Ireland -- the only European Union member without its own central securities depository -- has relied on a U.K.-based firm called Crest to settle trades since the 1990s and the dawn of electronic financial markets.
Once the U.K. leaves Europe’s single market, and after the accompanying loss of financial passporting rights, Crest probably won’t be able to continue providing that service, Euroclear, the giant CSD that runs Crest, has said.
While Irish securities and exchange-traded funds are settled in Crest, Irish government bonds are settled at Euroclear Bank in Brussels. Euroclear Bank plans to base the future stock-settlement arrangements on that existing operation, according to briefings to industry representatives in Dublin and the U.K. last month. Euronext has already indicated that the Belgian model has shown it can work in an Irish context.
The plan would be ready by the time the Brexit transition period finishes at the end of 2020, according to the briefings. In the meantime, Euroclear wants the current system to remain after March 2019 -- when the U.K. is due to leave the bloc -- via so-called grandfathering. That generally means exempting existing products or contracts from new laws.
Euronext needs its Irish regulator, the Central Bank of Ireland, and the European Securities and Markets Authority to approve any plan for how Irish stocks will be settled. [...]