Euroclear UK & Ireland announces new euro settlement model

Move will enable the CSD to provide central bank money settlement in euros, pounds sterling and US dollar. 

By Jonathan Watkins

Euroclear UK & Ireland has launched a new euro settlement model which allows it to continue to provide central bank money settlement in euros.

The service comes in alongside Euroclear’s other two central bank money currencies of pounds sterling and US dollars, and fulfils a promise it made to its members earlier this month. 
The central securities depository (CSD) said multi-currency settlement is an increasingly crucial component of its offering to the UK marketplace providing full DvP settlement in all three currencies.

The launch will also allow issuers to pay their dividends to their investors in the most optimal currency. 
Royal Dutch Shell as an issuer was able to make full use of this capability with their recent significant dividend payment being made in CREST in GBP, EUR and USD.

“Royal Dutch Shell paid over 95% of its Q4 2020 interim dividend in all three currencies through CREST,” said Paul Vos, Shell’s senior manager treasury & corporate finance. “For us, paying through CREST represents the most robust and efficient way to distribute dividends to CREST members.”

Euroclear UK & Ireland has been facing up to a whole range of new post-trade challenges following the UK’s departure from the EU. 

Ireland is the only EU country without its own CSD, having relied on Euroclear UK and Ireland’s (EUI) CREST system to settle trades. European regulation mandates all EU-denominated securities must be traded, cleared and settled on EU27 venues. 

Subsequently, earlier this month Euroclear completed the migration of around 50 Irish securities representing €100 billion of assets from its UK settlement house to the EU.  

At the end of last year, the European Commission extended the temporary equivalence for EUI to continue to settle Irish-domiciled funds and securities until 30 June 2021, six months after the Brexit transition period ended.