What is the purpose of the Settlement Finality Directive and the Financial Collateral Directive?
Directive 98/26/EC on settlement finality in payment and securities settlement systems (SFD) and Directive 2002/47/EC on financial collateral arrangements (FCD) are the two main Community instruments in the area of clearing and settlement and financial collateral. The SFD provides protection to both payment and securities settlement systems in case of the default of a participant to those systems and thus seeks to minimise systemic risk, whereas the FCD regulates and facilitates the cross-border use of financial collateral. Why is it necessary to amend these two directives? The Commission evaluated the two directives in 2005 and 2006 respectively. Following extensive consultation the Commission concluded that both directives work well and that Member States, market participants and other stakeholders strongly support them. The Commission does therefore not propose any substantial changes but propose to amend them in limited areas in order bring them in line with regulatory and market d
