In July 2011, the European Central Bank (ECB) published its European Oversight Policy Framework, which amongst other things, set a requirement for central counterparties (CCPs) involved in the clearing of a certain level of euro-denominated securities to be located within the Eurozone.
In its European Oversight Policy Framework, the ECB noted that securities settlement systems and CCPs are key components of the financial system and that a financial, legal or operation problem affecting them can be a source of systemic disturbance for the financial system. Therefore, the ECB concluded that infrastructures that settle euro-denominated payment transactions should be legally incorporated in the Eurozone, with full managerial and operational control and responsibility, over all core functions, exercised from within the Eurozone.
This requirement was challenged by the UK Government, which argued that the ECB lacked the competence to impose a location requirement on CCPs. The ECB, on the other hand, argued that it was acting within its powers as per its task under Article 127(2) of the Treaty on the Functioning of the European Union (TFEU) of promoting the smooth operation of payment systems, and more specifically Article 22 of Protocol No 4 to the TFEU on the Statute of the European System of Central Banks and of the ECB, which provides that ‘[t]he ECB and national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payment systems within the Union and with other countries’.
The General Court of Justice of the European Union (ECJ), in United Kingdom v European Central Bank, rejected the ECB’s argument and annulled the requirement in the European Oversight Policy Framework. The court held that the requirement imposed by the ECB went beyond mere oversight of the infrastructures of securities clearing systems and that the ECB did not have the competence necessary to regulate the activity of securities clearing systems. The ECJ held that the term “clearing and payment systems” in Article 22, did not grant the ECB autonomous regulatory competence in respect of all clearing systems, but rather the competence to adopt regulations to ensure efficiency and safety of payment systems, including those with a clearing stage.
View United Kingdom v European Central Bank  EUECJ T-496/11, 4 March 2015