Question ID:
Legal Act:
Directive 2014/59/EU (BRRD)
Other topics
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Directive 2014/59/EU (BRRD)
Disclose name of institution / entity:
Type of submitter:
Credit institution
Subject Matter:
Scope of bail-in tool: Clarification on Article 44(2)(f)

Is the purchase or sale by an EU bank (falling within the EU Single Supervisory Mechanism) from/to a EU bank (also subjected to the EU Single Supervisory Mechanism) of a listed security (bond of equity) with settlement T+2 (up to T+6) through a clearer such as (but not limited to) Euroclear, Iberclear, Clearstream, Monte Titoli, Sicovam, etc... excluded from bail-in in force of Article 44(2)(f) of the Directive 2014/59/EU?

Background on the question:

The sale/purchase of listed securities ("the transaction") is part of the daily normal activity of any financial institution. The sale/purchase of securities is generally executed by financial institutions through a clearer (CCPs). If an EU bank is bailed-in before the settlement of "the transaction" has taken place, is the potential liability arising from "the transaction” exempt from the bail-in? In other words will "the transaction" be executed/settled anyway on the agreed settlement date (if no more than T+6)?

Date of submission:
Published as Final Q&A:
Final Answer:

Article 44(2)(f) of Directive 2014/59/EU (BRRD) excludes from bail-in liabilities with a remaining maturity of less than 7 days owed to systems or operators of systems designated according to Directive 98/26/EC or their participants and arising from the participation in such a system, provided that the remaining maturity is below 7 daysor to CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation.

Directive 98/26 concerns settlement finality in payment and securities settlement systems and provides the EU legal framework for the regulation of central counterparties (CCPs).

Therefore, when a credit institution (or another entity subject to BRRD) concludes a transaction through an operator of systems designated according to Directive 98/26 (such as Euroclear, Iberclear, Clearstream, Monte Titoli, Sicovam), in the event of resolution of the credit institution, the resulting liability that arises as a result of participation in the system will be excluded from bail-in, provided that its remaining maturity is less than 7 days.

As a result, in such a case the transaction will be executed / settled notwithstanding the resolution of the institution.


This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A:

Update 26.03.2021: This Q&A has been updated in the light of the changes introduced to Directive 2014/59/EU (BRRD).