Rules making payments and settlement of securities final and secure

Automatic summary, not yet reviewed

1. The law incorporates Directive 98/26/EC into Spanish law, aiming to make settlements in payment and securities systems final and to reduce the risk that one participant's failure drags down the others.
2. It defines who can be a participant in a system: credit institutions, investment services firms, the Public Treasury, central banks and other bodies accepted by the system, and what counts as collateral.
3. To be recognized as a Spanish system, a system must meet requirements such as having at least three participating entities, membership and operating rules approved by the supervisor, and settling funds in an account at the Bank of Spain. The Government declares the recognition and it is published in the official gazette.
4. Transfer orders accepted by the system and their netting are irrevocable, final and enforceable against participants and third parties, and cannot be annulled on any grounds.
5. If insolvency proceedings are opened against a participant, orders already accepted and collateral already posted are not affected: transferred assets cannot be reclaimed and collateral beneficiaries have an absolute right of separation.
6. It creates Servicio de Pagos Interbancarios, Sociedad Anónima, which takes over the management of the current service from the Madrid Clearing House, supervised by the Bank of Spain and with its own operating rules.

Who it affects

• Credit institutions and investment services firms participating in payment or securities settlement systems.: Their accepted orders and collateral are final and are not affected by insolvencies.
• The Bank of Spain, the European Central Bank and other EU central banks.: They can participate in the systems and have a right of separation over collateral from their monetary policy operations.
• Courts.: They must immediately report insolvency proceedings to the Bank of Spain and the National Securities Market Commission.
• The Madrid Clearing House and its member institutions.: Their rights and obligations pass to the new company Servicio de Pagos Interbancarios, Sociedad Anónima.

Words worth knowing

Compensación (netting)

Replacing the rights and obligations of many orders with a single net credit or debt, so only the final balance is paid or collected.

Firmeza de la liquidación (settlement finality)

Once the system accepts an operation, it is closed and cannot be annulled or reclaimed later.

Riesgo sistémico (systemic risk)

When one participant's failure causes others to fail too and the whole system collapses.

Derecho de separación (right of separation)

The ability to recover assets given as collateral without them entering the insolvency estate.

Procedimiento de insolvencia (insolvency proceeding)

Bankruptcy or suspension of payments, or any universal measure to liquidate or reorganize an entity.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries