Royal Decree of 26 May 1994, as amended by Article 3 of the draft royal decree. 
Article 2(3) in fine of the Royal Decree of 14 June 1994, as amended by Article 2.3° of the draft royal decree. 
See section 2.4.2. of the ‘Issue list for task force on smooth cross-CSD settlement’, 8 February 2011, available on the 
ECB’s website at www.ecb.europa.eu. 
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/EEC (OJ L 145, 30.4.2004, p. 1). 

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in the European Union and on central securities depositories9, and Principle 18 of the CPSS-IOSCO 
Principles for financial market infrastructures10. 

2.2.  The  ECB  also  welcomes  the  fact  that  corporate  action  processes  are  shortened  due  to  the  faster 

availability of the data for foreign exchange reference rates in the NBB-SSS. Nevertheless, the ECB 

wishes to draw the Belgian legislator’s attention to the report on Market Standards for Corporate 
Action Processing, developed by the Corporate Actions Joint Working Group11, which recommends 

that issuers effect payment as soon as possible after the payment system opens, and no later than 

12 noon,  local  time,  at  the  registered  office  of  the  issuer  CSD.  According  to  these  standards,  the 

blocking  of  holdings  for  cash  distribution  is  prohibited.  The  NBB-SSS,  in  its  capacity  as 

Contracting CSD to the T2S Framework Agreement, and in cooperation with the other CSDs, seeks 

to harmonise its processes to make efficient use of the T2S Services. The ECB therefore encourages 

the Belgian legislator to work together with the NBB-SSS to determine how to fully comply with 

Union market standards on corporate actions. 

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

Done at Frankfurt am Main, 12 February 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI  

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Proposal  for  a  regulation  of  the  European  Parliament  and  of  the  Council  on  improving  the  securities  settlement  in  the 
European Union and on central securities depositories (CSDs) and amending Directive 98/26/EC, COM(2012) 73 final. 
Available on the website of the Bank for International Settlements website, at http://www.bis.org/publ/cpss101a.pdf 
This  group  is  composed  of  representatives  of  the  main  stakeholders,  i.e.  issuers,  market  infrastructures  and 
intermediaries. The report ‘Market Standards for Corporate Action Processing’, revised version 2012, is available on the 
ECB’s website at www.ecb.europa.eu. 

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