Pan-European exchange Euronext is preparing clients to shift their settlement activities for Irish securities from London to Belgium in the case of a no-deal Brexit.
Euronext stated in a client notice that it would no longer be able to settle Irish securities at Euroclear’s London-based CREST once the UK leaves the European Union, and that it will need an alternative central securities depository (CSD) to be developed for the long-run.
Instead, it has decided to shift settlement of Irish securities to Euroclear Bank based in Brussels.
“Its solution is workable for the Irish market, leveraging the existing Euroclear Bank operating model to minimise participant impact. In addition, given Euroclear’s experience having operated settlement arrangements in Ireland for decades, a migration to Euroclear Bank should minimise disruptions and risk for the market,” the client notice said.
Euroclear Bank already settles Irish government bonds and other Irish funds.
There were plans initiated by Euroclear on potentially developing an Irish-based CSD for securities settlement, however these were dropped for this new alternative route.
Euronext added, if permanent equivalence were granted to UK clearing houses and CSDs, its existing settlement arrangements with CREST would remain in effect.