Opinion of the European Central Bank of 11 January 2018 on markets in financial instruments (CON/2018/3)
Date: 2018-01-11
Institutions: European Central Bank
Subjects: Slovenia, application of EU law, banking supervision, credit institution, financial instrument, investment company, national law, provision of services

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 January 2018  

on markets in financial instruments 

(CON/2018/3) 

Introduction and legal basis 

On 1 December 2017 the European Central Bank (ECB) received a request from the Slovenian Ministry 
of Finance for an opinion on a draft Law on the financial instruments market1 (hereinafter the ‘draft law’). 

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  and  sixth  indents  of  Article 2(1)  of  Council  Decision 
98/415/EC2,  as  the  draft  law  relates  to  Banka  Slovenije  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  One of the purposes of the draft law, which recasts the currently applicable Law on the Financial 
Instruments Market3, is to transpose Directive 2014/65/EU4 and Delegated Directive (EU) 2017/593 
supplementing Directive 2014/65/EU5  into Slovenian  law,  and  to  implement and apply  Regulation 
(EU)  No  600/20146  and  Regulation  (EU)  2016/10117,  together  with  the  related  delegated  acts  of 

the Commission. 

1.2  The Securities Market Agency (Agencija za trg vrednostnih papirjev) is the designated competent 

authority  responsible  for  supervising  compliance  with  Regulation  (EU)  No  600/2014  and  the  acts 

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Predlog zakona o trgu finančnih instrumentov (ZTFI-1). 

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). 
Zakon o trgu finančnih instrumentov (Official Gazette of the Republic of Slovenia, No 108/10 – official consolidated 
version, 78/11, 55/12, 105/12 – ZBan-1J, 63/13 – ZS-K, 30/16 and 9/17). 
Directive  2014/65/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  on  markets  in  financial 
instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349). 
Commission  Delegated  Directive  (EU)  2017/593  of  7  April  2016  supplementing  Directive  2014/65/EU  of  the 
European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to 
clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or 
any monetary or non-monetary benefits (OJ L 87, 31.3.2017, p. 500). 
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial 
instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84). 
Regulation  (EU)  2016/1011  of  the  European  Parliament  and  of  the  Council  of  8  June  2016  on  indices  used  as 
benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and 
amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1). 

 
 
 
                                                 
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transposing Directive 2014/65/EU into Slovenian law8, and the designated contact point pursuant to 

Article 79(1) of Directive 2014/65/EU.  

1.3  Banka  Slovenije  also  has  a  certain  supervisory  role  in  respect  of  the  market  in  financial 

instruments, so far as concerns credit institutions. In particular, Banka Slovenije is responsible for 

granting  and  withdrawing  licences  to  credit  institutions  established  in  Slovenia  to  provide 
investment  services  and  activities9.  Furthermore,  the  draft  law  specifies  its  individual  provisions, 

transposing Directive 2014/65/EU and with regard to Regulation (EU) No 600/2014, that are to be 

applicable  mutatis  mutandis  to  credit  institutions  and  special  financial  institutions  providing 

investment services and activities. In applying those provisions, the references to investment firms 

shall, subject to certain exceptions, be read as references to credit institutions and special financial 

institutions  and  the  references  to  the  Securities  Market  Agency  are  to  be  read  as  references  to 
Banka Slovenije10. Accordingly, Banka Slovenije will be responsible inter alia for: (i) carrying out the 

duties  of  a  competent  authority  of  the  home  Member  State  regarding  the  intended  use  by 
Slovenian banks of tied agents established in Slovenia or another Member State11; (ii) carrying out 

the duties of the competent authority of the home Member State where Slovenian banks operating 

a  multilateral  trading  facility  (MTF)  or  an  organised  trading  facility  (OTF)  intend  to  provide  for 
remote  access  and  the  use  thereof  by  persons  established  in  another  Member  State12;  (iii) 

checking compliance by credit institutions with their obligations where they act as participants in an 
organised market13; and (iv) issuing decisions to credit institutions with regard to misdemeanours in 

the event of breach of the provisions of the draft law, including breaches identified by the Securities 
Market Agency in supervisory proceedings14.  

1.4  However, the Securities Market Agency will be responsible for the supervision of credit institutions 
and  special  financial  institutions  and  for  issuing  supervisory  measures15.  The  Securities  Market 
Agency  carries  out  this  supervision  in  close  cooperation  with  Banka  Slovenije16.  The  Securities 

Market  Agency  has  the  authority  to  conduct  supervisory  activities  under  the  draft  law,  while  the 

withdrawal of a licence and sanctioning for breaches of the draft law pursuant to a misdemeanour 
procedure remains under the authority of Banka Slovenije17. 

1.5  The Securities Market Agency is designated also as the competent authority under Regulation (EU) 

2016/1011. 

1.6 

In  addition  to  the  transposition  and  implementation  of  the  abovementioned  Union  legislation  in 

Slovenian  law,  the  draft  law  also  revises  the  provisions  of  the  Law  on  the  Financial  Instruments 

Market  concerning  the  investor  compensation  scheme.  Banka  Slovenije  currently  has  an 

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Article 49(2) of the draft law. 
Article 61(6) of the draft law. 
Article 61(4) and 62 of the draft law. 
Fourth indent of Article 61(1) of the draft law. 
Fifth indent of Article 61(1) of the draft law. 
Eighth indent of Article 61(1) of the draft law. 
Tenth indent of Article 61(1) of the draft law. 
Article 61(7) of the draft law. 
Article 61(6) and (7) of the draft law. 
Article 61(6) of the draft law. 

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administrative  role  in  respect  of  the  scheme  and  its  tasks  under  the  draft  law  have  a  similar 
scope18. 

1.7  The draft law provides that in the  event of the insolvency of a member investment firm, including 

those which are credit institutions, the other member investment firms participating in the scheme 

guarantee, proportionately to their size in terms of number of clients, the repayment of the eligible 

claims of the insolvent firm’s investor clients up to EUR 22 000 per investor. On the basis of the list 

of eligible claims, as prepared by the insolvency administrator, reviewed by the Securities Market 

Agency and approved by the competent court, the Agency requests the member investment firms 

to  pay  the  necessary  amounts  to  a  specified  account  to  be  opened  at  Banka  Slovenije.  Banka 

Slovenije  transfers  the  funds  that  it  receives  from  the  member  firms  to  the  account  of  a  bank 

appointed by Banka Slovenije to make individual payouts to investors of the insolvent firm. For the 

first six  months  after the  paying-out begins, the funds  at the  appointed  bank shall  be  deemed,  in 

the relationship between the appointed bank and the investors of the insolvent firm, as an interest 

free deposit of the investors and the bank is entitled to charge a maintenance fee not higher than 

the amount determined by Banka Slovenije. Thereafter, the bank can apply its market interest rate 

and fees for the maintenance of the deposit. 

1.8  Where  Banka  Slovenije  finds  that  member  firms  have  not  timely  or  fully  ensured  payment  of  the 

necessary amounts into the account it holds, the draft law provides that Banka Slovenije shall notify 

the  Securities  Market Agency and the  Ministry of Finance.  The  draft law further  provides  that  the 

ensuing shortfall in the scheme is to be temporarily covered by the Republic of Slovenia. The State 

is to provide a short-term loan to Banka Slovenije, acting as an agent for member investment firms 

who  have  failed  to  pay  the  relevant  amounts  into  the  scheme.  The  loan  agreement  with  the 

Republic of Slovenia  is  to be concluded  by Banka  Slovenije  on  behalf  of  the member  investment 

firms.  Members  who  have  failed  to  pay  the  required  amount  into  the  scheme  would  have  to  pay 

their proportionate amount of the loan back to the State. Banka Slovenije is further empowered to 

recover  the  outstanding  amounts  from  the  members  who  have  not  timely  or  fully  ensured  the 

necessary  funds  and  thereby  caused  the  shortfall  in  the  scheme,  together  with  any  interest  and 

fees.  Any  reimbursements  from  the  enforcement  procedure  are  to  be  used  for  repaying  the  loan 

provided by the State, together with interest and fees. 

1.9  Following  the  activation  of  the  scheme,  the  investors’  guaranteed  claims  towards  the  insolvency 

estate are deemed to be transferred to the member investment firms. Any reimbursements from the 

insolvency  estate  are  paid  to  Banka  Slovenije  for  the  benefit  of  the  scheme  members.  Banka 

Slovenije transfers the reimbursements received to the members in proportion to their share in the 

scheme. 

2. 

General observations 

2.1  This opinion does not consider whether the draft law indeed transposes Directive 2014/65/EU and 

Commission  Delegated  Directive  (EU)  2017/593  into  Slovenian  law,  or  implements  and  applies 

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Chapter 14 of the draft law. 

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Regulation (EU) No 600/2014, Regulation (EU) 2016/1011 and further related delegated acts of the 

Commission.  The  ECB  will  only  assess  those  provisions  of  the  draft  law  that  may  impact  on  the 

role  and  tasks  of  Banka  Slovenije  as  a  central  bank  and  member  of  the  Eurosystem  and  the 

European System of Central Banks (ESCB). 

2.2 

It  is  noted  that  Banka  Slovenije  is  already  responsible  for  granting  and  withdrawing  licences  to 

credit  institutions  established  in  Slovenia  to  provide  investment  services  and  activities  and  for 

carrying  out  the  abovementioned  tasks  and  cooperating  with  the  Securities  Market  Agency  with 

regard to the supervision of compliance by investment firms, including credit institutions and special 
financial  institutions,  with  the  provisions  governing  markets  in  financial  instruments19.  Therefore, 

the draft law does not alter Banka Slovenije’s existing role or confer genuinely new tasks on Banka 

Slovenije in respect of the market in financial instruments. 

2.3  Furthermore,  the  draft  law  does  not  confer  on  Banka  Slovenije  any  genuinely  new  tasks  in  the 

context  of  the  operation  of  the  investor  compensation  scheme  as  described  in  paragraphs  1.7  to 

1.9. 

3. 

Specific observations  

3.1  As regards  the tasks  of Banka Slovenije, the ECB notes that from  a legal certainty perspective it 

might  be  advisable  to  simplify  the  legislative  drafting.  The  draft  law  contains  numerous  cross-

references, and provides for the mutatis mutandis application of certain articles of the draft law and 

other  laws  depending  on  the  type  of  undertaking  in  question,  including  with  regard  to  the 

description of the respective responsibilities of the Securities Market Agency and Banka Slovenije. 

In addition, it would be beneficial if the division of responsibilities between Banka Slovenije and the 

Securities Market Agency under the draft law was more clearly specified. 

3.2  Concerning the investor compensation scheme, the ECB notes that the draft law aims to better and 

more precisely define the operation of the scheme, including how potential shortfalls in the scheme 

are to be covered. The ECB understands that the intention in this respect is to provide an explicit 

legal basis allowing and indeed requiring shortfalls to be financed by the Republic of Slovenia. The 

draft  law  establishes  that  it  is  the  government  of  the  Republic  of  Slovenia  which  has  to  finance 

potential shortfalls, thereby clarifying that Banka Slovenije does not finance them. While welcoming 

such clarification in the draft law, the ECB understands that any mismatch between the maturity of 

the short-term loan provided by the State to Banka Slovenije on behalf of the member investment 

firms  who  failed  to  ensure  the  provision  of  sufficient  funds  into  the  scheme  and  the  timing  of  the 

recovery by Banka Slovenije of the outstanding funds from those members will be mitigated in such 

a way to ensure that Banka Slovenije does not bear any financial risks under the scheme. Any loss 

resulting  from  unsuccessful  enforcement  of  amounts  due  from  the  individual  members  should  be 

borne by the State. 

19  

See Article 33(6) and (7) of the Law on the Financial Instruments Market. 

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

Done at Frankfurt am Main, 11 January 2018 

[signed] 

The President of the ECB 

Mario DRAGHI 

ECB-PUBLIC 

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