French Monetary and Financial Code
In forceI. - An interbank settlement system or a system for the settlement and delivery of financial instruments means a national or international procedure organising relations between at least three participants, not including the system operator, as defined in 5° of II of this article, or any indirect participants, as defined in the last paragraph of II, permits, in accordance with common rules and standardised procedures within the meaning of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems, the regular execution, with or without netting, of payments and, in the case of systems for the settlement and delivery of financial instruments, the delivery of financial instruments between the said participants.
The system must either have been set up by a public authority or be governed by a framework agreement complying with the general principles of a market framework agreement or by a standard agreement. The Minister responsible for the economy shall notify the European Securities and Markets Authority of the list of systems benefiting from Articles L. 330-1 and L. 330-2 governed by French law and their respective managers.
The following constitute a system
1° Any system designated as a system and notified to the European Securities and Markets Authority by the Member State of the European Union or the State party to the Agreement on the European Economic Area whose legislation is applicable, in accordance with Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 ;
2° Any system governed by the law of a third country designed to settle foreign exchange transactions in payment-versus-payment mode and in central bank money, in which a person governed by French law mentioned in II of this article is a direct participant, where this system, approved by order of the Minister for the Economy, after consultation with the Banque de France, presents a systemic risk and a level of regulatory and operational security equivalent to that of systems governed by French law;
3° Any system governed by the law of a third country acting principally in central bank money and intended to execute payments or to effect settlement and delivery of financial instruments, in which a person governed by French law mentioned in II above is a direct participant, where this system, approved by order of the Minister for the Economy, after consultation with the Banque de France, presents a systemic risk and a level of regulatory and operational security equivalent to that of systems governed by French law;
4° A clearing house recognised by the European Securities and Markets Authority, in which a person governed by French law mentioned in II above is a direct participant, where this system, approved by order of the Minister for the Economy, after consultation with the Banque de France, presents a systemic risk.
The systems mentioned in 2°, 3° and 4° must meet the conditions of their approval at all times. Any change in the conditions of this approval must be declared to the Minister for the Economy. An order from the same minister defines the terms of this declaration and the consequences that may be drawn from it.
An interoperability agreement may be concluded between the operators of two or more systems, involving the execution of payments between system participants and, in the case of systems for the settlement and delivery of financial instruments, the delivery of financial instruments. Such an agreement does not constitute a system.
II. - Only the following may be participants in an interbank settlement system or a system for the settlement and delivery of financial instruments:
1° Credit institutions and investment firms having their registered office in France and branches established on French territory of credit institutions having their registered office in a State which is neither a member of the European Union nor a party to the Agreement on the European Economic Area;
2° Credit institutions and investment firms having their registered office or, in the absence of a registered office, their effective management in a Member State of the European Union or in a State party to the Agreement on the European Economic Area other than France;
3° Members of a clearing house as referred to in Article L. 440-2 ;
4° Central securities depositories authorised or recognised pursuant to Articles 16 or 25 of Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories ;
5° Interbank settlement system or financial instrument settlement and delivery system operators, which are the entities responsible for operating such a system ;
6° Under the conditions laid down by the General Regulation of the Autorité des marchés financiers, credit institutions and investment firms other than those mentioned in 1° and 2°, and other legal entities not established in France whose activities are comparable to those of the persons mentioned in 3° to 5°, 7° and 8°;
7° Clearing houses established or recognised under Articles 14 or 25 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on over-the-counter derivatives, central counterparties and trade repositories ;
8° The institutions or undertakings referred to in Article L. 518-1 ;
9° International financial organisations or bodies, other public bodies as well as controlled undertakings operating under a State guarantee, which are not persons mentioned in 1° to 8°, designated on an individual basis or by category by an order of the Minister in charge of the economy, as well as central banks ;
10° Bodies and undertakings, other than the persons referred to in 1° to 9°, supervised by the Autorité des marchés financiers, the Autorité de contrôle prudentiel et de résolution or a counterpart authority of another Member State of the European Union or party to the Agreement on the European Economic Area, provided, their participation is justified in terms of systemic risk and, secondly, at least three participants in the system concerned fall into the categories of credit institutions, investment firms, public bodies or controlled undertakings operating under State guarantee. These conditions are specified by decree.
Access by credit institutions and investment firms having their registered office or, in the absence of a registered office, their effective management in another Member State of the European Union or another State party to the Agreement on the European Economic Area is subject to the same non-discriminatory, transparent and objective criteria as those applicable to participants having their registered office in France.
A system for the settlement and delivery of financial instruments may refuse, for legitimate commercial reasons, access to a credit institution or an investment firm having its registered office or, if it has no registered office, its effective management in another Member State of the European Union or another State party to the Agreement on the European Economic Area.
Where a participant in an interbank settlement system or a system for the settlement and delivery of financial instruments mentioned in 1°, 2°, 3° or 4° of I is the subject of safeguard, reorganisation or compulsory liquidation proceedings, the rights and obligations arising from or linked to its participation in the said system are determined by the law governing the system. With regard to the systems mentioned in 1° of the same I, the application, by the judge or by any authority of a third State, of a law other than that which governs the system is likely to prevent the foreign decision from being recognised and enforced in France.
The institutions mentioned in 1° to 10° may act as indirect participants in one of the systems mentioned in I when their instructions for payment or delivery of financial instruments are entered into the system via a direct participant. The relationship between an indirect participant and the direct participant through which the indirect participant enters its instructions into the system shall be the subject of a contract. The provisions of this contract may not limit the liability of the direct participant in respect of orders entered on behalf of the indirect participant. The indirect participant must be known to the system operator.
III. - Clearing instructions and transactions entered into one of the systems referred to in I shall be legally effective and enforceable against third parties, even if they were entered before expiry of the business day on which a judgement is handed down to open an insolvency, receivership or liquidation proceedings or proceedings in a Member State or a third country with comparable effect to these proceedings against a direct or indirect participant, notwithstanding any legislative provision to the contrary or any mention to the contrary in the judgement. The business day is defined, notwithstanding the provisions of Article L. 133-4, by the system's operating rules. Instructions that have not become irrevocable by the time the judgment is notified to the system operator or by the time the system operator is informed by the Autorité de contrôle prudentiel et de résolution under conditions laid down by decree of the Conseil d'Etat shall cease to have legal effect and be enforceable against third parties.
IV. - The provisions of this article also apply in the event that safeguard, receivership or liquidation proceedings or proceedings in a Member State or a third country having an effect comparable to that of such proceedings have been opened against a participant in another system bound by an interoperability agreement or the operator of an interoperable system that is not a participant.
When and how an instruction is considered to be entered into a system is defined by the operating rules of that system, which must also define when and how an instruction is considered to be irrevocable in the system.
In the case of systems linked by an interoperability agreement, each system determines in its own rules the moment of introduction into its system and the moment of irrevocability in order to coordinate the rules of all the interoperable systems concerned. Unless expressly provided otherwise in the rules of all the systems linked by interoperability contracts, the rules relating to the moment of introduction and the moment of irrevocability specific to a system shall not be affected by any rule of the other systems with which it is interoperable.
Where a system operator has provided a guarantee to another system operator under an interoperability agreement between the two systems, the rights of the guarantor shall not be affected by the opening of safeguard, receivership or liquidation proceedings or proceedings in a Member State or a third country having comparable effect to such proceedings against the system operator who received the guarantee.
V. - No judgement or decision emanating from a third country and rendered contrary to III or IV, with regard to a system mentioned in 1° of I, may be recognised or enforced in France insofar as it is contrary to III or IV.
