The Czech National Bank’s approach to providing answers to professional queries on financial market regulation

A. Introduction

As the financial market supervisory authority, the Czech National Bank supports professional financial market participants by clarifying legal queries in order to facilitate compliance with, and prevent breaches of, financial market regulations. This takes the form of publishing answers to queries received which comply with the following conditions.  This document does not relate to the approach to queries from other persons, such as the media or consumers. It does not relate to queries about the CNB’s FinTech contact point, either.

Assessment of compliance of own actions with legal regulations is primarily the responsibility of each market participant. The Czech National Bank’ educational work cannot replace financial market participants’ own work or work of their advisers, e.g. law firms. The answers to queries are aimed at raising awareness on the financial market and to  inform transparently about the Czech National Bank’s approach in the event of ambiguities in the interpretation of applicable legal regulations, rather than to generally assess market participants’ entire business models. 

The Czech National Bank expects queries from market participants to be qualified, i.e. to comply with the rules for qualified queries described below. 

B. Definition of conditions for replying to queries from professional market participants 

1. The query relates directly to the competences of the Czech National Bank on the financial market

A query aimed at interpreting legal regulations governing the financial market can be regarded as a query relating directly to the competences of the Czech National Bank. The Czech National Bank wishes to point out that if a similar query is being resolved at the level of the European Supervisory Authorities, the applicant will be informed of this and, as a rule, the Czech National Bank will not provide a reply.

2. The query is in written form

The Czech National Bank defines a query in written form mainly as a query sent through the form available on the CNB website. 

3. The query contains sufficient information

In addition to containing the question itself and the circumstances relevant to the answer, the query should specify the legal rule that requires interpretation (the provision of a law or decree, the article of an official information document, etc.). The query should be specific enough so that it is clear that it does not relate to abstract matters, but addresses a problem that market participants encounter in practice. The Czech National Bank therefore considers the identity of the applicant a relevant piece of information. If an opinion is being requested by a client’s representative (an attorney, auditor or other counsellor), the client in whose interest they are acting must be identified. 

At the same time, a broader importance of the query for financial market participants, or the market’s individual sectors, should be apparent in the query.

4. The query does not relate to a specific business model and its general compatibility with applicable regulation

The Czech National Bank will not assess specific business models or products which relate exclusively to the applicant’s specific factual circumstances. The query should thus be formulated in such a way that would point to ambiguities relating to applicable legal regulations in line with the other conditions for qualified queries.

5. The query includes an analysis of the issue and a proposed solution

The applicant includes an analysis of the issue and comments on the possible solution, or identifies the points that they find to be unclear. In usual cases, there is no reason for the Czech National Bank to comment on questions on how a particular situation should be addressed or on which regulations are relevant to that situation. Such questions should be answered by financial market participants themselves or with the assistance of their counsels. As the financial market supervisory authority, the Czech National Bank has neither the intention nor the capacity to substitute for them.  The purpose of the answers of the Czech National Bank as the financial market supervisory authority is to provide an interpretation of relevant regulations above all when they appear unclear or ambiguous. The analysis prepared by the applicant also helps clarify the matter in question.

6. The applicant agrees with the potential publication of the query, including the enclosed analysis of the situation and the proposed solution, and with the publication of the answer to the query 

The Czech National Bank expects the reply to be published in the form of a general opinion on the query. Depending on circumstances, however, it may also publish the query received or parts of it, and the query or the analysis enclosed to the query, including identification of the applicant, may be quoted in the published explanatory opinion.  

C. Dealing with the query

In order to use its resources efficiently when performing its tasks, the Czech National Bank will assess and deal with each qualified query with regard to its priority. Queries of a more general importance in terms of financial market regulation or of importance for a wider range of entities, typically queries sent through associations of market participants, are considered a priority.

If a qualified query pertains to the interpretation of EU acts, the CNB will send its relevant part for scrutiny to a relevant European Supervisory Authority, with the exception of cases where the interpretation is unambiguous.

The answer to the query will usually be dealt with by publishing an explanatory opinion on the query on the Czech National Bank website, and the applicant will be informed about the publication.

If the Czech National Bank finds when preparing the answer that the query is unlikely to be dealt with within three months, it will also inform the applicant about this.