EC gives green light to Euroclear UK & Ireland for temporary equivalence extension
27 November 2020 UK and Ireland
Image: Denys Rudyi/Adobe Stock
The European Commission has granted Euroclear UK & Ireland (EUI) the ability to continue to offer issuer central security depository (CSD) services after the Brexit transition period ends on 31 December 2020.
EUI will be able to continue settling Irish-domiclied funds and securities up until the end of the new extension period of 30 June 2021.
This comes as the EC has decided to adopt an implementing act determining the legal and supervisory requirements for UK CSDs as equivalent to those in the EU.
The temporary equivalence includes 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.
Euroclear explained that this is by way of registrar depository interests (DIs), where there is no other CSD in the holding chain (relevant DI settlement).
From the expiry of the transition period, EUI requires third country CSD recognition pursuant to the Central Securities Depositories Regulation (CSDR) in order to continue to provide Irish securities settlement and relevant DI settlement.
The key milestones in the recognition process include an implementing act of the EC; a subsequent application from EUI to the European Securities Market Authority (ESMA); and a decision from ESMA.
In March last year, ESMA said it was to recognise EUI as a third country CSD in case of a no-deal Brexit, in accordance with Article 25 of the EU CSD Regulation.
EUI’s recognition was to apply from 30 March 2019 to 30 March 2021, but following the entry into force of the UK’s withdrawal agreement in February 2020, this recognition was no longer applicable.
Meanwhile, in the run up to the UK’s exit from the EU, and during the transition period, EUI and EB have issued a number of consultations and notifications which are available on their respective websites.
EUI will be able to continue settling Irish-domiclied funds and securities up until the end of the new extension period of 30 June 2021.
This comes as the EC has decided to adopt an implementing act determining the legal and supervisory requirements for UK CSDs as equivalent to those in the EU.
The temporary equivalence includes 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.
Euroclear explained that this is by way of registrar depository interests (DIs), where there is no other CSD in the holding chain (relevant DI settlement).
From the expiry of the transition period, EUI requires third country CSD recognition pursuant to the Central Securities Depositories Regulation (CSDR) in order to continue to provide Irish securities settlement and relevant DI settlement.
The key milestones in the recognition process include an implementing act of the EC; a subsequent application from EUI to the European Securities Market Authority (ESMA); and a decision from ESMA.
In March last year, ESMA said it was to recognise EUI as a third country CSD in case of a no-deal Brexit, in accordance with Article 25 of the EU CSD Regulation.
EUI’s recognition was to apply from 30 March 2019 to 30 March 2021, but following the entry into force of the UK’s withdrawal agreement in February 2020, this recognition was no longer applicable.
Meanwhile, in the run up to the UK’s exit from the EU, and during the transition period, EUI and EB have issued a number of consultations and notifications which are available on their respective websites.
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