EUROPEAN COMMISSION

Brussels, 4.12.2025

COM(2025) 941 final

2025/0381(COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on settlement finality and repealing Directive 98/26/EC and amending Directive 2002/47/EC on financial collateral arrangements

(Text with EEA relevance)

{SWD(2025) 943-944}
{SEC(2025) 943}

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

The proposed conversion of the SFD into a Regulation – together with the targeted amendments to its substantive provisions – should be regarded as proportionate and necessary to help achieve the objectives of the SIU. Fragmentation and divergences in the application of settlement finality rules across Member States has long been a barrier to cross-border financial activity. Divergent transpositions of key definitions and concepts, inconsistent national practices in system designation and determining the moment of finality create legal uncertainty and additional operational and legal risk in cross-border operations. A Regulation would directly harmonise these rules, ensuring consistent application across the Union and facilitating smoother, more predictable financial operations. In this way, the proposal supports one of the core goals of the SIU, that of a more integrated and efficient single market for savings and investment.

As a Regulation, settlement finality provisions would not impose disproportionate burdens on market participants or authorities. Instead, a Regulation would eliminate duplicative legal and compliance efforts that currently arise from having to navigate 27 disparate transpositions and interpretations of the SFD. The legal uniformity achieved via a Settlement Finality Regulation would simplify participation in multiple systems, reduce costs linked to legal due diligence, and enhance legal certainty, especially in cross-border situations and in the case of participation in third-country systems. Finally, amendments linked to ensuring technological neutrality would allow for greater legal certainty in the case that systems and assets are underpinned by new technologies, decreasing the need for costly legal work to ensure regulatory compliance.

•Choice of the instrument

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Ex-post evaluations/fitness checks of existing legislation

•Stakeholder consultations

·A public consultation 9 on the operation of the SFD, which was organised between 12 February 2021 and 7 May 2021. 72 stakeholders replied to the targeted consultation. The lack of harmonisation and legal certainty as to how Member State insolvency rules apply to EU participants in third-country systems was raised by many respondents. There was also a general agreement to add CSDs to the list of eligible (direct) participants in systems governed by the law of a Member State.

·A stakeholder workshop 10 on identifying and addressing barriers to integration of market infrastructure and scaling up of investment funds in the EU on 26 September 2024. The event included a panel on post-trading, which explored the potential benefits and challenges of post-trade consolidation as well as the regulatory landscape.

·A targeted consultation 11 on integration of EU capital markets was organised between 15 April 2025 and 10 June 2025. Regarding the SFD, some respondents considered that the Directive worked well, and no modifications were necessary, except for some clarifications regarding its application to DLT-based systems. However, other respondents supported converting the SFD into a Regulation to tackle inconsistent implementation of the SFD across the EU. Respondents also highlighted the need for clearer guidance on the conflict of law rules, as well as to tackle uncertainty regarding the protection of indirect participants and the extension of protection to participants in third-country systems and to DLT-based systems. Several respondents noted that the current SFD framework was too narrow and that a more comprehensive approach would be beneficial (e.g. broadening the scope of eligible participants). Some respondents suggested that SFD protection should be extended to activities in relation to any assets, not just cash and securities, and that the definition of ‘system’ should be broadened to include more types of systems. In addition, some respondents indicated that the information about each designated system should be published so that settlement finality moments within the SFD would be harmonised, and clearer definitions of ‘collateral security’ and ‘financial collateral’ in the FCD should be provided. The misalignment of these definitions was mentioned by more than half of respondents as creating complexities for efficient collateral management. 

•Collection and use of expertise

·The Advisory Group on Market Infrastructures for Securities and Collateral (AMI-SeCo) 12 published in September 2025 a report 13 on remaining barriers to integration in securities post-trade services. The report notes that although EU regulatory measures have dismantled barriers (including finality issues), frictions remain due to differing national implementations or interpretations.

·A study on reducing fragmentation in post-trading infrastructures in Europe, commissioned 14 by the European Commission in September 2024. The study 15  was based on publicly available information and data but also included 98 structured interviews with 76 institutions from 21 European countries, including financial market infrastructures, market participants and supervisory and policy bodies. The study notes the definition of settlement finality as one of the areas where Member States divergence in interpretation and implementation acts as a barrier to capital market integration. Furthermore, the study recommends converting the SFD into a Regulation as it would ensure uniform application of settlement finality rules, reduce legal risk and strengthen the foundation of interoperable, consolidated market infrastructures. 

•Impact assessment

·Option 1 – Do nothing;

·Option 2 – Comprehensive review of the SFD to enhance the functioning of market infrastructure;

·Option 3 – Extensive review of the SFD to impose an integrated market. 

•Regulatory fitness and simplification

•Fundamental rights

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

•Explanatory documents (for directives)

•Detailed explanation of the specific provisions of the proposal

2025/0381 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on settlement finality and repealing Directive 98/26/EC and amending Directive 2002/47/EC on financial collateral arrangements

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Central Bank 19  

Having regard to the opinion of the European Economic and Social Committee 20 ,

Acting in accordance with the ordinary legislative procedure 21 ,

Whereas:

(1)This proposal is part of a package designed to establish a single market for financial services by addressing market inefficiencies resulting from fragmentation and to create truly integrated European capital markets which are accessible to all citizens and businesses across the Union. The package seeks to unlock the Union’s financial markets potential by providing access to more efficient capital-market based financing and facilitating cross-border capital flows, which in turn should support the Union economy, stimulate job creation and enhance competitiveness. 

(2)Directive 98/26/EC of the European Parliament and of the Council 22 lays down principles and rules aiming to reduce systemic risk arising from the insolvency of participants in payment systems and securities settlement systems by disapplying certain national insolvency rules, where a party to a transaction becomes insolvent, allowing payments and securities transactions to be made and settled safely. Directive 98/26/EC also protects collateral provided for by the insolvent party and clarifies which law is to apply in certain cross-border situations.

(3)A public consultation conducted in 2021 and the 2023 Commission report 23  showed that the obligations laid down in Directive 98/26/EC as well as protections granted towards domestic institutions participating in third-country systems were transposed differently by Member States, resulting in an unlevel playing field for Union systems and participants, and creating barriers to the smooth functioning of the single market.

(4)Divergent national approaches have resulted in the fragmentation of the single market. Systems and participants are subject to different rules in different Member States. In this respect, a system could be designated in one Member State and not in another, or a transfer order could be protected in one Member State and not in another, depending on the law of the Member State applicable to the system. The divergent national approaches cause legal uncertainty, prevent market integration and inhibit cross-border transactions.

(5)To ensure that provisions imposing obligations on systems, their operators and their participants are applied in a uniform manner throughout the Union, thereby facilitating market integration and cross-border transactions, and ensuring greater legal certainty, it is appropriate and necessary to repeal Directive 98/26/EC and replace it with a Regulation.

(6)To enable a wider range of systems to benefit from the protections offered to systems and system operators, the concepts used and the rules laid down should be neutral as regards the use of any particular technology, including distributed ledger technology (DLT). In particular, any references to register or recordings should include instances where such registers are established on DLT or otherwise on distributed ledgers and where recordings are made onto such ledgers-based registers and hence may or may not include wallets or other digital representations of ownership and rights.

(7)Regulation (EU) 2022/858 of the European Parliament and of the Council 24 allows for market infrastructures based on DLT to test and experiment with the provision of certain services via DLT, including by establishing systems that settle transfer orders in DLT-based financial instruments. It should be possible to designate such systems under this Regulation, subject to their compliance with the conditions set out in both Regulation (EU) 2022/858 and this Regulation. The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) should be mandated to further specify the rules on how to assess and determine settlement finality in systems that use DLT.

(8)Since the national insolvency rules of the Member State whose law governs a system apply to that system, systems should be designated by the authorities of the Member State whose law governs the system, on the basis of uniform designation conditions and a harmonised procedure.

(9)Member States have adopted different approaches regarding the type of information to be publicly disclosed on Union systems and third-country systems to which they chose to extend the protections of Directive 98/26/EC. To address the existing information asymmetry across Member States and to harmonise the information to be made publicly available, the type of information to be provided to the authorities in charge of the designation or registration of a system should be harmonised. Furthermore, ESMA should publish the information in a centralised way to facilitate access to that information. To ensure legal certainty, the information communicated to ESMA for the purpose of publication should be relevant, accurate and up-to-date.

(10)The list of entities that can be considered as participants in a system should take into account the different participation models adopted by systems, while ensuring that the aim to protect the financial system from systemic risk is met. To that end, the entities to be admitted as participants should fulfil certain conditions to avoid creating unnecessary risks for the system in which they participate. Such conditions should, however, not impose additional requirements where the system operator already applies admission requirements to the system under Union law when admitting new entities as participants to its designated systems, as in the case of central counterparties (CCPs) and central security depositories (CSDs). It should be possible to include as participants in a system entities that perform validation or consensus functions that are essential for maintaining settlement integrity.

(11)To ensure an effective application of the settlement finality protections, Member States should nominate the authority or authorities responsible for the designation, the registration and the communication of the opening of insolvency proceedings. Those authorities should be granted the necessary powers for the exercise of their functions. They should cooperate and exchange information as necessary with each other and with ESMA and the members of the European System of Central Banks (ESCB). To facilitate their tasks and increase transparency across the Union, the list of those authorities should be made public.

(12)Member States should be able to apply the protections provided to Union systems to entities established on their territory that participate directly in third-country systems and to collateral security provided in connection with participation in such third-country systems. In order to remedy the unlevel playing field regarding participation of Union entities in third-country systems stemming from the different national regimes developed by Member States to extend the protections of Directive 98/96/EC, a harmonised regime for registration by Member States of third-country systems should be laid down. It should be based on a formalised and harmonised procedure that ensures the application of clear standards and that streamlines access conditions for all Union entities participating in a given third-country system. Registration of third-country systems by Member States should be done by the Member State in which an entity participating in such system is established. That may, however, result in several Member States registering the same third-country arrangement if members are established in several Member States. To prevent any unlevel-playing field for entities established in different Member States, the registration of such systems should be done in a coordinated and convergent way and be facilitated by ESMA, EBA and the ESCB.

(13)The reduction of systemic risk requires, in particular, the finality of settlement and the enforceability of collateral security. Transfer orders and their netting should therefore be legally enforceable in all Member States and binding on third parties. Rules on enforceability of netting should not prevent systems from testing, before the netting takes place, whether orders that have entered the system comply with the rules of that system and allow the settlement of that system to take place.

(14)Settlement should be considered final when the parties to the contract underlying the settlement have fully discharged their obligations towards the other party in an unconditional and irrevocable manner. The moment a transfer order enters a system and the moment of irrevocability of a transfer order are important moments for the application of insolvency law to that transfer order. To ensure the highest possible degree of consistency regarding settlement finality protection across systems, as well as to facilitate cross-border activity in the single market, it is necessary to lay down principles to be used for the determination of those moments for all types of systems. At the same time, those principles should allow for the possibility to develop regulatory technical standards to tailor those principles to the specific characteristics of each system while taking into account the existence of different types of systems, the different technologies used and the mechanics of each system. Systems should include, where they exist, those specific and tailored moments of settlement finality in their rules in a clear manner.

(15)Participants or third parties should not be prevented from exercising any right or claim resulting from the underlying transaction which they may have in law to recovery or restitution in respect of a transfer order which has entered a system, including in case of fraud or technical error, as long as that leads neither to the unwinding of netting nor to the revocation of the transfer order in the system.

(16)Member States should immediately notify each other of the opening of insolvency proceedings against a participant in the system. Insolvency proceedings should not have a retroactive effect on the rights and obligations of participants in a system. 

(17)In the event of insolvency proceedings against a participant in a system, it should be clear which insolvency law is applicable to the rights and obligations of that participant in connection with its participation in a system.

(18)Collateral security should be insulated from the effects of the insolvency law applicable to the insolvent participant. Collateral security comprises all means provided by a participant to the other participants in the settlement system, to secure rights and obligations in connection with that system, including repurchase agreements, statutory liens and fiduciary transfers.

(19)In the case of linked systems, it is necessary to ensure adequate protection of the system operator that provides collateral security to a receiving system operator in the event of insolvency proceedings against that receiving system operator. 

(20)It is necessary to provide a conflict of laws rule regarding the rights of holders of collateral security in order to ensure that the law of the Member State where the collateral security was validly created in a register, account or centralised deposit system, determines also the validity and enforceability of that collateral security against the system, the system operator, and against any other person claiming directly or indirectly through it. That rule should only apply to a register, account or centralised deposit system which evidences the existence of proprietary rights in or for the delivery or transfer of the collateral security concerned.

(21)It is necessary to clarify the law of which Member State should apply to determine the rights of the holders of that collateral security. However, in some circumstances, in particular regarding the use of new technologies, it is not always possible to determine in which Member State the register, account or centralised deposit system, where the collateral security is legally recorded, is located. In such cases, the rights of the holders of that collateral security should be determined by the law governing the system concerned in connection with that collateral security.

(22)It is also necessary to provide a conflict of laws rule regarding the law applicable in case of insolvency of a participant. That rule should not prejudice the operation and effect of the law of the Member State under which the financial instruments are constituted or of the law of the Member State where the financial instruments may otherwise be located, including, inter alia, the law concerning the creation, ownership or transfer of such financial instruments or of rights in such financial instruments, and should not be interpreted to mean that any such collateral security will be directly enforceable or be capable of being recognised in any such Member State otherwise than in accordance with the law of that Member State.

(23)In view of the changes made in this Regulation, it is necessary to amend Directive 2002/47/EC of the European Parliament and of the Council 25 to ensure consistency. Divergences in the scope of this Regulation and Directive 2002/47/EC would cause legal uncertainty and conflicting application, in particular in relation to instruments issued on DLT, as such instruments would be recognised as potential collateral under this Regulation but not necessarily under Directive 2002/47/EC.

(24)ESMA, EBA and the ESCB should play a central role in the application of this Regulation by ensuring consistent application of Union rules by national competent authorities.

(25)The Commission should be empowered to adopt regulatory technical standards developed by ESMA and EBA with regard to further specifying the following: the information to be provided in an application for designation; the conditions for designation; the information to be provided in an application for registration; the moment of entry of a transfer order into a system not operated by a CSD, including DLT-based systems; the moment of irrevocability of a transfer order entered into a system not operated by a CSD, including DLT-based systems; and the moment of final settlement in systems not operated by a CSD, including DLT-based systems. The Commission should adopt those regulatory technical standards by means of delegated acts pursuant to Article 290 of the Treaty on the Functioning of the European Union (TFEU) and in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council 26 and with Articles 10 to 14 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council 27  

(26)The Commission should also be empowered to adopt implementing technical standards developed by ESMA or EBA with regard to the electronic formats for the application for designation, and the electronic formats for the application for the registration of a third-country system. The Commission should adopt those implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1095/2010 and with Article 15 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council.

(27)The power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU) should be delegated to the Commission in respect of amendments to the definition of transfer order to add or remove settlement assets and amendments to the list of participants. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(28)Systems which were designated under Directive 98/26/EC, and third-country systems to which Member States extended the protections of that Directive prior to the date of entry into force of this Regulation, should benefit from some transitional measures in order to provide sufficient time for Member States to designate or register those systems, as applicable, in accordance with the conditions set out in this Regulation. The application of the designation and registration requirements for those systems should therefore be deferred.

(29)Since the objectives of this Regulation, namely to ensure a harmonised approach to protection against systemic risk arising from the functioning of settlement systems, in connection with the insolvency of any of their participants, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives, 

(30)This Regulation introduces binding requirements for cross-border digital public services within the meaning of Regulation (EU) 2024/903 28 . The Digital Dimensions chapter of the Legislative Financial and Digital Statement constitutes the resulting report. This will also be published on the Interoperable Europe Portal following the Act's adoption.

HAVE ADOPTED THIS REGULATION:

TITLE I

OBJECT, SCOPE AND DEFINITIONS

Article 1

Object and scope

1.This Regulation lays down requirements for the designation of systems that qualify for the application of settlement finality rules in the Union as set out in Articles 17 to 25.

2.This Regulation also lays down requirements for the registration of third-country systems in one or several Member States in order to enable institutions established in those Member States, which participate in those third-country systems, to benefit from the extension of the insolvency protection provided for in Articles 17, 19, 22(1), 23, 24 and 25(1) to transfer orders entered into in such third-country systems.

In the case of an insolvency of a member of such a system, transfer orders entered by that member shall be protected where both the following conditions are met:

(a)the member participates in a registered system as defined in Article 2(1), point (9);

(b)the member is an institution as defined in Article 2(1), point (10)(a)(i) to (iv) and (b), established in the Member State which has registered that system under Article 12.

3.This Regulation shall apply to:

(a)any system as defined in Article 2(1), point (1);

(b)any participant as defined in Article 2(1), point (15);

(c)collateral security, as referred to in Article 25, provided in connection with and in relation to any of the following:

(i) participation in a system;

(ii) operations of the central banks of the Member States or the European Central Bank in the context of their function as central banks.

Article 2

Definitions

1.For the purpose of this Regulation, the following definitions shall apply:

(1)‘system’ means a formal arrangement, other than an interoperability arrangement, with common rules and standardised procedures, including a securities settlement system, a clearing system or a payment system, which provide for the settlement, clearing or execution of transfer orders between participants;

(2)‘third-country system’ means a system which is not governed by the law of a Member State;

(3)‘settlement’ means settlement as defined in Article 2(1), point (7), of Regulation (EU) No 909/2014 of the European Parliament and of the Council 29 ;

(4)‘clearing’ means clearing as defined in Article 2, point (3), of Regulation (EU) No 648/2012 of the European Parliament and of the Council 30 ;

(5)‘securities settlement system’ means a system whose activity consists of the settlement of transfer orders;

(6)‘payment system’ means a payment system as defined in Article 4, point (7), of Directive (EU) 2015/2366 of the European Parliament and of the Council 31 ;

(7)‘clearing system’ means a system providing clearing services operated by a clearing house;

(8)‘designated system’ means a system designated in accordance with Article 3;

(9)‘registered system’ means a system registered in accordance with Article 12;

(10)‘institution’ means:

(a)any of the following entities, participating in a designated system, and being responsible for discharging the financial obligations arising from transfer orders within that system: 

(i)a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council 32 , including the entities listed in Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council 33 ;

(ii) an investment firm as defined in Article 4(1), point (1), of Directive 2014/65/EU of the European Parliament and of the Council 34 with the exception of the institutions referred to in Article 2(1) thereof;

(iii)a public authority;

(iv)a publicly-guaranteed undertaking;

(v)any undertaking whose head office is outside the Union and whose functions correspond to those of the Union credit institutions or investment firms referred to point (i) and (ii);

(b) any of the following entities, which participates in a designated system whose business consists of the execution of transfer orders as defined in point (20)(a) and which is responsible for discharging the financial obligations arising from such transfer orders within that system:

(a)a payment institution as defined in Article 4, point (4), of Directive (EU) 2015/2366, with the exception of a natural or legal person benefitting from an exemption pursuant to Article 32 or 33 of that Directive;

(b)an electronic money institution as defined in Article 2, point (1), of Directive 2009/110/EC of the European Parliament and of the Council 35 , with the exception of a legal person benefitting from a waiver under Article 9 of that Directive;

(11)‘central counterparty’ or ‘CCP’ means a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012; 

(12)‘central securities depository’ or ‘CSD’ means a central securities depository as defined in Article 2(1), point (1), of Regulation (EU) No 909/2014; 

(13)‘settlement agent’ means an undertaking providing settlement accounts to participants of a system;

(14)‘clearing house’ means an entity responsible for the calculation of the net positions of institutions, including a CCP or a settlement agent; 

(15)‘participant’ means any of the following entities, which participates in a system: 

(a)for designated systems, any of the following: 

(i)an institution;

(ii)a CSD;

(iii)a settlement agent;

(iv)a clearing house;

(v)a system operator;

(vi)a clearing member of a CCP authorised pursuant to Article 17 of Regulation (EU) No 648/2012;

(vii)an entity other than the entities listed in points (i) to (vi);

(b)for registered systems, any member allowed under the rules of that registered system;

(16)‘system member’ means an entity referred to in point (15) (a)(vii);

(17)‘indirect participant’ means any of the entities listed in point (15)(a)(i) to (v) that has a contractual relationship with a participant in a designated system executing transfer orders which enables the entity to pass transfer orders through the designated system;

(18)‘client’ means any undertaking with a contractual relationship with a participant, including an indirect participant, which enables that undertaking to settle, clear and execute its transfer orders through the designated system via such participant;

(19)‘financial instrument’ means a financial instrument as defined in Article 4(1), point (15), of Directive 2014/65/EU; 

(20)‘transfer order’ means any of the following instructions, including instructions that require the use of a cryptographic key or other device or method to digitally sign:

(a)an instruction by a participant to place at the disposal of a recipient or member an amount of funds which results in the assumption or discharge of a payment obligation as laid down in the rules of the system;

(b) an instruction by a participant to transfer the title to, or interest in, financial instruments and other instruments, where authorised by the system, including in relation to collateral arrangements and clearing, recorded by means of a book-entry or electronic recording on a register having a similar function or otherwise;

(21)‘funds’ means funds as defined in Article 3, point (30), of [Regulation on payment services in the internal market (EU) [PSR] 36 ;

(22)book-entry’ means an electronic record, evidencing any credit or debit or other changes made to such electronic record, where the electronic record and any changes thereto may be undertaken by using distributed ledger technology;

(23)‘insolvency proceedings’ means any collective measure provided for in the law of a Member State, or a third country, either to wind up a participant in a system or to reorganise such participant, where such measure involves the suspending of, or imposing limitations on, transfers or payments;

(24)‘netting’ means the conversion into one net claim or one net obligation of claims and obligations resulting from transfer orders which a participant or participants either issue to, or receive from, one or more other participants with the result that only a net claim can be demanded or a net obligation be owed;

(25)‘settlement account’ means an account used to settle transfer orders or used to hold settlement assets, including cash, funds and financial instruments, and, where used for extending credit for settlement purposes, operated by a central bank, a settlement agent or a clearing house;

(26)‘account’ means a record, including a centralised or decentralised digital or electronic record, on which cash, financial instruments or other assets may be credited or debited or otherwise recorded to register a change in the record;

(27)‘collateral’ means all realisable assets, including, without limitation, those financial instruments and funds, including those issued or recorded using distributed ledger technology, including in tokenised form, and financial collateral referred to in Article 1(4), point (a), of Directive 2002/47/EC, provided under a pledge, a title transfer arrangement, a repurchase or similar agreement, or otherwise, for the purpose of securing rights and obligations potentially arising in connection with or related to a system, or provided to central banks of the Member States or to the European Central Bank;

(28)‘business day’ means both day and night-time settlements and encompasses all events happening during the business cycle of a system;

(29)‘working day’ means all days other than public holidays, Sundays and Saturdays as calculated in accordance with Regulation (EEC, Euratom) No 1182/71 37 ;

(30)‘interoperability arrangement’ means two or more designated systems whose system operators have entered into a formal arrangement with one another that involves cross-system execution of transfer orders;

(31)‘interoperable system’ means a system that is part of an interoperability arrangement;

(32)‘system operator’ means the undertaking or undertakings, legally responsible for the operation of a system, which may also act as a settlement agent, central counterparty, central securities depository or clearing house;

(33)‘designating authority’ means the competent authority responsible for designating the system in accordance with Article 4(1);

(34)‘national competent authority’ means the competent authority in the Member State where the system operator is established;

(35)‘registering authority’ means the competent authority responsible for registration the system in accordance with Article 12;

(36)‘central database’ means the central database established in accordance with Article 26;

(37)‘distributed ledger technology’ or ‘DLT’ means distributed ledger technology as defined in Article 2, point (1), of Regulation (EU) 2022/858 of the European Parliament and of the Council.

2.The Commission shall be empowered to adopt delegated acts in accordance with Article 27 to amend any of the following:

(a)the definition of transfer order laid down in paragraph 1, point (20), where necessary to ensure that new types of assets subject to settlement, clearing or payment in designated systems are covered by the protections provided in this Regulation;

(b)the definition of participant laid down in paragraph 1, point (15), to add natural or legal persons, based on the experience of cases where such persons are allowed to participate in a DLT settlement system subject to Regulation (EU) 2022/858.

TITLE II

SYSTEM DESIGNATION

Article 3

Designated system

1.Where an undertaking operates or intends to operate a system governed by the law of a Member State, such a system operator may apply for that system to be designated in accordance with the procedure laid down in Article 4, as a system in the Union to which the settlement finality rules laid down in Articles 17 to 25 apply.

A system operator referred to in paragraph 1 that, to a limited extent, offers the settlement, clearing or execution of instructions related to instruments other than those referred to in Article 2(1), point (20)(b), may request that the settlement finality rules set out in Articles 17 to 25 also apply in relation to such instruments. The designating authority may allow such instructions to be considered transfer orders when it considers that such a designation is warranted on grounds of systemic risk.

2.The designating authority of the Member State whose law governs the system may designate the system, where at least one of its participants has its head office in that Member State.

Article 4

Procedure for granting and refusing designation 

1.A system operator that applies for designation of a system that it operates shall submit an application for designation addressed to the designating authority of the Member State whose law governs the system.

2.The application shall be immediately shared with all of the following:

(a)the designating authority;

(b) where applicable, the national competent authority;

(c)ESMA;

(d)EBA for systems operating transfer orders set out in Article 2(1), point (20)(a);

(e)The ESCB. 

3.The system operator shall include in the application all documents and information necessary to demonstrate that it and the system it operates meet the requirements in this Regulation, including the information listed in Article 6(2) (a) and (c) to (g).

4.An acknowledgement of receipt of the application referred to in paragraph 1 shall be sent to the system operator within two working days of receipt of such application. The designating authority shall, within 20 working days of receipt of the application, determine whether the application contains the documents and information required pursuant to paragraph 3.

Where, during the applicable period specified under the first subparagraph, the designating authority concludes that not all documents and information required pursuant to paragraph 3 have been submitted, it shall request the system operator to submit such additional documents or information. Where the system operator has failed to comply with any such request in full, the designating authority may reject the application.

5.By the end of the time limits referred to in paragraph 4, the designating authority shall notify the system operator and the authorities listed in paragraph 2, points (b) to (e), as applicable, whether the application is accepted or rejected.

6.After having notified the system operator that the application is accepted, the designating authority shall conduct an assessment of the system operator’s and the system’s compliance with the requirements laid down in this Regulation within 80 working days of the date of the notification referred to in paragraph 5 (‘the assessment period’).

7.During the assessment period, the designating authority may submit questions to, or request complementary information from, the system operator.

Where the system operator has not responded to the questions or provided the requested information within the deadline set by the designating authority, the designating authority may decide to extend once the relevant assessment period by a maximum of 10 working days in total where, in its view, any of the questions or information is material for the assessment. The designating authority shall inform the system operator of the extension provided. The designating authority may take a decision on the application in the absence of the system operator’s response.

8.Within the assessment period, the designating authority shall decide whether to grant or refuse the designation of the system referred to in Article 3. The designating authority shall decide to grant designation only where it is fully satisfied that the system and its operator comply with the requirements laid down in this Regulation.

9.After taking a decision referred to in paragraph 8, the designating authority shall, inform, without undue delay, the system operator, and the authorities listed in paragraph 2, points (b) to (e), as applicable, of its decision, including a fully reasoned explanation.

Article 5

Conditions for designation

1.A designating authority shall designate a system in accordance with Article 3, only where the designating authority is satisfied that all of the following conditions are fulfilled: 

(a)the system is governed by the law of the Member State of the designating authority;

(b)at least one of the participants to the system is established in the Member State of the designating authority;

(c)the system has common rules and standardised procedures for the settlement, clearing, or execution, as applicable, of transfer orders between the participants;

(d)the system has clearly identified in its common rules and standardised procedures the moments of finality that fulfil the requirements set out in Articles 18, 20 and 21.

(e)the common rules and standardised procedures of the system stipulate, where relevant in accordance with Article 7, the requirements for participation in the system;

(f)there are no apparent conflicts between the common rules and standardised procedures of the system and the law governing the system;

(g)the system operator is able to ensure adequate monitoring of compliance of its system with the common rules and standardised procedures of the system it operates;

(h)the system operator is capable of operating the system, is of sufficiently good repute and has sufficient experience to ensure the sound and prudent management of the system;

(i)the system operator has enough financial resources to operate the system;

(j)the system operator is legally accountable, responsible and liable for the operation of the system, including for any links to other systems and the relationship to third parties and to the authorities;

(k)the system operator has put in place sufficient measures to mitigate the risks related to the operation of the system;

(l)where the system operator consists of a network of nodes operating under a common governance and supervision framework, the common rules and standardised procedures of the system shall ensure that one undertaking is legally accountable, responsible and liable for the operation of the system;

(m)where the system operator is a consortium of entities, all entities shall be jointly and severally accountable, responsible and liable for the operation of the system.

2.ESMA may, in close cooperation with the ESCB, develop draft regulatory technical standards to further specify the conditions referred to in paragraph 1 for securities settlement systems and clearing systems.

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council 38 .

3.EBA may, in close cooperation with the ESCB, develop draft regulatory technical standards to further specify the conditions referred to in paragraph 1 for payment systems.

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010 39 .

Article 6

Notification of a designated system

4.A designating authority shall notify, simultaneously and without undue delay, ESMA and the system operator of its decision taken pursuant to Article 4. The designation shall be effective from the date of notification.

5.The notification referred to in paragraph 1 shall contain at least all of the following information, as of the date of the designation:

(a)the identification of the system, the law governing the system, the system operator and the designating authority;

(b)the date on which the system was designated;

(c)the Member State in which the system operator is established and the national competent authority, where applicable;

(d)whether the system is a securities settlement system, a clearing system or a payment system;

(e)the finality moments of the system as specified in its rules in accordance with Articles 18, 20 and 21;

(f)the participants to the system;

(g)the common rules and standardised procedures of the system;

(h)the designating authority’s assessment of the system operator’s and system’s compliance with the requirements under this Regulation, including the conditions for designation set out in Article 5.

6.The designating authority shall notify ESMA and the authorities listed in Article 4(2), points (b), (d) and (e), as applicable, without undue delay, of any of the following:

(a)any notifications made by the system operator in accordance with Article 8(2); 

(b)any changes to the designation of the system; 

(c)any updates to the information listed in paragraph 2.

7.ESMA shall publish in a standardised format the information referred to in paragraph 2, point (a) to (g), and any updates thereto in accordance with paragraph 3, point (c), on its website without undue delay and no later than 2 working days after receipt of that information. ESMA shall specify the date when updates to the information on its website were made and which information was updated.

ESMA shall, without undue delay, provide updated information to EBA and the ESCB, as applicable.

Article 7

Participants in designated systems

1.A system operator may admit one or more types of participants listed in Article 2(1), point (15)(a)(i) to (vii), to the designated system it operates.

A designated system that allows a participant to act in several of the capacities listed in Article 2(1), point (15)(a), or carry out part or all the tasks related to those capacities, shall specify that in its common rules and standardised procedures.

A Member State may, in exceptional circumstances and for the purposes of this Regulation, admit an indirect participant as participant where the indirect participant is known to the system operator and the participants of the system, and where that is warranted on the grounds of systemic risk. That possibility shall, however, not limit the responsibility of the participant through which the indirect participant passes transfer orders to the designated system.

2.A system operator of a designated system may accept a system member to the system only where that member meets all of the following conditions: 

(a)it has the capacity and ability to meet the obligations arising from its participation in the system;

(b)it has the capacity and ability to mitigate the risks resulting from its participation in the system;

(c)it complies with the rules of the system. 

A system operator of a designated system shall establish admission criteria, differentiating per type of participant where relevant. Such admission criteria shall be non-discriminatory, transparent and objective to ensure fair and open access to the designated system.

A system operator of a designated system shall ensure that the system members comply with the conditions set out in the first subparagraph on an ongoing basis and shall have timely access to the information relevant for such assessment.

3.A participant that enables its clients to access a designated system by transmitting instructions for transfer orders through that system shall inform the system operator of that system thereof. That participant shall have the necessary additional financial resources and operational capacity to perform that activity and shall provide the system operator with the information necessary to identify, monitor and manage relevant concentrations of risk relating to the provision of services to clients. 

A participant that enables its clients to access the services of the system shall, upon request from the system operator, inform the system operator about the criteria and arrangements it adopts to enable its clients to access those services. Regardless of such information, that participant shall remain solely responsible with respect to the system operator and other participants to the system for ensuring that its clients comply with their obligations.

Article 8

Duties of a system operator of a designated system

1.The system operator of a designated system shall be responsible for its compliance, and that of the system it operates with the provisions of this Regulation at all times.

2.The system operator shall notify, without undue delay, to the designating authority of any of the following:

(a)any material changes that affect or may affect the system operator’s compliance, and that of the system it operates, with the provisions of this Regulation;

(b)any changes to the list of information provided for in Article 6(2), points (a) to (g).

Article 9

Withdrawal of designation

1.A designating authority shall withdraw a designation it granted, where any of the following conditions is met:

(a) the system operator has obtained the designation by making false statements or by any other irregular or unlawful means;

(b)the system operator or the system it operates, as applicable, no longer complies with the requirements of this Regulation and the system operator has not taken the remedial actions requested by the designating authority within a set timeframe;

(c)the system operator or the system it operates, as applicable, has seriously or systemically infringed the requirements laid down in this Regulation.

2.A designating authority shall only decide to withdraw the designation of a system after it has informed the national competent authority and requested an opinion on the appropriateness of withdrawing the designation. The opinion shall be requested from ESMA and the ESCB for the withdrawal of the designation for securities settlement systems and clearing systems, or from EBA and the ESCB, for the withdrawal of the designation for payment systems.

Where ESMA, EBA or the ESCB are of the opinion that the withdrawal of the designation may cause material risks to the financial stability of the Union or in a Member State, it shall inform the designating authority within 10 working days of being informed of a potential withdrawal of a designation under first subparagraph and the designating authority shall, before withdrawing the designation of the system, convene an ad hoc meeting with the national competent authority, the ESCB and, depending on the nature of the system, ESMA or EBA, to cooperate on how to mitigate the risks identified.

Where the designated system is a CSD or a CCP, the designating authority shall not withdraw the designation without the consent of the authority responsible for the supervision of that CSD or CCP.

3.A designating authority shall examine whether a system remains in compliance with the conditions under which the designation was granted when requested to do so by ESMA and the ESCB, for securities settlement systems and clearing systems, or EBA and the ESCB, for payment systems.

4.Where the designating authority withdraws the designation, it shall notify simultaneously the system operator, the national competent authority, ESMA, EBA and the ESCB of its decision to withdraw the designation of a system and ESMA shall update its website accordingly on the day indicated by the designating authority in its notification.

5.The withdrawal of a designation shall be effective from the date of notification referred to in paragraph 4.

TITLE II

AUTHORITIES AND COOPERATION

Article 10

Competent authority

1.Each Member State shall appoint all competent authorities responsible for carrying out the duties resulting from this Regulation in relation to systems, including the designating authorities, the registering authorities and the competent authority referred to in Article 22(2).

Where a Member State appoints more than one competent authority, it shall determine their respective roles.

Each Member State shall designate a single competent authority to be responsible for cooperation with other Member States’ competent authorities, ESMA, EBA and the ESCB.

2.Member States shall notify to ESMA, the designating authorities and the registering authorities referred to in paragraph 1, first subparagraph, and specify their respective roles under this Regulation, and the single competent authority referred to in paragraph 1, third subparagraph.

3.ESMA shall publish, without undue delay, a list of the designating authorities and the registering authorities referred to in paragraph 1, first subparagraph, and their respective roles, and the single competent authority referred to in paragraph 1, third subparagraph, on its website and inform the EBA and the ESCB of any changes to that list.

Article 11

Exchange of information

1.Designating authorities, registering authorities, national competent authorities, competent authorities referred to in Article 22(2), ESMA, EBA and the ESCB, shall share and provide one another with information where that is requested for carrying out their respective duties under this Regulation without undue delay.

2.Both the request for information and the reply to the request shall be submitted through the central database.

3.Any confidential information received pursuant to this Regulation shall only be used for the exercise of any duty arising under this Regulation.

TITLE III

THIRD-COUNTRY SYSTEMS

Article 12

Registration of third-country systems

Each of the registering authorities in any of the Member States in which a member participating in a third-country system is established may decide to register such a third-country system in accordance with the procedure set out in Article 13, provided that the member is an institution as defined in Article 2(1), points (10)(a)(i) to (iv), or Article 2(1), point (10)(b). Each of those registering authorities shall assess the application for registration of the third-country system.

Article 13

Procedure for granting and refusing registration

1.Where the system operator of a third-country system (‘third-country system operator’) wishes to register that system as a registered system, it shall submit an application for registration, addressed to ESMA.

2.ESMA shall immediately share the application with all of the following recipients:

(a)at least, all registering authorities referred to in Article 12;

(b)EBA for systems operating transfer orders set out in Article 2(1), point (20)(a);

(c)the ESCB. 

3.The third-country system operator shall include in the application all documents and information necessary to demonstrate that it and the system it operates meet the conditions for registration laid down in Article 14, including the information on the members of that system which are established in the Union, broken down by Member State.

4.An acknowledgement of receipt of the application referred to in paragraph 1 shall be sent to the third-country system operator within two working days of receipt of such application. The registering authorities shall, within 20 working days from receipt of the application, determine whether the application contains the documents and information required pursuant to paragraph 3.

Where, during the applicable period specified under the first subparagraph, any of the registering authorities concludes that not all documents or information required pursuant to paragraph 3 have been submitted, such authority shall request the third-country system operator to submit such additional documents or information. Where the third-country system operator has failed to comply with any such request in full, any of the registering authorities may reject the application.

5.By the end of the time limits referred to in paragraph 4, each registering authority shall notify ESMA, the third-country system operator and the authorities listed in paragraph 2, points (a), (b) and (c), whether the application is accepted or rejected.

6.After having notified the third-country system operator that the application is accepted, each registering authority that accepted the application shall conduct an assessment of the third-country system operator’s and the system’s compliance with the conditions for registration laid down in Article 14 within 80 working days of the notification set out in paragraph 5 (‘the assessment period’).

7.During the assessment period, any registering authority may submit questions to, or request complementary information from, the third-country system operator.

Where the third-country system operator has not responded to the questions or provided the requested information within the deadline set by a requesting registering authority, ESMA may, upon request by any of the registering authorities that accepted the application, extend once the relevant assessment period by a maximum of 10 working days in total where, in their view, any of the questions is material for the assessment. ESMA shall inform the third-country system operator of the extension provided. A registering authority may take a decision on the application in the absence of the third-country system operator’s response.

8.During the assessment period, ESMA and the ESCB for securities settlement systems and clearing systems, and EBA and the ESCB for payments systems, shall take all appropriate measures, including convening ad hoc meetings, to ensure a convergent approach to the decisions to grant or refuse the registration of a third-country system by the registering authorities in their respective Member State.

9.During the assessment process, ESMA, EBA and the ESCB shall promote the regular exchange and discussion among registering authorities, to ensure cooperation of the registering authorities in the registration process of such third-country system and provide input to the registering authorities’ assessment process.

10.Within the assessment period, each registering authority shall decide whether to grant or refuse the registration of the third-country system. Each registering authority shall decide to grant the registration only where it is fully satisfied that the third-country system operator and the third-country system comply with the conditions laid down in Article 14.

11.After taking a decision referred to in paragraph 10, each registering authority shall inform, without undue delay, the third-country system operator, ESMA and the authorities listed in paragraph 2, points (a), (b) and (c) as applicable, of its decision, including a fully reasoned explanation.

12.ESMA shall, in close cooperation with the ESCB, develop, for clearing and securities settlement systems, draft regulatory technical standards to further specify the information to be provided in:

(a)an application for registration as referred to in paragraph 1, with a view to demonstrate that the applicant third-country system operator and the third-country system comply with all relevant requirements set out in this Article, including the conditions set out in Article 14, and to specify the information the application shall contain on the members of the third-country system, established in the Union; 

(b)an application for designation as referred to in Article 4(1), with a view to demonstrate that the applicant system operator and the system comply with all the relevant requirements of this Regulation.

In developing the regulatory technical standards, ESMA and the ESCB shall take into consideration that the requested information shall be proportionate to and relevant for the type of system seeking to be registered or designated.

ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by [OP insert date = 1 year after the date of entry into force of this Regulation].

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

13.ESMA shall, in close cooperation with the ESCB, develop draft implementing technical standards to specify, for securities settlement systems and clearing systems:

(a)the uniform electronic formats for the application for registration referred to in paragraph 1, to be submitted to the central database;

(b)the uniform electronic formats for the application for designation referred to in Article 4(1), to be submitted to the central database.

ESMA shall submit the draft implementing technical standards referred to in the first subparagraph to the Commission by [OP enter 1 year after the date of entry into force of this Regulation].

The Commission shall be empowered to adopt implementing acts to supplement this Regulation by adopting the implementing technical standards referred to in the first subparagraph of this paragraph in accordance with Article 15 of Regulation (EU) No 1095/2010.

14.EBA shall, in close cooperation with the ESCB, develop, for payment systems, draft regulatory technical standards to further specify the information to be provided in:

(a)an application for registration as referred to in paragraph 1 with a view to demonstrate that the applicant third-country system operator and the third-country system comply with all relevant requirements set out in this Article, including the conditions set out in Article 14, and to specify the information the application shall contain on the members of the third-country system, established in the Union;

(b)an application for designation as referred to in Article 4(1), with a view to demonstrate that the applicant system operator and the system comply with all the relevant requirements of this Regulation.

In developing the regulatory technical standards, EBA and the ESCB shall take into consideration that the requested information shall be proportionate to and relevant for the type of system seeking to be registered or designated. 

EBA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by [OP insert date = 1 year after date of entry into force of this Regulation]. 

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010. 

15.EBA shall, in close cooperation with ESCB, develop draft implementing technical standards to specify, for payment systems:

(a)the uniform electronic formats for the application for registration referred to in paragraph 1 of this Article to be submitted to the central database;

(b)the uniform electronic formats for the application for designation referred to in Article 4(1), to be submitted to the central database.

EBA shall submit the draft implementing technical standards referred to in the first subparagraph to the Commission by [OP insert date = one year after the date of entry into force of this Regulation].

The Commission shall be empowered to adopt implementing acts to supplement this Regulation by adopting the implementing technical standards referred to in the first subparagraph of this paragraph in accordance with Article 15 of Regulation (EU) No 1093/2010.

Article 14

Conditions for registration

A registering authority may register a third-country system in its Member State only where all of the following conditions are met:

(a)the system has common rules and standardised procedures for the settlement, clearing, or execution of transfer orders between the participants;

(b)the system is authorised or supervised in the country of its establishment or in the country under which law the third-country system is governed;

(c)the system is governed by a law that upholds the principles of settlement finality;

(d)the system identifies clearly in its common rules and standardised procedures all of the following moments:

(i)the moment of entry of a transfer order into the system referred to in Article 18(1);

(ii)the moment of irrevocability of a transfer order entered into the system referred to in Article 20(1);

(iii) the moment of final settlement of a transfer order entered into a system referred to in Article 21(1).

(e)the system operator of the system is adequately structured and financed;

(f)the system complies in all material respects with global principles of financial market infrastructures.

Article 15

Notification of registered systems

1.After taking a decision referred to in Article 13(10), each registering authority shall notify, simultaneously and without undue delay, the applicant third-country system operator, ESMA, EBA, the ESCB and the other registering authorities, as applicable, of its decision. The registration shall be effective from the date of notification.

2.The notification referred to in paragraph 1 shall contain at least all of the following information, as of the date of the registration:

(a)the identification of the registered system and its system operator;

(b)the date of registration of the registered system;

(c)the country in which the third-country system operator is established;

(d)the Member States in which the registered system has been registered and each of the registering authorities that granted the registration;

(e)whether the system is a securities settlement system, a clearing system, or a payment system;

(f)the law governing the registered system;

(g)the settlement finality moments of the registered system;

(h)the Union participants of the registered system.

3.The registering authority of a registered system shall, without undue delay, notify ESMA and the authorities listed in Article 13(2), points (a), (b) and (c), as applicable, of any of the following:

(a)any substantive changes that materially affect, or may materially affect, the compliance with the conditions for registration set out in Article 14;

(b)any updates to the information listed in paragraph 2.

4.ESMA shall publish in a standardised format the information referred to in paragraph 2 and any updates thereto in accordance with paragraph 3, point (b), on its website, without undue delay and no later than 2 working days after receipt of that information ESMA shall specify the date when updates to the information on its website were made and which information was updated.

ESMA shall, without undue delay, provide updated information to the registering authorities, EBA and the ESCB, as applicable.

Article 16

Withdrawal of registration

1.A registering authority shall withdraw the registration of a registered system where any of the following conditions is met:

(a)the third-country system operator has obtained the registration by making false statements or by any other irregular or unlawful means;

(b)the third-country system operator or the system it operates, as applicable, no longer complies with the conditions set out in Article 14;

(c)the third-country system operator or the system it operates, as applicable, has seriously or systematically infringed the conditions for registration laid down in Article 14. 

2.A registering authority shall only decide to withdraw the registration of a third-country system operator after it has informed ESMA and provided ESMA with all the relevant information for ESMA to be able to update its list of registered systems registered in a Member State. ESMA shall share this information with EBA, the ESCB and other registering authorities, as applicable. 

3.Where one of the registering authorities, ESMA, EBA or the ESCB, as applicable, are of the opinion that the withdrawal of the registration may cause material risks to the financial stability of the Union or in a Member State, it shall inform the relevant registered authority within 10 working days of being informed of a potential withdrawal of a registration under paragraph 2 and the relevant registering authority shall convene an ad hoc meeting with the other registering authorities, ESMA, EBA and the ESCB, as applicable, to cooperate on how to mitigate the risks identified before the registering authority withdraws the registration.

Where the registered system is a CCP determined by ESMA to be a Tier 2 CCP under Regulation (EU) No 648/2012, the registering authority shall not withdraw the registration without the consent of ESMA.

4.Where the registering authority withdraws the registration, it shall notify simultaneously the system operator, ESMA, EBA, the ECSB and other registering authorities, as applicable, of its decision to withdraw the registration of the system and ESMA shall update its website accordingly on the day indicated by the registering authority in its notification.

5.The withdrawal of the registration of a system shall be effective from the date of notification referred to in paragraph 4.

TITLE IV

NETTNG AND SETTLEMENT FINALITY

Article 17

Netting and transfer orders

1.Transfer orders and netting, including close-out netting, shall be legally enforceable and binding on third parties, provided that transfer orders were entered into the designated system or registered system before the moment of opening of insolvency proceedings as referred to in Article 22(1), even in the event of insolvency proceedings against any of the following:

(a)a participant in the designated system or registered system;

(b)a participant to an interoperable system to a designated system;

(c)the system operator of an interoperable system to a designated system, which is not a participant.

Transfer orders that are entered into a designated system or registered system after the moment of opening of insolvency proceedings and that are carried out within the business day, as laid down in the common rules and standardised procedures of such system, during which the opening of such proceedings occur, shall be legally enforceable and binding on third parties only where the system operator can prove that, at the time that such transfer orders become irrevocable, it was neither aware, nor should have been aware, of the opening of such proceedings.

2.No law, regulation, rule or practice on the setting aside of contracts and transactions concluded before the moment of opening of insolvency proceedings, as provided for in Article 22(1), shall lead to the unwinding of netting, or the disapplication of close-out netting provisions as referred to in Article 2(1), point (n), of Directive 2002/47/EC of the European Parliament and of the Council.

Article 18

Moment of entry of a transfer order into a designated system

1.The moment of entry of a transfer order into a designated system shall be determined by the common rules and standardised procedures of that system. Such determination shall take account of the receipt and registration of the transfer order by the system.

2.In the case of interoperable systems, each designated system shall determine in its own common rules and standardised procedures the moment of entry of a transfer order into its system, while ensuring, to the extent possible, that the common rules and standardised procedures of all interoperable systems concerned are coordinated. Unless expressly provided for by the common rules and standardised procedures of all the systems that are party to the interoperability arrangement, one system's rules on the moment of entry of a transfer order shall not be affected by any rules of the other systems with which it is interoperable.

Article 19

Use of funds and financial instruments

1.The opening of insolvency proceedings against a participant or a system operator of an interoperable system shall not prevent funds or financial instruments available on the settlement account or on accounts holding collateral, including default fund contributions such as contributions to a pre-funded default fund held by a CCP in accordance with Article 42 of Regulation No 648/2012 and margins as referred to in Article 41 of Regulation No 648/2012, where applicable, of that participant or system operator from being used to fulfil that participant’s obligations in the designated system, or registered system in the Member State where the participant is established, or in an interoperability arrangement on the business day of the opening of the insolvency proceedings.

2.Such a participant’s credit facility connected to the designated system or registered system, as applicable, shall be usable against available, existing collateral security to fulfil that participant’s obligations in the designated system, or in the registered system in the Member State where the participant is established, or in an interoperability arrangement.

Article 20

The moment of irrevocability of transfer orders

1.Each designated system shall determine the specific moment where, in its system, a participant or a third party cannot revoke a transfer order. Such determination shall take account of the moment when a transfer order that entered into the system was confirmed by the system and where the processing of the order could not be reversed.

2.In the case of interoperable systems, each system shall determine in its own common rules and standardised procedures the moment of irrevocability, while ensuring, to the extent possible, that the common rules and standardised procedures of all interoperable systems concerned are coordinated. Unless expressly provided for by the common rules and standardised procedures of all the systems that are party to an interoperability arrangement, one system's rules on the moment of irrevocability shall not be affected by any rules of the other systems with which it is interoperable.

Article 21

Final settlement

1.Settlement shall be final when the discharge of the obligations of the parties to a transaction is completed in an unconditional and irrevocable manner as determined by the common rules and standardised procedures of each designated system, in accordance with the applicable law for transfer of ownership and other rights. A designated system that is based on DLT shall implement mechanisms guaranteeing deterministic and legally enforceable finality moments.

2.In the case of interoperable systems, each system shall determine in its own common rules and standardised procedures the moment of final settlement. Each system operator shall ensure, to the extent possible, that the rules of all interoperable systems concerned are coordinated. Unless expressly provided for by the common rules and standardised procedures of all the systems that are party to an interoperability arrangement, one system's common rules and standardised procedures on the moment of final settlement shall not be affected by any common rules or standardised procedures of the other systems with which it is interoperable.

3.ESMA may, in close cooperation with the ESCB, for clearing and securities settlement systems not operated by a CSD, and taking into account the specificities of different types of systems,  and the mechanics of those systems, develop draft regulatory technical standards to specify the rules for determining all of the following:

(a)the moment of entry of transfer orders into a designated system, referred to in Article 18(1);

(b)for DLT-based designated systems, when and how the moment of entry of a transfer order into the system, referred to in Article 18(1), occurs when a transaction is recorded in the ledger according to the system’s consensus rules;

(c)the moment, referred to in Article 20(1), in which a transfer order that entered into the designated system cannot be revoked;

(d)for DLT-based designated systems, how the moment, referred to in Article 20(1), in which a transfer order that entered into the system cannot be revoked by a participant or by a third party coincides with the point at which consensus is final and the record cannot be reversed under the technical protocol of that system;

(e)the moment of final settlement referred to in paragraph 1;

(f)for DLT-based designated systems, how the moment of final settlement  referred to in paragraph 1 could be defined for probabilistic or layered finality models, which may not meet the absolute legal certainty but may still be able to achieve legal certainty depending on the structure and rules of the system.

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

4.EBA may, in close cooperation with the ESCB, and taking into account the specificities of different types of payments systems and the mechanics of the systems, develop draft regulatory technical standards to specify the rules for determining all of the following:

(a)the moment of entry of transfer orders into a designated system referred to in Article 18(1);

(b)for DLT-based designated systems, when and how the moment of entry of a transfer order into the system, referred to in Article 18(1), occurs when a transaction is recorded in the ledger according to the system’s consensus rules;

(c) the moment, referred to in Article 20(1), in which a transfer order that entered into the designated system cannot be revoked;

(d)for DLT-based designated systems, when and how the specific moment in which a transfer order that entered into the system cannot be revoked by a participant or by a third party coincides with the point at which consensus is final and the record cannot be reversed under the technical protocol of that system;

(e) the moment of final settlement referred to in paragraph 1;

(f)for DLT-based designated systems, how the moment of final settlement, referred to in paragraph 1, could be defined for probabilistic or layered finality models, which may not meet the absolute legal certainty but may still be able to achieve legal certainty depending on the structure and rules of the system.

The Commission shall be empowered to adopt delegated acts to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

TITLE V

PROVISIONS CONCERNING INSOLVENCY PROCEEDINGS

Article 22

The moment of opening of insolvency proceedings

1.For the purpose of this Regulation, the moment of opening of insolvency proceedings shall be the moment the judicial or administrative authority concerned hands down its decision.

2.When a decision has been taken in accordance with paragraph 1, the judicial or administrative authority concerned shall immediately notify that decision to a competent authority responsible for collecting that information, appointed pursuant to Article 10(1). It shall immediately notify, via the central database, ESMA, EBA, the ESCB, the European Systemic Risk Board and other Member States thereof. 

Article 23

No retroactive effects

Insolvency proceedings shall not have retroactive effects on a participant’s rights and obligations arising from, or in connection with, its participation in a designated system, or in a registered system for its participants established in Member States where the third-country system is registered, before the opening of such proceedings pursuant to Article 22(1). Such proceedings shall not have retroactive effect on the rights and obligations of a participant in an interoperable system, or on a system operator of an interoperable system where such system operator is not a participant.

Article 24

Law governing the rights and obligations of participants

In the event of insolvency proceedings being opened against a participant in a system, the rights and obligations arising from, or in connection with, the participation of that participant shall be determined by the law governing that system.

TITLE VI

INSULATION OF THE RIGHTS OF HOLDERS OF COLLATERAL SECURITY FROM THE EFFECTS OF THE INSOLVENCY OF THE PROVIDER

Article 25

Collateral security

1.The rights of a system operator or of a participant to collateral security provided to them in connection with a designated system, a registered system for its participants established in the Member States where the system is registered, or an interoperability arrangement, and the rights of central banks of the Member States or the European Central Bank to collateral security provided to them, shall not be affected by insolvency proceedings against any of the following:

(a)the participant in the designated or the registered system concerned or in an interoperability arrangement;

(b)the system operator of an interoperable system which is not a participant;

(c)a counterparty to the central bank of a Member State;

(d)a counterparty to the European Central Bank;

(e)any third party which provided the collateral security.

Such collateral security may be realised for the satisfaction of those rights.

The rights of a system operator to the collateral security it provided to another system operator in connection with an interoperability arrangement shall not be affected by insolvency proceedings against the receiving system operator.

2.The rights of participants, system operators, a central bank of a Member State, the European Central Bank and of any nominee, agent or third party acting on their behalf with respect to the financial instruments, including rights in those financial instruments, which are provided as collateral security that is legally recorded on a register, including where recorded on a distributed ledger, account or centralised deposit system located in a Member State, shall be governed by the law of that Member State.

For the purposes of the first subparagraph, the location of a register, account or centralised deposit held at a legal entity shall be the Member State where that entity has its registered office.

3.Where it is not possible to determine the location of a register, account or centralised deposit system in accordance with paragraph 2, the determination of the rights of participants, system operators, a central bank of a Member State or the European Central Bank, and the rights of any nominee, agent or third party acting on their behalf, with respect to the financial instruments provided as collateral security, shall be governed by the law governing the system or the interoperability arrangement referred to in paragraph 1.

4.For the purposes of paragraphs 2 and 3, the reference to the law of a Member State is a reference to its domestic law, disregarding any rule under which, in deciding the relevant question, reference is made to the law of another country. 

TITLE VII

CENTRAL DATABASE AND EXERCISE OF DELEGATION

Article 26

Central database

1.ESMA shall establish and maintain a central database in accordance with Article 35c of Regulation (EU) 1095/2010. Separately for each system concerned, the designating authorities, the registering authorities, the national competent authorities and the competent authority referred to in Article 22(2), ESMA, EBA and the ESCB (‘registered recipients’), shall have access to all information and documents as referred to in paragraph 3, registered within the database for that system and where relevant or necessary for the performance of their duties.

2.A system operator shall have access to the central database as regards the information and documents it submitted to that central database or the documents transmitted to it through that central database by any of the registered recipients.

Other recipients shall also submit and have access to certain specific documents or information, where specified under this Regulation, that is registered in the central database. ESMA shall ensure that the central database performs the functions under this Article.

3.System operators, including for designated and registered systems as well as the registered recipients shall upload to the central database, in electronic format, all information and documents, including applications, decisions, recommendations, requests, information, questions, answers and notifications, referred to in this Regulation unless stated otherwise.

An acknowledgement of receipt shall be sent via the central database within two working days of submission of information or documents.

4.ESMA shall ensure the database enables DLT recorded data, including on-chain data reading and access to such data.

5.ESMA shall design the central database to automatically inform the registered recipients when changes have been made to its content, including the uploading, deletion or replacement of documents, submission of questions or requests for information.

6.ESMA shall make available the information shared via the central database under this Regulation to relevant authorities for the purpose of Regulations (EU) No 648/2012 and Regulation (EU) No 909/2014 where relevant or necessary for the performance of their duties.

Article 27

Exercise of the delegation

1.The power to adopt delegated acts is conferred to the Commission subject to the conditions laid down in this Article.

2.The power to adopt delegated act referred to in Article 2(2) shall be conferred on the Commission for an indeterminate period of time from [OP insert date = the date of entry into force of this Regulation].

3.The delegation of power referred to in Article 2(2) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4.Before adopting a delegated act, the Commission shall endeavour to consult ESMA and EBA and shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. 

5.As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6.A delegated act adopted pursuant to Article 2(2) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or of the Council.

TITLE VII

FINAL PROVISIONS

Article 28

Transitional provisions 

1.By way of derogation from Article 3, a system designated under Directive 98/26/EC prior to [OP insert date = entry into force of this Regulation] shall continue to be designated for the purposes of this Regulation until it is re-designated under that Article or until [OP insert date= 5 years after the entry into force of this Regulation], whichever is earlier. In the meantime, the Member State law on the designation of a system shall continue to apply.

2.By way of derogation from Article 12, a third-country system to which a Member State has extended the protections granted under Directive 98/26/EC prior to [OP insert date = entry into force of this Regulation] shall be considered as registered in that Member State for the purposes of this Regulation until it is registered in accordance with that Article in that same Member State or until [OP insert date = 5 years after the date of entry into force of this Regulation], whichever is earlier.

3.A transfer order which enters a system before [OP insert date = date of entry into force of this Regulation], but is settled thereafter shall be deemed to be a transfer order for the purposes of this Regulation.

4.Until the central database has been established in accordance with Article 26, the exchange of information and documents including, the submission of applications, decisions, recommendations, requests, information, questions, answers, and any notifications, that are required to be provided using the central database shall be carried out through the use of alternative arrangements.

Article 29

Review

1.By [OP insert date = 6 years after the date of entry into force of this Regulation] the Commission shall assess the application of this Regulation and prepare a general report. The Commission shall submit that report to the European Parliament and to the Council, together with any appropriate proposals.

2.By [OP insert date = 5 years after the date of entry into force of this Regulation] ESMA, in close cooperation with the EBA and the ESCB, shall submit a report to the Commission on the functioning of the settlement finality regime laid down in this Regulation.

Article 30

Repeal

1.Directive 98/26/EC is repealed with effect from [OP insert date = date of entry into force of this Regulation].

2.References to Directive 98/26/EC shall be construed as references to this Regulation and shall be read in accordance with the correlation table in Annex 1 to this Regulation. 

Article 31

Amendments to Directive 2002/47/EC 

Directive 2002/47/EC is amended as follows:

(1)in Article 1(4), the following subparagraphs are added in point (a):

‘For the purpose of this Directive, references to cash, financial instruments and credit claims shall include where they are issued or recorded using DLT.

Member States may extend the scope of financial instruments to be covered by this Directive to include the instruments referred to as ‘financial instrument’ in Article 4(1), point (15), of Directive 2014/65/EU where these are negotiable on the capital market.’;

(2)Article 2 is amended as follows:

(a)in paragraph 1, the following point is added:

‘(p) ‘account’ means account as defined in Article 2(1), point (26), of [Regulation (EU) …/… on settlement finality]’;

(b)the following paragraph is added:

‘4. Any reference to “account”, “registration” or “register” shall be understood to include any form of electronic record, including based on DLT, that fulfils the same function. In addition, any instructions or notification shall allow for the use of a cryptographic key or other device or method to electronically sign such instruction or notification.’.

(3)in Article 11, the following subparagraph is added after the first subparagraph:

‘By way of derogation from the first subparagraph, Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Article 1(4), point (a), first and second subparagraphs, Article 2(1), point (p), and Article 2(4) by [OP insert date = 18 months after the date of entry into force of this Regulation] at the latest. They shall forthwith inform the Commission thereof.’.

Article 32

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Communities.

It shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE3

1.1.Title of the proposal/initiative3

1.2.Policy area(s) concerned3

1.3.Objective(s)3

1.3.1.General objective(s)3

1.3.2.Specific objective(s)3

1.3.3.Expected result(s) and impact3

1.3.4.Indicators of performance3

1.4.The proposal/initiative relates to:4

1.5.Grounds for the proposal/initiative4

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative4

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.4

1.5.3.Lessons learned from similar experiences in the past4

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments5

1.5.5.Assessment of the different available financing options, including scope for redeployment5

1.6.Duration of the proposal/initiative and of its financial impact6

1.7.Method(s) of budget implementation planned6

2.MANAGEMENT MEASURES8

2.1.Monitoring and reporting rules8

2.2.Management and control system(s)8

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed8

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them8

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure)8

2.3.Measures to prevent fraud and irregularities9

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE10

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected10

3.2.Estimated financial impact of the proposal on appropriations12

3.2.1.Summary of estimated impact on operational appropriations12

3.2.1.1.Appropriations from voted budget12

3.2.1.2.Appropriations from external assigned revenues17

3.2.2.Estimated output funded from operational appropriations22

3.2.3.Summary of estimated impact on administrative appropriations24

3.2.3.1. Appropriations from voted budget24

3.2.3.2.Appropriations from external assigned revenues24

3.2.3.3.Total appropriations24

3.2.4.Estimated requirements of human resources25

3.2.4.1.Financed from voted budget25

3.2.4.2.Financed from external assigned revenues26

3.2.4.3.Total requirements of human resources26

3.2.5.Overview of estimated impact on digital technology-related investments28

3.2.6.Compatibility with the current multiannual financial framework28

3.2.7.Third-party contributions28

3.3.Estimated impact on revenue29

4.Digital dimensions29

4.1.Requirements of digital relevance30

4.2.Data30

4.3.Digital solutions31

4.4.Interoperability assessment31

4.5.Measures to support digital implementation32

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE 

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned 

1.3.Objective(s)

1.3.1.General objective(s)

1.3.2.Specific objective(s)

1.3.3.Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

1.3.4.Indicators of performance

Specify the indicators for monitoring progress and achievements.

1.4.The proposal/initiative relates to: 

 a new action 

 a new action following a pilot project / preparatory action 40  

 the extension of an existing action 

 a merger or redirection of one or more actions towards another/a new action

1.5.Grounds for the proposal/initiative 

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments

1.5.5.Assessment of the different available financing options, including scope for redeployment

1.6.Duration of the proposal/initiative and of its financial impact

 limited duration

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY

–    financial impact from YYYY to YYYY for commitment appropriations and from YYYY to YYYY for payment appropriations.

 unlimited duration

–Implementation with a start-up period in 2028

–followed by full-scale operation.

1.7.Method(s) of budget implementation planned 41  

 Direct management by the Commission

– by its departments, including by its staff in the Union delegations;

–by the executive agencies

 Shared management with the Member States

 Indirect management by entrusting budget implementation tasks to:

– third countries or the bodies they have designated

– international organisations and their agencies (to be specified)

– the European Investment Bank and the European Investment Fund

– bodies referred to in Articles 70 and 71 of the Financial Regulation

– public law bodies

– bodies governed by private law with a public service mission to the extent that they are provided with adequate financial guarantees

– bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that are provided with adequate financial guarantees

– bodies or persons entrusted with the implementation of specific actions in the common foreign and security policy pursuant to Title V of the Treaty on European Union, and identified in the relevant basic act

–bodies established in a Member State, governed by the private law of a Member State or Union law and eligible to be entrusted, in accordance with sector-specific rules, with the implementation of Union funds or budgetary guarantees, to the extent that such bodies are controlled by public law bodies or by bodies governed by private law with a public service mission, and are provided with adequate financial guarantees in the form of joint and several liability by the controlling bodies or equivalent financial guarantees and which may be, for each action, limited to the maximum amount of the Union support.

Comments

2.MANAGEMENT MEASURES 

2.1.Monitoring and reporting rules 

2.2.Management and control system(s) 

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure) 

2.3.Measures to prevent fraud and irregularities 

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected 

·Existing budget lines

In order of multiannual financial framework headings and budget lines.

·New budget lines requested

In order of multiannual financial framework headings and budget lines.

3.2.Estimated financial impact of the proposal on appropriations 

3.2.1.Summary of estimated impact on operational appropriations 

–    The proposal/initiative does not require the use of operational appropriations

–    The proposal/initiative requires the use of operational appropriations, as explained below

3.2.1.1.Appropriations from voted budget

EUR million (to three decimal places)

EUR million (to three decimal places)

Description of additional resources:

The initiative implies additional resource to carry out the tasks assigned by the co-legislators, especially as regards the new role of EBA and ESMA in the following tasks: assistence regarding convergent implementation by Member States of SFR designation of EU systems and communication with system operators and coordination amongst Member States regarding SFR authorisation of third-country systems. For this, it is estimated that 2 skilled and permanent FTEs would be necessary to carry out these tasks, 1 at EBA and 1 at ESMA. These tasks require a good knowledge on insolvency law as well as on financial market infrastructure legislation. The FTEs need to be able to assess the reasoning of Member States’ competent authorities as to how the compatibility of the rules of a system is in line with the (national) insolvency law and ensure that Member States have designated EU systems in a consistent way, also taking into account sectorial legislation. This is the case for EU systems as well as third-country systems.

ESMA is required to establish and run over time an electronic central database as required under Article 26 of the SFR. The central database facilitates the exchange of information and documents relevant to the recipients under this Regulation, including the designation and registration of EU and third-country systems, as well as the publication of certain information. Article 26 also provides for access for the competent authorities, registration authorities and national competent authorities for payment, settlement and clearing systems. Given the EBA, in close cooperation with the ESCB, is responsible for payments systems, central banks and the EBA will also require access.

The central database will require ESMA to set up appropriate IT infrastructure to ensure the safe, efficient and effective transmission and storage of the information, documents, and communication between relevant stakeholders (e.g. designated systems, competent authorities, etc.) as prescribed under the SFR. The central database required under the SFR should be the same system as that required under Article 17c of EMIR, Article 21a of the CSDR, Article 38ea of MiFIR, and Article 35c of the ESMA Regulation. Since this central database is established under an earlier mandate, i.e. Regulation (EU) 2024/2987 (‘EMIR 3’), the costs associated with the set-up and ongoing maintenance of the central database under the SFR should only reflect the relative increase in those costs in order for the central database to be implemented as required under the SFR. This includes the added cost of facilitating access for the additional stakeholders required to have access to the central database under the SFR (approximately 60 entities), as well as the cost of storage for the additional information, documentation, and communications that would be kept in and/or transmitted via the database. These costs are incorporated into the figures provided in the Master Regulation document 46 related to the “ESMA Central Database and supervisory platform for CCPs, CSDs and TVs” (see Section 4.3 of the Master Regulation, as well as Parts D and E of the section on Specific Assumptions in the Annex of that Regulation) and are thus not presented separately here.

Cost estimates:

The calculation for the costs of are based on DG BUDG guidance for the category of personnel: Contract agent, based on the average cost of a temporary agent in 2025 (i.e. €0.084 million) and featuring:

An inflation rate of 2% starting in 2027;

A salary correction coefficient for Paris, where both ESMA and the EBA are located, of 114,2%;

An amount of 30.000 EUR/year corresponding to operating expenditure, mainly building and IT related costs, is included, as per 2025 standard price, subject to an inflation of 2%.

The above expenditures will be financed: 1/ for EBA, up to 40% via a Commission subsidy and up to 60% by the national competent authorities (NCA), in accordance with this ESAs’ founding Regulation; 2/ for ESMA, up to 50% via a Commission subsidy and up to 50% by the national competent authorities (NCA) strictly as it concerns new additional tasks required by the SIU package.

Based on a date of entry into force in year 2027 and considering the 12 months delay for agencies to submit drafts of initial delegated acts, the assumption retained is that additional FTEs will be in place from the beginning of the year 2028.

EUR million (to three decimal places)

3.2.2.Estimated output funded from operational appropriations

Commitment appropriations in EUR million (to three decimal places)

3.2.3.Summary of estimated impact on administrative appropriations

–The proposal/initiative does not require the use of appropriations of an administrative nature

–    The proposal/initiative requires the use of appropriations of an administrative nature, as explained below

3.2.3.1. Appropriations from voted budget

3.2.4.Estimated requirements of human resources

–    The proposal/initiative does not require the use of human resources

–    The proposal/initiative requires the use of human resources, as explained below

3.2.4.1.Financed from voted budget

Estimate to be expressed in full-time equivalent units (FTEs) 50

3.2.5.Overview of estimated impact on digital technology-related investments

Compulsory: the best estimate of the digital technology-related investments entailed by the proposal/initiative should be included in the table below.

Exceptionally, when required for the implementation of the proposal/initiative, the appropriations under Heading 4 should be presented in the designated line.

The appropriations under Headings 1-3 should be reflected as “Policy IT expenditure on operational programmes”. This expenditure refers to the operational budget to be used to re-use/ buy/ develop IT platforms/ tools directly linked to the implementation of the initiative and their associated investments (e.g. licences, studies, data storage etc). The information provided in this table should be consistent with details presented under Section 4 “Digital dimensions”.

3.2.6.Compatibility with the current multiannual financial framework

The proposal/initiative:

–    can be fully financed through redeployment within the relevant heading of the multiannual financial framework (MFF)

–    requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation

–    requires a revision of the MFF

3.2.7.Third-party contributions

The proposal/initiative:

–    does not provide for co-financing by third parties

–    provides for the co-financing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

3.2.8.Estimated human resources and the use of appropriations required in a decentralised agency

Staff requirements (full-time equivalent units)