Minister Donohoe welcomes successful completion of the multi-year securities settlement migration project, as the Irish €100bn market breaks link with London post- Brexit
The Minister for Finance, Paschal Donohoe T.D., today (Thursday) welcomed this week’s successful migration of Irish securities settlement, from the UK CREST system to Euroclear Bank Belgium, praising all those involved in this multi-year project. The migration means that the settlement of trading activity on Euronext Dublin (formerly the Irish Stock Exchange), of some €100 billion of assets across 50 listed companies, will now take place in Euroclear Bank Belgium Central Securities Depository (CSD) after decades of association with London. The UK decision to leave the EU precipitated the need to migrate the Irish system to an EU entity.
This week’s action is the culmination of a unique and complex project involving public and private sector stakeholders from Ireland, the EU and the UK. In response to Brexit, the CSD migration was an industry led project, which has been actively supported over the last two and half years by the Irish authorities (notably the Department of Finance and Central Bank of Ireland). The migration process was also underpinned by a number of specific legislative provisions.
Commenting on today’s market migration, Minister Donohoe said: ‘This has been a very complex and innovative project and I welcome the successful migration of our securities settlement system from the UK to Belgium. This week’s migration of our €100 billion of securities shows that Ireland remains well connected into the heart of the EU’s capital markets – with the stable investment and legislative environment that comes with that access and activity’.
“The Government, and in particular my Department, has been steadfast in its support of this critical project. I am confident that the success of the migration will ensure that Irish companies can continue to access funding from the capital markets and will help ensure Ireland’s place in the EU capital markets for the future.”
ENDS
Note to Editors:
Central Securities Depositories (CSDs) are specialist financial institutions that hold securities and facilitate trading between financial market operators. CSDs are a vital and systemic part of market infrastructure that enable the effective functioning of settlement systems for stock exchanges.
Most countries have a domestically located CSD traditionally associated with their stock exchange. However, due to the close historic links between the Dublin and London Exchanges, Ireland does not have a domestically located CSD. The Irish market instead used a UK based CSD called Euroclear UK & Ireland which operates the CREST settlement system to settle Irish listed equities and Exchange Traded Funds (while Irish Government debt and corporate debt securities use Euroclear Belgium to settle).
The UK became a ‘third country’ as a result of Brexit and the knock-on effects for settlement is a market issue that required a market led solution as ultimately CSDs are private market operators. Euronext Dublin (formerly the Irish Stock Exchange) announced in October 2018 that it would transfer the settlement of trades in Irish equities and other exchange traded instruments from the UK operation to Euroclear Bank Belgium. Given the size of the Irish securities market it was deemed more efficient to link in with an existing system and in that context the market chose Euroclear Bank Belgium as the new location of the Irish CSD
This project to migrate the Irish market has been an industry led project with Euroclear and Euronext Dublin central partners in its delivery. Significant support was provided by the Authorities and a range of legislative and non-legislative actions were taken. In addition, the Department of Finance and the Central Bank of Ireland were actively involved with all stakeholders, including securing the support of relevant EU Authorities, since the issue of migration was identified.
The Government put in place dedicated legislation such as the Migration of Participating Securities Act 2019 and there were further provisions in the 2020 Brexit Omnibus Act and 2020 Finance Act to support the migration, as well as amendments to the 2014 Companies Act. The Irish public authorities also closely liaised with EU authorities to ensure that the Irish market could continue to temporarily use the UK based CSD in 2021 until the migration took place.
On 15 March the listed shares of 50 companies began settlement in Belgium after many years in London. The settlement activity represents some €100 billion in securities. Euroclear and Euronext today published public statements on this migration (available here and here). The delay in issuing public statements was to allow a full cycle of settlements to be completed within the market, this time period is known as T+2 (‘Trade date + 2 days’).