Euroclear has published an update regarding Euroclear UK & Ireland’s (EUI’s) ability to continue to offer issuer CSD services from the expiry of the post-Brexit transition period (scheduled for 31 December 2020) in respect of:

• securities constituted under the law of Ireland (Irish Securities Settlement); and
• securities constituted under the laws of Cyprus, The Netherlands or Luxembourg, which are represented in the CREST system by way of registrar depository interests (DIs), where there is no other CSD in the holding chain (Relevant DI Settlement).

As Euroclear has previously communicated, from the expiry of the transition period, scheduled to be 31 December 2020, EUI needs third country CSD recognition pursuant to the CSD Regulation (CSDR) in order to continue to provide Irish Securities Settlement and Relevant DI Settlement.

The key milestones in the recognition process are:

• an implementing act of the European Commission (EC);
• a subsequent application from EUI to the European Securities Market Authority (ESMA); and
• a decision from ESMA.

On November 25, 2020, the European Commission (EC) decided to adopt an implementing act determining the legal and supervisory requirements for UK CSDs as equivalent to those in the EU. This implementing act is time limited to the end of June 2021.

Following publication of the EC implementing act in the Official Journal, EUI will formally apply to ESMA seeking recognition as a third country CSD under Article 25 of CSDR in respect of Irish Securities Settlement and Relevant DI Settlement.

Euroclear will continue to work with ESMA with regards to the application and await their decision. EUI considers that any recognition would also be time limited in line with the EC equivalence decision.

EUI intends to issue updates in relation to the recognition process. EUI will continue to work together with stakeholders, particularly registrars, participants and issuers, to define and agree the required operational steps, timing and other relevant information.

As Euroclear has previously communicated, EUI also intends to make an application to become a Qualified Intermediary for the purposes of Irish Dividend Withholding Tax on Irish securities held in CDI form within the CREST system.

The company is in the process of finalising its application to the Irish Revenue Commissioners and expects to publish further details regarding this service shortly.