Recital 18

(18)Directive 98/26/EC of the European Parliament and of the Council ³ allows Member States to designate securities settlement systems governed by their laws for the purposes of application of that Directive when Member States consider that such designation is warranted on grounds of systemic risk. When CSDs operate securities settlement systems designated by host Member States in accordance with Directive 98/26/EC, their operations should therefore be deemed to be of substantial importance for the functioning of the securities markets and the protection of investors in those host Member States.