ECSDA response to the Settlement Finality EU Consultation
ECSDA recognises the importance of ensuring that the Settlement Finality framework remains both technologically advanced and neutral across traditional infrastructures, DLT, and other emerging technologies. It also supports targeted harmonisation where necessary to enhance consistency and strengthen legal certainty.
The settlement finality framework is a core pillar of the safety of settlement and payment systems in the EU and has proven its resilience in well-known crisis situations, as confirmed by the 2023 Commission Report, also recalled in the Explanatory Memorandum to the Proposal.
Any amendment should, therefore, be approached with caution. The application of the Settlement Finality Legislation provisions effectively modifies how standard insolvency law operates, which may affect the position of other creditors of the insolvent entity. Such a change of the standard insolvency process is justified for the purposes of financial stability for systems with systemic relevance.
This underscores the importance of carefully assessing whether changes to certain core definitions, such as the finality moments, are indeed necessary, as well as ensuring a consistent set of system designation criteria that preserve systemic relevance as the key principle justifying the exceptional insolvency regime.
ECSDA welcomes the reform’s general objectives. However, SFD has already clearly defined all relevant aspects of settlement finality concerning CSD activities. Therefore, transforming the SFD into a more rigid instrument is not necessary to achieve further harmonisation in our area. And we need to remind that other barriers essential to be addressed remain untouched (see AMI-SeCo Post-trade barriers report).