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The legal framework that governs payments and securities settlement comes from European Union and Estonian legislation. The directly applicable legal standards of the European Union are not replicated in the domestic law of the member states.

The acts of general application of the European Union are regulations and directives passed by the European institutions. Member states have to transpose the directives into their national law, while regulations apply directly, though implementing them may sometimes mean that member states have to pass legal acts, to define which institution is responsible for adopting the regulation for example, or to impose sanctions to ensure compliance.

A directive on settlement finality has been adopted in order to reduce the risks of payments and securities settlements and to contribute to the efficient operation of payment and settlement systems. Its main purpose is to ensure that the payment orders entered in the payment and securities settlement systems are enforceable and cannot be revoked if a participant in the system becomes insolvent. A harmonised legal framework and standards for the use of the main payment services and payment instruments has been set up to create an integrated market for payments and support its operation. To ensure the securities market functions properly, harmonised conditions for trading, clearing and settlement of securities have been fixed.

Estonian law covers all areas that are not regulated by European Union legislation. The main legal acts that are the basis for regulating payments and securities settlements

Legislation regulating the payment environment at the European Union level:

Estonian legislation regulating the payment environment:

Legislation regulating securities settlements at the European Union level:

  • Regulation 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR)

  • Directive 2002/47/EC on financial collateral arrangements

  • Directive 2009/44/EU, amending Directive 98/26/EC on settlement finality in payment and securities settlement systems and Directive 2002/47/EC on financial collateral arrangements as regards linked systems and credit claims

  • Regulation 909/2014 on improving securities settlement in the European Union and on central securities depositories (CSDR)

  • Directive 2014/65/EC on markets in financial instruments (MiFID)

  • Regulation 600/2014 on markets in financial instruments

Estonian legislation regulating securities settlements: