Settlement finality is the legal status reached when a payment or other transfer is unconditional, enforceable and no longer capable of reversal, including where insolvency proceedings concern a participant. This protection does not extend to transactions forming part of a criminal offence or fraud established by a competent court.
European rules distinguish the status of a payment instruction from completion of the underlying transfer. An instruction normally becomes enforceable against third parties, and protected from the effects of insolvency, once it has been accepted by the relevant system under its rules before insolvency proceedings begin. Instructions submitted afterwards receive such protection only in exceptional cases. The system’s rules determine when participants can no longer revoke an instruction. The transfer itself is final when the recipient legally acquires the corresponding entitlement.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.