Euroclear secures passporting rights from Central Bank

The company behind the settlement of shares traded on the Irish Stock Exchange has secured passporting rights from the Central Bank, allowing it to continue providing services to EU-domiciled companies after Brexit.

For the past two decades the settlement of trades has been carried out by a UK-based central securities depository called Crest, operated by Euroclear UK & Ireland in London. However, Crest stood to lose its automatic right to passport services into the Republic as the UK leaves the EU.

Euroclear previously abandoned a plan to set up an Irish CSD, following discussions with the Central Bank and Bank of England in 2018. Last week it said it had secured passport authorisation from the financial regulator in March.

The European Commission and the European Securities and Markets Authority had previously granted a temporary equivalence to Euroclear last year to continue to settle under the existing market structure until March 30th, 2021.

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However, it has since been suggested though that “bespoke legislation” would be needed to ensure Irish shares could continue to be traded and settled seamlessly over the long term.

Euronext Dublin, formerly the Irish Stock Exchange, has previously said its preferred long-term solution is for the movement of Irish securities settlement from the UK to Euroclear's Euroclear Bank in Belgium.

Announcing its first-half results on Friday, the group said it was “entering the next phase of its migration project of Irish securities from Euroclear UK & Ireland”.

Euroclear last year announced a 1 per cent rise in income to €730 million for the first six months of 2020. Assets under custody reached €31.1 trillion at the end of June, an increase of 3.7 per cent year on year with Euroclear reporting a record number of settled netted transactions of 141 million to €461 trillion.

The group settled the equivalent of €837 trillion in securities transactions in 2019, representing 239 million domestic and cross-border transactions and held an average of €30.1 trillion in assets for clients.