Ireland’s stock market operator is in talks
over its options for a central securities depository (CSD) and
settlement system for Irish securities.
Most European markets already have their own CSDs, critical
market infrastructures which settle vast amounts of securities
on behalf of investors.
However Irish securities currently settle in CREST, the
UK-based CSD owned and operated by Brussels-based Euroclear
Dublin officials now fear that under a so-called 'hard
Brexit’, which is looking increasingly likely,
there is no guarantee that CREST would be granted equivalence
with the EU’s CSDR (Central Securities
"We are engaged with the market, policy makers and partners
on the options for a CSD and settlement system for Irish
securities in a post-Brexit environment," an Irish Stock
Exchange spokesperson told Global Investor/ISF on
Potentially, the plans could result in the creation of an
entirely new Dublin-based CSD.
Another route could lead to Ireland taking advantage of the
passporting rights under CSDR and settle Irish securities in an
already established EU CSD.
The two major European CSDs Euroclear and Clearstream along
with Irish Funds - the representative body for the
international investment fund community in Ireland - were
unable to comment immediately.
Earlier this week Sean Tuffy, senior vice president and head
of regulatory intelligence at Brown Brothers Harriman, said
Brexit has the potential to be "quite disruptive" in the
usually sedate world of security settlements.
"The disruption won’t be in the UK, rather it
would be felt across the Irish Sea in Dublin," he added.
Under the EU’s CSDR, one of the key regulations
adopted in the aftermath of the 2008 financial crisis, a CSD
must be authorized by a local EU member state regulator.
"Since the UK will no longer be part of the EU post-Brexit,
the question is whether this cross-border arrangement will be
allowed to continue when Brexit is all said and done," Tuffy
He added that EU policymakers want to make sure that, in the
event of a hard Brexit, CSD equivalence isn’t
simply a "backdoor into the EU market".
"Alternatively, Ireland could establish its own CSD."
Such a move by the Irish Stock Exchange could means that
Ireland could choose to connect to the European Central
Bank’s T2S (TARGET2-Securities) platform.
T2S is designed to harmonize security settlements across
Europe and provide centralised settlement in central bank
Euroclear Belgium, Euroclear France and Euroclear Nederland
connected in September last year.
Clearstream Frankfurt and LuxCSD joined the platform over
the weekend along with CSDs in Hungary, Slovenia, Slovakia and
Due to objections from UK policymakers, CREST is not
participating in T2S.
Over 800 fund managers from over 50 countries have assets
administered in Ireland. All but two of the top twenty global
asset managers have Irish domiciled funds.