ALFI responds to the EU Commission consultation on the review of the Directive on settlement finality in payment and securities settlement systems (SFD)

The answers provided to this consultation of the Settlement Finality Directive (SFD) will feed into a Commission report to the European Parliament and Council. The current review considers the impact of new developments in a changing business, technological and regulatory environment. The SFD regulates and protects designated securities settlement and payment systems. It guarantees that transfer orders entered into such systems are also finally settled, regardless of whether the sending participant has become insolvent.

ALFI provided input in particular on two dimensions:

1. on the status of settlements systems governed by the law of a third country (Ch. 1). See also the remark in Ch. 7.2 regarding the enforceability/validity of collateral posted in a third-country (eg. UK under Brexit temporary equivalences).
2. on the interoperability of regular settlement systems with the DLT/blockchain (Ch. 3), in order to obtain legal certainty from the Commission.

View the ALFI response.