Brexit

It is our intention to continue providing services in respect of Irish securities and euro settlement following Brexit, including in a no-deal scenario, for as long as we are permitted to do so. We have been engaging with domestic and European authorities to seek this continuity of service provision.

We welcome the publication, on 19 December 2018, by The European Commission of its UK CSD equivalence implementing decision. In a no-deal scenario, the decision provides for equivalence of UK CSD arrangements for a period of 24 months from March 2019, and is a positive step towards enabling The European Securities Market Authority (ESMA) to recognise Euroclear UK & Ireland as a ‘third country CSD’.

We are preparing our application for EU third country CSD recognition and are engaging with ESMA regarding this process. Subject to this application process, regulatory approvals and circumstances which remain outside of our control, we expect this recognition would be granted and become effective in the event of a no-deal Brexit. This would ensure that Euroclear UK & Ireland could continue to settle Irish securities after 29 March 2019.

We continue to engage with the relevant authorities regarding the continued provision of euro settlement services.

In parallel and following Euronext’s announcement that Euroclear Bank is its preferred solution for long term settlement of Irish corporate securities, Euroclear Bank is starting a detailed consultation to finalise the operating model for Euroclear Bank, with the aim of having the long term solution in place by the expiry of the equivalence period.

The purpose of this briefing is to provide an overview of the impact of Brexit on the Euroclear group CSDs.

We have published a consultation paper to provide further information to, and seek the views of, stakeholders in relation to Euroclear UK & Ireland's ability to offer settlement of Irish securities and settlement of euros after Brexit.

Consultation feedback

You are encouraged to respond to the questions set out on page 4 of the consultation paper.

In particular, we are interested to hear about:

• any potential action you may be considering in relation to the potential impact of Brexit upon Irish Securities Settlement or Euro Settlement, or
• any support that you may wish to receive from Euroclear UK & Ireland (or the wider Euroclear group) in connection with the potential impact of Brexit upon Irish Securities Settlement or Euro Settlement

All responses should be sent by email to: consultationfeedback@euroclear.com quoting EUI Potential Brexit Impacts, in the subject line of your email. You can also provide your feedback to your Relationship Manager.

In February 2018, Euroclear published a White Paper "Euroclear Ireland – Delivering continuity of Irish securities settlement post Brexit". This paper described the proposed structure and services of a new post-Brexit CSD in Dublin for Irish corporate securities, to be called ‘Euroclear Ireland’, which would need to be authorised and regulated, including by the Central Bank of Ireland under the EU CSD Regulation.

In this White Paper we noted that, while Euroclear had made a decision in principle to seek to establish a new CSD in Ireland, the establishment of ‘Euroclear Ireland’ was subject to a number of factors outside Euroclear’s control including approval by stakeholders and regulators. In addition, the continued uncertainty over the precise nature of the UK’s relationship with the EU after March 2019 meant that it was possible that other solutions, delivered to different time-lines, might also be appropriate.

Following recent discussions with the Central Bank of Ireland and the Bank of England, Euroclear has ceased work on the development of ‘Euroclear Ireland’ as originally proposed and will now pursue alternative solutions for Irish securities settlement.

Euroclear UK & Ireland’s intention is to continue to offer settlement services in respect of Irish securities against euro, sterling and dollars on an interim basis after March 2019. This is subject to dependencies outside Euroclear’s control including regulatory approvals and Euroclear is working with relevant authorities in this respect. We note however, that the Agreement on 23 March 2018 between the EU and UK on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union ('The Withdrawal Agreement') contains a 21 month Implementation or Transition Period.

Euroclear will now explore other potential settlement solutions for Irish securities. To that end, Euroclear will work with the authorities and with its Irish User Committee and other stakeholders over the coming weeks to consult on, and develop further, these longer term options for Irish securities settlement.

For any questions, we encourage you to contact your Euroclear Relationship Manager