Opinion of the European Central Bank of 9 November 2018 on the strengthening of financial supervision and investor protection (CON/2018/50)
Date: 2018-05-09
Institutions: European Central Bank
Subjects: Poland, data collection, exchange of information, financial institution, financial risk, financial stability, financial supervision, investment protection, securities

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 November 2018 

on the strengthening of financial supervision and investor protection 

(CON/2018/50) 

Introduction and legal basis 

On 18 September 2018 the European Central Bank (ECB) received a request from the Polish Parliament 

for  an  opinion  on  a  draft  law  amending  certain  laws  to  strengthen    financial  supervision  and  investor 

protection (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/EC1,  as  the  draft  law  relates  to  Narodowy  Bank  Polski  (NBP)  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  proposes  to  amend  a  series  of  laws,  including  the  Law  on  the  supervision  of  the 
financial  market2,  in  order  to  strengthen  financial  supervision  and  investor  protection.  In  this 

respect,  the  draft  law  introduces  three  main  categories  of  changes.  First,  the  draft  law  proposes 

changes  to  the  structure,  financing  and  membership  of  Komisja  Nadzoru  Finansowego  (current 

KNF, the Polish Financial Supervision Authority), as well as to the sharing of information obtained 

in the course of KNF’s activities. Second, the draft law introduces the obligatory dematerialisation 

of certain securities. Third, the draft law proposes to establish Fundusz Edukacji Finansowej (FEF, 

the Financial Education Fund). 

1.2  Changes to the structure, financing and membership of the current KNF, exchange of information 

and identification of systemic risk 

The  draft  law  proposes  to  abolish  the  current  KNF  and  to  replace  it  with  the  new  KNF.  The  new 

KNF  would  comprise  the  KNF  Office  and  the  KNF.  The  KNF  Office  would  be  a  state  legal  entity 

with its own legal personality. The KNF Office would have the task of providing support services in 

relation to supervision, and would report to the Prime Minister. Within the KNF Office there would 

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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). 
Ustawa z dnia 21 lipca 2006 r. o nadzorze nad rynkiem finansowym (Dz. U. z 2018 r. poz. 621, z późn. zm.). 

 
 
 
 
                                                 
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be a separate body or organ - the KNF - which would be competent in the field of supervision over 

the  financial  market.  The  KNF  would  have  the  same  tasks  as  the  current  KNF.  All  current  KNF 

employees would remain employed by the KNF Office. The main reason for establishing the KNF 

Office, as a legal person, is to ensure its independence in the management of its own funds. The 

KNF  Chairman  would  be  responsible  for  managing  the  current  activities  of  the  KNF  Office  and 

would represent the KNF Office externally. 

The draft law also proposes to extend KNF’s membership to include representatives of the Prime 

Minister and, in an advisory capacity, Bankowy Fundusz Gwarancyjny (the Bank Guarantee Fund), 

the President of Urząd Ochrony Konkurencji i Konsumentów (UOKiK, the Office of Competition and 

Consumer Protection) and the Minister responsible for coordinating special services. According to 

the  explanatory  memorandum,  the  extension  of  KNF’s  membership  aims  to  ensure  better 

coordination  of  state  bodies  in  financial  markets  by  allowing  for  a  more  efficient  identification  of 

risks. 

The draft law includes provisions that will enable an exchange of information obtained in the course 

of  KNF’s  activities  between  institutions  that  will  be  represented  in  KNF.  In  addition,  the  draft  law 

proposes that KNF and NBP shall exchange information, including protected information, which is 

necessary  to  perform  their  tasks.  Furthermore,  the  draft  law  will  enable  the  sharing  of  certain 

information related to KNF’s activities with other public bodies or persons heading them, including 

Agencja  Bezpieczeństwa  Wewnętrznego  (the  Internal  Security  Agency),  Agencja  Wywiadu  (the 

Foreign  Intelligence  Agency),  Służba  Kontrwywiadu  Wojskowego  (the  Military  Counterintelligence 

Service),  Służba  Wywiadu  Wojskowego  (the  Military  Intelligence  Service),  Centralne  Biuro 

Antykorupcyjne  (the  Central  Anti-Corruption  Bureau),  Krajowa  Administracja  Skarbowa  (the 

National Revenue Administration) and the Police. 

Under the draft law the KNF Chairman must inform the Prime Minister about systemic risk identified 

in the financial system. 

1.3 

Introduction of obligatory dematerialisation of certain securities 

The draft law introduces the obligatory dematerialisation of corporate bonds, investment certificates 

issued  by  closed  investment  funds  and  covered  bonds,  irrespective  of  whether  or  not  such 

securities are the subject of a public offer or intended for trading on any trading venue. The main 

purpose  of  these  changes  is  to  increase  the  transparency  of  the  identity  of  the  issuer  and  the 

volume of the issuance of these securities as well as strengthen investor protection and flexibility, 

on the basis that only  entities that are best prepared for  this purpose  (i.e. brokerage houses and 

banks which have a licence for securities accounts) will record these securities and that investors 

will have the flexibility to transfer these securities to other entities. In addition, creating one central 

repository of information about debt securities issued and their maturity will improve access to such 

information for KNF, other entitled bodies and investors. 

The draft law also proposes to introduce the concept of an issuing agent which will make it easier 

for issuers to record debt securities in the depository and shorten the relevant process. 

1.4  Establishment of FEF 

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The draft law proposes to establish the FEF. The main purpose of FEF is to increase the financial 

awareness  of  Polish  citizens,  in  particular  through  setting  out  an  educational  strategy,  organising 

and supporting educational projects and information campaigns and co-operating with the Minister 

responsible  for  education.  FEF  will  be  supported  by  Rada  Edukacji  Finansowej  (the  Council  of 

Financial  Education  (hereinafter,  the  ‘FEF  Council’))  which  will  comprise  a  representative,  each 

appointed  by  the  Minister  responsible  for  financial  institutions,  of,  among  others,  each  of  the 

following:  (i)  the  Minister  responsible  for  financial  institutions,  (ii)  the  Minister  responsible  for 

education,  (iii)  the  KNF  Chairman,  (iv)  the  NBP  President,  (v)  the  President  of  UOKiK  and  (vi) 

Rzecznik  Finansowy  (the  Financial  Ombudsman).  The  FEF  Council  will  be  responsible  for  FEF’s 

strategy and ways of performing its tasks, and for supervising how these tasks are performed. The 

FEF  Council  will  also  supervise  how  FEF  manages  its  funds  and  will  decide  on  FEF’s  rules  of 

procedure.  FEF  will  be  administered  by  the  Central  Securities  Depository  of  Poland  and  funded 

through, among other things, sanctions imposed, among others, by KNF, the President of UOKiK 

and Rzecznik Finansowy. 

2. 

Specific observations   

2.1  Composition of the new KNF and the authority of the Prime Minister  

Regarding  the  authority  of  the  Prime  Minister  in  respect  of  the  new  KNF,  the  ECB  notes  that,  in 
accordance  with  Article  4(4)  of  Directive  2013/36/EU3  Member  States  must  ensure  that  the 

competent  authorities  have,  among  other  things,  the  independence  necessary  to  carry  out  the 

functions relating to prudential supervision, investigations and penalties set out in that Directive and 
in Regulation (EU) No 575/20134.  

2.2  Exchange of information 

The  ECB  understands  that  the  draft  law  effectively  requires  the  sharing  of  information  between 

KNF  and  NBP which  is  necessary to perform  their  tasks, and that certain  information obtained  in 

the  course  of  KNF’s  activities  may  also  be  exchanged  with  a  number  of  other  bodies,  including 

those which will be represented in the new KNF. However, the draft law does not otherwise specify 

the  exact  scope  of  information  that  may  be  subject  to  exchange.  Accordingly,  the  ECB  has  two 

observations. 

First, the ECB notes that NBP is subject to Council Regulation (EC) No  2533/985  concerning  the 

collection of statistical information by the ECB. Article 8(1) of Council Regulation (EC) No 2533/98 

provides  that  the  European  System  of  Central  Banks  (ESCB),  of  which  NBP  is  part,  shall  use 

confidential statistical information exclusively for the exercise of the tasks of the ESCB except in a 

limited number of circumstances, including, as regards the ECB and national central banks, if that 

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Directive 2013/36/EU of  the  European  Parliament and of the Council of 26  June 2013 on access  to the activity  of 
credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending  Directive 
2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1). 

Council Regulation (EC) No 2533/1998 of 23 November 1998 concerning the collection of statistical information by 
the European Central Bank (OJ L 318, 27.11.1998, p. 8). 

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statistical  information  is  used  in  the  field  of  prudential  supervision.  The  ECB  invites  the  Polish 

authorities  to  consider  whether  the  sharing  of  information  proposed  by  the  draft  law,  in  particular 

with  other  public  bodies  or  persons  heading  them  whose  tasks  do  not  include  prudential 

supervision, complies with the above exception. 

Second,  to  the  extent  that  information  that  could  be  exchanged  between  the  various  bodies  as 

proposed  by  the  draft  law  constitutes  confidential  information  for  the  purposes  of  Directive 

2013/36/EU,  the  ECB  draws  attention  to  Articles  53  to  62  of  that  Directive  which  set  out  the 

conditions under which confidential information may be shared with third parties, and which refer to 

specific  permitted  recipients  in  this  respect.  The  ECB  invites  the  Polish  authorities  to  consider 

whether the sharing of information proposed by the draft law complies with these provisions. 

2.3 

Identification of systemic risk 

The provision of the draft law under which the KNF Chairman must inform the Prime Minister about 

systemic  risk  identified  in  the  financial  system  is  imprecise,  as  it  is  not  clear  whether  it  concerns 

informing  the  Prime  Minister  about  systemic  risk  identified  by  KNF  or  by  the  Komitet  Stabilności 

Finansowej (KSF, the Financial Stability Committee). In that respect the ECB understands that, in 

accordance  with  the  Law  on  the  macroprudential  oversight  of  the  financial  system  and  crisis 
management6,  KSF  (whose  board  includes  the  NBP  President,  as  Chairman  in  respect  of 

macroprudential  oversight  tasks)  is  the  competent  authority  responsible  for  macroprudential 
supervision  in  Poland.7  One  of  the  tasks  of  KSF  is  to  identify  systemic  risks.  Against  that 

background, the ECB invites Polish authorities to clarify the relevant provision to avoid any conflicts 

of competence between KNF and KSF in respect of the identification of systemic risks. 

2.4  Dematerialisation of certain securities 

The ECB welcomes the obligatory dematerialisation of the relevant securities and their recording in 

a  central  securities  depository  (CSD),  as  proposed  by  the  draft  law,  as  this  will  contribute  to  the 

elimination  of  the  operational  complexities  and  risks  related  to  handling  physical  securities  in 
Poland,  and  to  the  reduction  of  settlement  and  custody  costs8,  as  recommended  in  the  CPSS-
IOSCO Principles9. It is also noted that, for those securities admitted to trading or traded on trading 

venues,  the  dematerialisation  is  in  line  with  the  requirements  in  Article  3  of  Regulation  (EU)  No 

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Ustawa  z  dnia  5  sierpnia  2015  r.  o  nadzorze  makroostrożnościowym  nad  systemem  finansowym  i  zarządzaniu 
kryzysowym w systemie finansowym, Dz.U. 2015 poz. 1513.  

The law on the macroprudential oversight implemented Recommendation ESRB/2011/3 of the European Systemic 
Risk Board of 22 December 2011 on the macro-prudential mandate of national authorities (OJ C 41, 14.2.2012, p. 
1.). See also ECB Opinion CON/2014/18. 
See,  e.g.,  paragraph  2  of  ECB  Opinion  CON/2012/3.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

Committee  on  Payment  andSettlement  Systems  and  the  Technical  Committee  of  the  International  Organization  of 
Securities  Commissions  (IOSCO),  Principles  for  financial  market  infrastructures,  particularly  Principle  11:  ‘A  CSD 
should  have  appropriate  rules  and  procedures  to  help  ensure  the  integrity  of  securities  issues  and  minimise  and 
manage the risks associated with the safekeeping and transfer of securities. A CSD should maintain securities in an 
immobilised or dematerialised form for their transfer by book entry.’ 

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909/201410 on transferable  securities and the recording of such securities in book-entry form in a 

CSD.  

2.5  Council of Financial Education Fund  

The  draft  law  proposes  that  the  Minister  responsible  for  financial  institutions  appoints  a 

representative of the NBP President to the FEF Council. In this respect, the ECB understands that 

the intention of the draft law is that the representative of the NBP President is to be first selected by 

NBP  in  accordance  with  its  statutory  rules  and  then  only  formally  appointed  by  the  relevant 

Minister.  The  ECB  would  recommend  that  the  wording  of  the  draft  law  is  clarified  accordingly  in 

order  to  avoid  any  uncertainty.  An  ability  of  the  Minister  to  select  as  well  as  appoint  the 

representative  of  the  NBP  President  could  be  considered  as  interfering  with  the  institutional 

independence of NBP as laid down in Article 130 of the Treaty and Article 7 of the Statute of the 

ESCB and the ECB, according to which the governments of the Member States undertake not to 

seek to influence the members of the decision-making bodies of the national central banks in the 

performance of their tasks. 

2.6  FEF  will  be  administered  by  the  Central  Securities  Depository  of  Poland,  which  will  also  perform 

FEF’s  tasks.  By  contrast,  the  role  of  the  FEF  Council  –  of  which  a  representative  of  the  NBP 

President  will  be  a  member  –  will  be  limited  mainly  to  setting  out  FEF’s  strategy  and  ways  of 

performing  such  tasks.  On  that  basis,  the  ECB  understands  that  no  new  task  is  proposed  to  be 

conferred on NBP.  

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

Done at Frankfurt am Main, 9 November 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities 
settlement  in  the  European  Union  and  on  central  securities  depositories  and  amending  Directives  98/26/EC  and 
2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1). 

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