On 23 April 2008, the European Commission published a proposal for a directive amending the Settlement Finality Directive (98/26/EC) (SFD) and the Financial Collateral Directive (2002/47/EC) (FCD).The aim of the SFD was to minimise systemic risk associated with, and to ensure the stability of, payment and securities settlement systems (systems). It provides that transfer orders entered into systems cannot be revoked or invalidated by stipulating the irrevocability and finality of transfer orders and of the netting of transfers, even if a system participant is subject to insolvency proceedings. The SFD was implemented in the UK by the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.The aim of the FCD was to create a uniform legal framework to limit credit risk in financial transactions where securities and/or cash are provided as collateral. It reduces the formalities for taking and enforcing such collateral. The Financial Collateral (No.2) Regulations 2003 implemented the FCD into UK law.The Commission's proposals aim to bring the SFD and the FCD "into line with the latest market and regulatory developments". The proposals include extending the protection of the SFD to night-time settlement and to settlements between linked systems and extending the definition of collateral to cover "credit claims eligible for the collateralisation of central bank credit operations". Although considered by the Commission, changes to conflict of laws rules were not included in the proposals.It remains to be seen how the member states choose to implement the amending directive, whether it will enhance legal certainty in this complex area, and whether it is compatible with other initiatives (referred to in Legal update, UNIDROIT set to adopt convention on intermediated securities).