The Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (as amended), ('Settlement Finality Regulations') which implement the EU Settlement Finality Directive in the United Kingdom allow payment and settlement systems to apply for certain protections against the operation of normal insolvency law, generally in order to ensure that transactions that have been settled in the system are final and irrevocable, and to ensure the enforceability of collateral security. In order to receive these protections, systems must meet the criteria set out in the Settlement Finality Regulations and be designated by the relevant authority.
The Bank is the relevant authority for systems processing only payment transfer orders. The Bank analyses applications for designation from such systems and decides whether to designate a system on the basis of whether it meets the requirements set out in the Settlement Finality Regulations.
The FSA is the relevant authority for systems processing securities transfer orders, but consults the Bank when it receives an application for designation of a system that processes both securities transfer orders and payment transfer orders.
Payment systems that have been designated are:
- CHAPS (operated by CHAPS Clearing Company)
- Continuous Linked Settlement (operated by CLS Bank international)
- Bacs (operated by Bacs Payment Schemes Limited)
- Cheque Clearing System and Credit Clearing System (operated by the Cheque and Credit Clearing Company)
- Faster Payments Service (operated by the CHAPS Clearing Company)
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