Brexit - Irish Securities Settlement - Update

This communication provides the latest update in relation to Euroclear UK & Ireland’s ability to continue to offer issuer CSD services from the expiry of the transition period (scheduled for 31 December 2020) in respect of:

• securities constituted under the law of Ireland (Irish Securities Settlement); and
• securities constituted under the laws of Cyprus, The Netherlands or Luxembourg, which are represented in the CREST system by way of registrar depository interests (DIs), where there is no other CSD in the holding chain (Relevant DI Settlement).

As we have previously communicated, 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.

By way of reminder, the key milestones in the recognition process, as previously set out in Operational bulletin 2020 – 184, are:

• an implementing act of the European Commission (EC); 
• a subsequent application from Euroclear UK & Ireland to the European Securities Market Authority (ESMA); and 
• a decision from ESMA. 

On 25 November 2020, the European Commission (EC) decided to adopt an implementing act determining the legal and supervisory requirements for UK CSDs as equivalent to those in the EU. This implementing act is time limited to the end of June 2021.

Following publication of the EC implementing act in the Official Journal, Euroclear UK & Ireland will formally apply to ESMA seeking recognition as a third country CSD under Article 25 of CSDR in respect of Irish Securities Settlement and Relevant DI Settlement.

We will continue to work with ESMA with regards to the application and await their decision. Euroclear UK & Ireland considers that any recognition would also be time limited in line with the EC equivalence decision.

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.

As we have previously communicated, Euroclear UK & Ireland also intends to make an application to become a Qualified Intermediary for the purposes of Irish Dividend Withholding Tax on Irish securities held in CDI form within the CREST system.

We are in the process of finalising our application to the Irish Revenue Commissioners and expect to publish further details regarding this service shortly.

In the run up to the UK’s exit from the EU, and during the transition period, Euroclear UK & Ireland and Euroclear Bank have issued a number of consultations and notifications which are available on our respective websites.

If you would like to discuss the above, please contact your Euroclear Relationship Manager who remains available to assist.