Legislation implementing amendments to the Settlement Finality Directive and the Directive on Financial Collateral Arrangements came into force on 11 May 2011.
The existing Settlement Finality Directive provides that transfer orders become irrevocable after entry into a payment or securities settlement system. This should minimise systemic risk, and safeguard the stability of settlement systems. As such systems are increasingly interconnected, the amending directive requires coordination of their rules.
The amendments to the Directive on Financial Collateral Arrangements ensure that credit claims (i.e. loans) can be used as financial collateral, in addition to cash and securities. This is intended to enable banks to provide more credit to consumers and businesses, thus improving competition between banks and promoting the availability of credit to consumers and businesses at more favourable terms.