Euroclear acknowledged that Ireland’s current system for settling share trading would be “untenable” under a hard Brexit as Ireland would no longer be able to use passporting rights to settle trades from London. A solution is required to separate the long-term marriage between UK and Irish securities.
Last week Euroclear announced it will open a new unit in Ireland in March 2019 to avoid Brexit disrupting its ability to deliver post-trading activities.
By the end of 2016 Market capitalisation of equities listed on the Irish Stock Exchange (ISE) exceeded €120bn, there is a clear market growth trend that it’s at risk by Brexit and the many uncertainties accompanying it. Creating an independent Irish securities CSD will ensure a pre and post-Brexit smooth transition and deliver a real represent a scalable solution for the growing Irish securities market.
While Euroclear Ireland and Euroclear UK would become legally separate entities, the aim is for both to continue using the existing CREST technical plumbing. This will deal with Brexit uncertainties allowing the securities Irish market to scale up independently from the UK. This is excellent news for Irish Corporates and the securities market providing visibility post Brexit for investors in Ireland.