Why does the proposal extend the definition of participants and indirect participants?
Systems that are linked by means of access, i.e. one system becoming a participant in the other, currently do not fall under the protection of the SFD as a ‘system’ currently cannot be a participant. This is problematic as such access is likely to become more common as a result of MiFID and the Code. In order to protect transfer orders entered by a system into another system, the proposal extends the definition of a ‘participant’ to a ‘system’. Moreover, Article 2(f) SFD allows Member States to consider an indirect participant as a participant if it is warranted due to systemic risk and provided that the indirect participant is known to the system. This option is limited, as only credit institutions can be considered as indirect participants and as it only applies to payment systems. However, other institutions indirectly participating in a system may also represent systemic risk (e.g. CCPs, investment firms…). The proposal therefore expands the definition of ‘indirect participant’ b
