From the expiry of the transition period, scheduled to be 31 December 2020, Euroclear UK & Ireland requires third country CSD recognition pursuant to the CSD Regulation (CSDR) in order to continue to provide Irish Securities Settlement and Relevant DI Settlement.
Euroclear UK & Ireland previously secured conditional third country CSD recognition in March 2019 to provide Irish Securities Settlement until March 2021. However, following the entry into force of the Withdrawal Agreement, this recognition is no longer applicable.
Euroclear UK & Ireland is in discussion with relevant authorities regarding recognition as a third country CSD. The key milestones in the recognition process are: an implementing act of the European Commission (EC) determining the lega and supervisory requirements for UK CSDs as equivalent to those in the EU, a subsequent application from Euroclear UK & Ireland to the European Securities and Markets Authority (ESMA) and a decision from ESMA. If an implementing act is passed then Euroclear UK & Ireland intends to formally submit an application seeking recognition in respect of Irish Securities Settlement and Relevant DI Settlement. As with the previous recognition, Euroclear UK & Ireland anticipates that any recognition would be time limited.
Whilst Euroclear UK & Ireland has been having discussions with the relevant authorities and taking steps to secure third country CSD recognition prior to the end of the transition period, Euroclear UK & Ireland cannot guarantee that such recognition will be granted. With this in mind your attention is drawn to our consultation paper – Potential Brexit Impacts:
Irish Securities and Euro Settlement- August 2018 which sets out potential options and mitigating actions should this recognition not be granted. Note: as a result of changes to the political landscape and/or further MyEuroclear News & updates regulatory analysis since the date of publication, aspects of this consultation paper may no longer be correct. In particular, Euroclear UK & Ireland notes that option (B), paragraph 2.3.2 is no longer a viable option.
Euroclear UK & Ireland intends to issue updates in relation to the recognition process. Euroclear UK & Ireland will continue to work together with stakeholders, particularly registrars, participants and issuers, to define and agree the required operational steps, timing and other relevant information.