European Union: European Commission submitted a proposal for a regulation on settlement finality

On 4 December 2025, the European Commission submitted a proposal for a Regulation on settlement finality (2025/0381). Part of the Market Integration Package, the proposal converts the Settlement Finality Directive, which provided for the finality and irrevocability of payment and security transfer orders once entered into a designated settlement system, into a directly applicable Regulation to address divergences in national transposition. It harmonises the designation of systems, definitions of participants and indirect participants, scope of eligible securities, and determination of the moment of settlement finality, and clarifies conflict-of-law rules and treatment of EU entities participating in third-country systems. Further, the proposal clarifies the application of the settlement finality framework to distributed ledger technology-based systems (DLT systems) by defining the moment of final settlement and amends the Financial Collateral Directive to take DLT systems into account.