3 Proposal for a European Parliament and Council Directive on Settlement Finality and Collateral Security
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(96) 193 final
Proposal for a
EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
On settlement finality and
(presented by the Commission)
The present proposal for a directive is the result of a process which can be summarised as follows:
The Lamfalussy Report of 1990 1 highlighted the important systemic risks inherent in payment systems which operate on the basis of one or more legal types of payment netting 2 . The Commission's attention was drawn to these matters by one of its advisory committees on payment systems, the Payment Systems Technical Development Group.
In its March 1992 working document 3 , the Commission noted that certain features of the law in a number of Member States, together with the differences between Member States' laws relating to payment systems in general, were a source of uncertainties and risks. This view was endorsed by the Committee of Governors of the central banks of the EC 4 .
Work began on these issues in a group of government legal experts and central bank representatives, chaired by the Commission, early in 1993. The first phase of the work has consisted of establishing an inventory of the legal situation in the areas of payment netting and settlement finality in all Member States, which has led to a more precise identification of these problems. An extensive study 5 , ordered by the Commission and delivered in February 1994, supported these preliminary conclusions. A first consultation hearing with the European Credit Sector Industry was held in the spring of 1994.
In a second phase (since 1994) different solutions have been discussed and examined within the group of government experts. They are listed under point II.3. A second consultation hearing with the European Credit Sector Industry was held in October 1995, which confirmed the overall validity of the approach.
In the light of this process, the Commission has reached operational conclusions, in particular as regards the questions pertaining to settlement finality and collateral security. It therefore considers that a directive should be proposed. No operational conclusions have been reached relating to securities settlement systems. These issues remain, however, under consideration within the Commission. It may be necessary to make a further proposal covering these issues in the future.
The Commission Strategic Programme for the Internal Market clearly identified the establishment of effective cross-border payment systems as one of the few requirements that still need to be met to ensure the functioning of the Internal Market. This requires modernisation of systems, which affects both central banks and commercial banks, and consequent investment on the part of the industry. This process is already under way. Moreover a number of the large value payment systems which primarily serve the domestic market in their countries are increasingly gaining member banks from other Member States.
The legal issues which are the subject of the present proposal have an important underlying influence on the design of the necessary systems and linkages, both those which are specifically conceived to transmit payments across borders and those which have a cross-border membership. The resolution of these issues will provide a valuable foundation of certainty and serve to minimise legal risks of a systemic kind, as well as the costs which such risks entail.
The need for action in this domain is all the more urgent as progress is made towards full Economic and Monetary Union. The European Council, meeting in Madrid on 15 and 16 December, has stressed that the payment system's infrastructure needs to be in place so as to ensure the smooth functioning of an area-wide money market based on the single currency.
3.2 Subsidiarity assessment
3.2.1 What are the objectives of the directive, having regard to Community obligations?
The principal objectives are threefold:
to reduce legal risks associated with participation in payment systems, as was pointed out in the Lamfalussy report of 1990, in particular as regards the legal validity of netting agreements and the enforceability of collateral security;
to ensure that in the Internal Market payments may be made free of impediments, thus contributing to the efficiency and the cost-effective operation of cross-border payment arrangements in the European Union;
by taking into account collateral constituted for monetary policy purposes, to contribute to developing the necessary legal framework in which the future European Central Bank may develop its monetary policy.
The present directive also
leads to further integration of EC banks in the domestic payment systems of other EC States. The directive therefore supports the free movement of capital stated in Article 73B to 73G and the freedom to provide services under Article 59 of the Treaty;
contributes to the preparation of the third stage of EMU, for which efficient payment mechanisms are indispensable.
3.2.2 Does the action envisaged stem from an exclusive competence of the Community?
Exclusive competence: Article 100A, in conjunction with Article 7A.
3.2.3 What are the possibilities of action available to the Community
A number of alternatives were considered:
First, the minimalist approach of developing a solution within the current state of the national laws was examined. The question in that context was to examine whether it was possible to design a model contract which could be used by members of a payment system and which could remedy the problems concerned. This approach was rejected for two reasons:
This solution concerns only the parties to the contract, while it is necessary that third parties be legally bound. This is illustrated by the following case: a Country A bank participates in a multilateral netting system with a central settlement agent in Country B. The Country A bank goes bankrupt. In that case, the creditors – or the liquidator – of the bankrupt Country A bank, attempting to recover part of their claims against that bank, are likely to challenge the netting agreement under Country A law, since that law may not necessarily recognise multilateral netting. If such action were successful, it could jeopardise the whole netting system.
Insolvency law contains so-called ordre public rules which can overrule contractually stipulated provisions. Even if a payment system agreement stipulated that in case of insolvency of a member the payment orders introduced before the moment of pronouncement of insolvency proceedings cannot be unwound, a zero-hour-rule e.g., as it exists in a number of Member States, would overrule that contractual arrangement. Consequently, unwinding could happen, with potentially far-reaching and damaging consequences for the payment system concerned.
A second possible solution consisted of the private international law approach, under which it is possible to agree that a payment system established under the laws of Country A, a country whose commercial law recognises netting and whose bankruptcy laws do not interfere with the proper operation of payment systems, would be governed entirely – including all its members from EU countries – by the laws of country A. Whether Member State B's law recognises the finality of netting applicable to bank B, or whether that State's insolvency law has provisions d'ordre public, like the zero-hour rule, would no longer be relevant. Such an approach did not in the final analysis, however, prove to be attractive. If chosen, it would mean that the courts in every Member State would in principle need to be in a position to interpret and apply the different branches of law (commercial law, insolvency law, etc.) of all other Member States. Such a solution, at least when standing alone, seemed unnecessarily cumbersome.
A third possibility was to recommend to the Member States, without any binding obligations, the necessary modifications in their laws. This approach has some procedural attractions in largely bypassing the EU legislative process but it would not substantially assist the governments of Member States, who would still have to draft and implement any necessary legislation. From the point of view of the finacial institusions and payment systems, the solution would lack transparency and legal certainty. Any slight advantage of proceeding in this way was felt to be outweighed by the disadvantages.
Therefore, as explained in detail in section I above, a binding instrument is now deemed both timely and necessary.
3.2.4 Is uniform legislation necessary or is a directive setting out the general objective and leaving implementation thereof to the Member States sufficient?
Uniform legislation is not necessary. A directive setting out the general objectives, as they are outlined hereunder, is sufficient.
Section I of the directive deals with the scope of the directive and defines the necessary terms;
Section II of the directive lays down the general principle, the objective of which is to ensure that payment netting is made legally enforcable under all jurisdictions and its effects binding on third parties;
Section III provides for the irrevocability of payment orders in accordance with the rules of the payment system concerned;
Section IV of the directive lays down the general principle, the objective of which is to:
ensure that insolvency proceedings or any other rule or practice do not have a retroactive effect on the rights and obligations of participants.
determine which insolvency law is applicable to the rights and obligations in connection with direct participation in a payment system in the event of insolvency proceedings against a participant in that payment system.
Section V of the directive lays down the general principle, the objective of which is to insulate collateral security from the effects of the insolvency law of the Member State of a failed participant.
These provisions set out the general objective pursued, thus leaving implementation to the Member States; where appropriate, institutions are free to determine the precise contents of these general principles.
3.3 Detailed commentary on the articles
This Directive's main goal is to reduce the systemic risk associated with participation in Payment Systems. There was a general consensus that this directive should have the widest scope possible. To this effect, the directive covers cross-border payment systems as well as domestic systems. Furthermore, it applies to the following two categories:
EC institutions which are participants in third country payment systems and collateral security constituted for such a payment system
Third country institutions which participate in an EC Payment System and the collateral security constituted in favour of that payment system
The inclusion of the first category in the directive's scope implies that the benefits of this Directive are extended to third country payment systems as far as their EC participants are concerned. Third country payment systems as such are of course not covered by the directive, but their participants are insofar as they are EC institutions within the meaning of Article 2 (i).
As far as the second category is concerned, the essential interest of its inclusion in the directive's scope lies in the fact that it makes it possible to insulate collateral security, pledged by a third country institution in an EC Member State, from a possibly universal insolvency law of that third country.
Finally, with a view to the establishment of the future European Central Bank, the pledging of collateral security will increasingly be cross-border. The same problems arise in that respect as in the case of the pledging of collateral in the framework of payments systems. Therefore, the scope of this proposal has been extended to collateral security, pledged in connection with monetary policy operations.
« institution» has been given a wide scope, so as to include not only credit institutions in the sense of the first Banking Directive, but also investment banks, giro and postal banks and any other undertaking which participates directly in a payment system.
« payment order» means an instruction given to carry out a transfer, be it credit or debit, by a book entry on the accounts of a credit institution or of a central bank. On the accounts of a credit institution, since it is this type of payment system which calls – from a public policy standpoint – for the kind of protection which this Proposal for a Directive provides for. On the accounts of a central bank, is added to anticipate the foreseeable development of real time gross settlement facilities, which necessitate movements on the accounts of the Central Banks.
« payment system» is defined widely, so as to include systems, regardless of whether they settle on a gross or net basis and of whether they are based on multilateral or bilateral arrangements. Of course, a federation of payment systems in itself is also covered by the directive.
Many payment systems, handling very large payments ( large value) or smaller values ( retail) depend on the technique known as netting 6 or set-off. Payment netting is the conversion into one net claim or one net obligation of claims and obligations resulting from payment orders which an institution either issues to one or more other institutions or receives from one or more other institutions, with the result that only the net claim can be demanded or the net obligation be owed. This has the effect of reducing greatly the number of settlement transactions required to process a given number of payments. Instead of settling each payment order individually as it arises during the day the banks involved in a netting agreement settle once by paying (or receiving) a single net balance to (or from) the other members of the system.
The legal enforceability of a netting operation with institutions from different Member States ultimately depends on the law of the Member State of origin of these institutions. In a number of Member States netting, especially multilateral netting, is not enforcable under the current state of legislation. If the liquidator of a failed participant in a payment system were on that basis to challenge the netting, this would mean that he could repudiate the net settlement debt, arrived at by netting. Instead he could insist on payment to him of all the individual underlying amounts originally due to that institution. As for the amounts due from the failed institution, they will be claims on paper in the insolvency proceedings and unlikely to be met. This phenomenon of repudiating the debt and accepting the amounts originally due, is called cherry-picking. The consequence of cherry-picking is serious disruption in the payment system at best, at worst the payment system might break down (systemic risk) and cause in turn the inability of other members in the payment system to meet their obligations (knock-on effect).
Therefore, Article 3(1) provides that netting is legally enforceable and binding on third parties, even in the event of the opening of insolvency proceedings, insofar as the payment orders have been introduced into the payment system before the opening of insolvency proceedings.
Article 3(2) specifically focuses on the cases in which a participant who realises that bankruptcy is becoming inevitable, introduces payment orders into a payment system before the declaration of insolvency in order to remove assets to the detriment of the creditors. Therefore, this article confirms that the directive does not shield fraudulent payment orders from invalidation. Such invalidation will, however, not be permitted to occur through the unwinding of the netting operation, something that the directive aims to avoid at all costs, but rather outside the payment system, or indeed in a subsequent netting cycle (via a revers order).
It is commonly agreed that the possibility of a significantly large payment being revoked can generate systemic risk, if the revocation occurs during the process leading to settlement in a payment system. It would be unacceptable, on the other hand, to disproportionately limit the freedom of operation and the freedom of contract of the various parties to a payment system in attempting to reduce or minimise this risk.
Thus, having recognised that revocation might otherwise lead to an unwinding of settlement, Article 4(1) precludes the revocation of a payment order after a contractually agreed time, not only by the parties to the payment system agreement, but also by third parties, e.g. a sub participant. This prohibition is important not only in the case of netting, but also in the case of real time gross settlement arrangements.
This does not mean, of course, that a payment order which was not due by the originator, but has been introduced into the payment system, is forever lost to him. Article 4(2) confirms that, if the originator, i.e. a customer, has a right against the beneficiary to reclaim an amount that has been introduced into the payment system, such a right is not cancelled, but will only have to be exercised outside of the payment system, or by a reverse payment operation in the next netting cycle.
Articles 5 and 6
Irrespective of whether a payment system operates on the basis of netting or gross-settlement, the different insolvency laws in the different Member States cause further problems, where rules d'ordre public included in these insolvency laws would lead to the possibility of cherry-picking, with its very damaging consequences, as described above.
This is the case for the so called zero-hour rule, which gives retroactive effect to the pronouncement of insolvency. A consequence of this rule is that payment orders introduced after zero hour of the day of pronouncement of insolvency of a participant in a payment system but before the pronouncement of the insolvency, could be challenged by a liquidator of an insolvent institution. The latter would then be in a position to insist on payment to him of all the individual underlying amounts originally due to that institution. As for the amounts due from the failed institution, they will be claims on papir in the insolvency proceedings and unlikely to be met. In order to avoid this possibility, Article 5 provides that insolvency proceedings do not have retroactive effect.
There may, however, exist other provisions d'ordre public, beyond the so called zero-hour rules, which can potentially lead to cherry-picking. This is why Article 6 has been designed as a catch-all provision, which is to cover all those cases which have not been identified but are believed to exist. Therefore, Article 6 states that in the event of insolvency proceedings against an institution which participates directly in a payment system, the rights and obligations arising from or in connection with participation in that payment system, shall be determined by the insolvency law of the country where the payment system is located. In practice, Article 6 does, of course, not imply that a separate insolvency proceeding has to be opened in the Memeber State of location of the payment system. The insolvency of a member institution would continue to fall under the insolvency law of the Member State where that institution is established, as is currently the case. If the liquidator, however, would wish to draw on insolvency provisions d'ordre public to challenge a payment made through the payment system, he would have to apply the insolvency law of the Member State of location of the payment system. This approach has the advantage that the parties in a payment system only have to examine one insolvency law, namely the insolvency law of the Member State of location of the payment system, instead of having to examine and attempt to reconcile the insolvency law of the Member State of origin of every single participant. This would contribute to reducing costs and eliminating legal uncertainty.
Finally, the directive addresses the problems associated with collateral security which supports participation in payment systems, on a cross-border basis. Its objective is to avoid a situation where in the case of insolvency of a participant in a payment system, the insolvency law of that participant's Member State would not recognise the validity of collateral security constituted in another Member State. Article 7(1) therefore provides that, in the case of insolvency of a participant, the rights of the pledgee shall not be affected by the insolvency of that participant. This rule is justified for public policy reasons. Vast sums are transferred through the payment systems on a daily basis: if one member were not able to meet its obligations and the collateral could not be realised, this could – in a worst case scenario – have disastrous consequenses for the payment system as such, causing no less than the collapse of such a system, with a devastating knock-on effect in financial markets.
It should be pointed out that this Proposal does not alter the rule of law applicable to collateral security. This remains, as is the current situation, the law of the Member State where the collateral is located, in accordance with the principle of lex rei sitae.
In its second paragraph, Article 7 provides that in the case of a universal third country insolvency law, the effects of that law do not extend to the rights of the pledgee in connection with participation in a payment system or in connection with monetary policy operations, if that collateral security is constituted in a Member State.
DRAFT PROPOSAL FOR A EUROPEAN PARLAMENT AND COUNCIL DIRECTIVE ON SETTLEMENT FINALITY AND COLLATERAL SECURITY
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular Article 100A thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Monetary Institute,
Having regard to the opinion of the Economic and Social Committee,
In accordance with the procedure laid down in Article 189b of the Treaty establishing the European Community,
Whereas the Lamfalussy report of 1990 to the Governors of the central banks of the Group of Ten Countries demonstrated the important systemic risk inherent in payment systems which operate on the basis of one or more legal types of payment netting, be it bilateral or multilateral, on the one hand; whereas the reduction of legal risks associated with participation in real time gross settlement payment systems is of paramount importance, given the increasing development of these systems, on the other;
Whereas the reduction of systemic risk regards in particular the finality of settlement and the enforceability of collateral security; whereas collateral security is meant to comprise all means provided by a participant to the other participants in the payment system to secure rights and obligations in connection with that payment system including, among other means, repurchase agreements, insurance contracted by a participant in a payment systems for the benefit of the other participants;
Whereas, by ensuring that payments and movement of capital may be made free of impediments in the Internal Market, the present directive contributes to the efficient and the cost-effective operation of cross-border payment arrangements in the European Union; whereas the directive thereby follows up the progress made towards completion of the internal market, in particular towards the freedom to provide services and liberalization of capital movements, with a view to the realisation of economic and monetary union;
Whereas the present directive is intended to cover payment systems of a domestic as well as of a cross-border nature; whereas debit as well as credit transfers are covered; whereas the directive is applicable to EC payment systems and collateral security constituted by their participants, be they EC or third country participants, in connection with participation in these payment systems; whereas the directive also covers EC institutions which participate in third country payment systems; whereas financial flows are increasingly taking place on a world-wide level; whereas EC institutions and EC payment systems thus are bound to establish and maintain close operational links with third country payment systems and to participate in them; whereas it is essential, therefore, that the cross-border relations between EC institutions and EC payment systems on the one hand and third country payment systems on the other are addressed and facilitated by this directive with a view to avoiding impediments for EC institutions to participate in third country payment systems arising from a of lack of legal security; whereas efficient EC payment systems are vital for the Internal Market and cannot operate properly without links to third country payment systems because financial markets are inextricably connected with one another;
Whereas the directive, by covering collateral security provided in connection with monetary policy operations, assists the EMI in its task of promoting the efficiency of cross-border payments with a view to the preparation of the third stage of economic and monetary union and thereby contributes to developing the necessary legal framework in which the future European Central Bank may develop its monetary policy;
Whereas the purpose of the present directive is to ensure that netting is legally enforceable under all Member States' jurisdictions and binding on third parties; whereas the purpose of the directive is also to ensure that payment orders cannot be revoked after a contractually agreed time; whereas the directive aims at securing that insolvency proceedings do not have a retroactive effect on the rights and obligations of participants; whereas the present directive furthermore aims at determining – in the event of insolvency proceedings against a participant in a payment system – which insolvency law is applicable to that part of the insolvency which the rights and obligations in connection with direct participation in that payment system are; whereas the present directive finally intends to insulate collateral security from the effects of the insolvency law applicable to the failed participant;
Whereas the present Directive also applies to the relationship between an institution and a member of a payment system which transfers the payment orders of such institution to the payment system, given that this relationship can be considered in itself to be a separate payment system;
Whereas the adoption of the present directive constitutes the most appropriate way of realising the above objectives; whereas the present proposal is nessary to realise these objectives and does not go beyond the goal of realising these objectives;
HAVE ADOPTED THIS DIRECTIVE:
I. SCOPE and DEFINITIONS
The provisions of this directive shall apply to:
any EC payment system operating in any currency and the ECU and to collateral security provided in connection with participation in such a system.
any EC institution which participates directly in a third country payment system and to collateral security provided in connection with participation in such a system.
collateral security provided in connection with monetary policy operations.
For the purpose of this directive:
institution means any undertaking as defined in Article 1 of Council Directive 77/780/EEC including the institutions set out in the list in Article 2(2) thereof, which participates directly in a payment system, and any other undertaking which participates directly in a payment system;
direct participation means participation in a payment system entailing responsability for settlement;
EC institution means any institution which has its registered office in a Member State;
third country institution means any institution which is not an EC institution;
payment order means any instruction to place at the disposal of a final recipient an amount of money by means of a book entry on the accounts of a credit institution or a central bank;
insolvency proceedings means any measure which, for reasons of impending or actual inability to meet financial obligations, is pronounced by a judicial or administrative authorithy for the benefit of a collectivity of creditors, and which precludes from making payments or disposing of property;
payment netting means the conversion into one net claim or one net obligation of claims and obligations resulting from payment orders which an institution either issues to one or more other institutions or receives from one or more other institutions, with the result that only the net claim can be demanded or the net obligation be owed;
payment system means any written agreement between two or more institutions for executing payment orders;
EC payment system means a payment system located in a Member State. A payment system shall be deemed to be located in the Member State the law of which has been chosen by the institutions which participate directly in that payment system. In the absence of choice, the payment system shall be deemed to be located in the Member State where the settlement takes place;
third country payment system means any payment system which is not an EC payment system;
monetary policy operation means an outright (spot and forward) buying and selling operation in the financial markets or such an operation under a repurchase agreement, or lending or borrowing of claims and marketable instruments, whether in Community or in non-Community currencies or in precious metals, by a Member State Central Bank or by the future European Central Bank; it also means the conduct of credit operations, by a member State Central Bank or by the future European Central Bank, with credit institutions or other market participants, with lending being based on adequate collateral;
collateral security means all assets, provided for the purpose of securing rights and obligations potentially arising in a payment system or provided to Member State Central Banks or to the future European Central Bank in connection with monetary policy operations.
II. FINALITY of PAYMENT NETTING
Article 3-Payment Netting
Payment netting is legally enforceable and shall, even in the event of insolvency proceedings against any institution which participates directly in a payment system, be binding on third parties, provided that the payment order was entered into payment system before the opening of insolvency proceedings. The moment of entrance shall be defined by the rules of that payment system.
Any rule on the setting aside of contracts and transactions entered into before the opening of insolvency proceedings, shall not lead to the unwinding of the netting.
III. REVOCATION of PAYMENT ORDERS
A payment order may not be revoked either by an institution which participates directly in a payment system or a third party as against the other direct participants in that payment system after the moment defined by the rules of that payment system. This rule applies notwithstanding the opening of insolvency proceedings.
Any right which the originator of a payment order might have to a refund shall be exercised without prejudice to paragraph 1.
IV. NON-RETROACTIVITY and APPLICABLE INSOLVENCY LAW
Insolvency proceedings shall not have retroactive effect on the rights and obligations of an institution in connection with direct participation in an EC payment system. Any other rule or practice which has a retroactive effect shall be superseded.
Article 6-Applicable Insolvency Law
In the event of insolvency proceedings against an institution which participates directly in a payment system, the rights and obligations arising from or in connection with direct participation in that payment system, shall be determined by the insolvency law of the country where the payment system is located.
V. INSULATION of the RIGHTS of the PLEDGEE from the EFFECTS of the INSOLVENCY of the PLEDGER
Article 7-Insulation from the effects of insolvency
The rights of a pledgee in connection with liabilities of one participant to one or more other participants in a payment system or the rights of monetary authorities to whom collateral security has been pledged in connection with monetary policy operations, shall not be affected by the opening of insolvency proceedings against the pledger. The collateral security shall be realised for the satisfaction of rights in connection with participation in a payment system or with monetary policy operations with priority over all other creditors.
Where a third country institution constitutes collateral security in a Member State in connection with participation in an EC payment system or in connection with monetary policy operations, the rights of the pledgee shall not be affected by the opening of insolvency proceedings against that third country institution.
VI. FINAL PROVISIONS
Article 8 – Implementation
Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive before 31 December 1998 at the latest. They shall immediately inform the Commission.
When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference at the time of their official publication. The procedure for such a reference shall be laid down by the Member States.
Member States shall communicate to the Commission the text of the laws, regulations and administrative provisions which they adopt in the field governed by this Directive. In this Communication Member States shall provide a table of correspondence showing the national provisions which exist or are introduced in respect of each article of this directive.
Article 9 – Report to the European Parliament and the Council
No later than three years after the date mentioned in Article 8(1), the Commission shall present a report to the European Parliament and the Council on the application of this Directive, accompanied where appropriate by proposals for its revision.
This Directive is addressed to the Member States.
Done at Brussels,
For the European Parliament For the Council
The President The President
Report to the Governors of the central banks of the Group of Ten countries, Basel, November 1990
For the purposes of the present Proposal, payment netting means the conversion into one net claim or one net obligation of claims and obligations resulting from payment orders which an institution either issues or receives, with the result that only the net claim can be demanded or the net obligation be owed.
Easier cross-border payments: Breaking down the barriers, SEC(92)621 final of 27 March 1992.
Issues of common concern to EC Central Banks in the field of payment systems, by the Ad Hoc Working Group on EC payment systems, September 1992.
The laws on credit transfers and their settlement in Member States of the EU: Report for the European Commission (DGXV), Wilde Sapte – Brussels, February 1994.
From the legal point of view, netting in this sense is the same technique as is the subject of the proposal for a directive on contractual netting. However the latter deals with unmatured obligations, netted on a bilateral basis only, whilst the present initiative concerns payment streams netted bilaterally or multilaterally. Both types of netting differ markedly from the concept of position netting, as used in the Capital Adequacy Directive.