In accordance with Article (131) of the Central Bank Law settlement finality is “the discharge of an obligation by a transfer of funds that has become irrevocable and unconditional”. Specifically, “settlement finality” refers to the abrogation of all rights otherwise existing at law that would allow the reversal of a Transfer Order effected through, or proceedings within, an LVPS.
Article (131) (1) of the Central Bank Law grants finality to all transactions conducted through a Financial Infrastructure System, therefore rendering the same final, irrevocable and irreversible, in any of the cases provided for thereunder. Besides finality in respect of Transfer Orders, the Central Bank Law also provides legal certainty on the Netting arrangements in a designated LVPS.
If Netting has been effected in an LVPS that meets any of the designation conditions refers to in Article (126) (2) of the Central Bank Law, the SO and/or SI needs to take into consideration the Netting of obligations of insolvent or bankrupt parties to all obligations owed to or by a participant person in the system, as per Article (133) of the Central Bank Law.
In addition, this Regulation shall not limit, restrict or otherwise effect, the preservation of rights in underlying transactions and obligation of Participant Person to notify of insolvency are set out in Article (134) and Article (135) of the Central Bank Law respectively.