Deutsche Boerse unit weighs plan to keep Irish shares trading post-Brexit

A unit of German stock market operator Deutsche Boerse is in talks with Irish authorities about facilitating the continued settlement of shares traded on the Dublin exchange following Brexit, according to sources.

Deutsche Boerse's securities settlement arm, Luxembourg-based Clearstream, is understood to be exploring setting up a so-called central securities depository (CSD) in Ireland.

For the past two decades the settlement of trades has been carried out by a UK-based CSD called Crest, operated by Euroclear UK & Ireland in London. However, Crest will lose the right to passport services into the Republic when the UK leaves the EU and a proposed transition period to the end of 2020 has expired.

“We are consulting, monitoring and analysing the developments very closely,” a spokeswoman for Deutsche Boerse said. “It is, of course, in our primary interest to support the market with solutions that enable seamless continuity of our customers’ businesses post-Brexit.”

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The spokeswoman declined to comment specifically on the Irish talks. Clearstream has an operation in Cork.

The Euroclear group, which is based in Brussels, had been advancing plans to set up an Irish CSD, but abandoned the idea in April. However, sources said in June that the group was considering a back-up plan that would seek the Euroclear in Belgium take over and passport the services currently carried out by its London-based Crest CSD for the Irish market.

It is understood that talks on this potential solution are also continuing. A spokesman for Euroclear declined to comment.

Ireland is the only country in the EU that does not have its own CSD. Minister for Finance Paschal Donohoe called in July last year for applications to be made to the Central Bank by interested parties.

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"The Irish authorities are continuing to engage with Euronext [formerly the Irish Stock Exchange] and other relevant stakeholders to ensure that a settlement solution for equities that minimises distribution to the market post-Brexit is found," a spokesman for the Department of Finance said. "This remains a priority."

A spokeswoman for the Central Bank said: “The Irish market participants are currently evaluating, the market identified, viable long-term CSD solutions. The Central Bank awaits confirmation of the Irish market participants’ preferred future CSD partner.”

Under the current system Euroclear’s Crest assists the Revenue Commissioners in the collection of stamp duty on the trading of Irish shares, which currently charged at a rate of 1 per cent.

Department of Finance officials, who were asked by the Mr Donohoe last year to consider the future of the stamp duty, recommended in advance of the recent budget that the levy be retained, which the Minister did.

“The view of the Department of Finance is that in the absence of a viable alternative source for the approximate €400 million in revenue from this stamp duty each year that every effort should be made to protect it.”