Euroclear UK and Ireland Limited to be recognized by ESMA in case of no-deal Brexit

Maria Nikolova

The UK Central Securities Depository – Euroclear UK and Ireland Limited, will be recognised as a third country CSD by ESMA in the event of hard Brexit.

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European regulators continue to prepare for the impact of Brexit. The European Securities and Markets Authority (ESMA) today announces that, in the event of a no-deal Brexit, the Central Securities Depository (CSD) established in the UK – Euroclear UK and Ireland Limited – will be recognised as a third country CSD to provide its services in the European Union.

ESMA says it has made this recognition decision in order to allow the UK CSD to serve Irish securities and to avoid any negative impact on the Irish securities market. ESMA has previously communicated that its Board of Supervisors supports continued access to the UK CSD.

After reviewing the application and the information submitted by the UK CSD, and having consulted the relevant authorities in accordance with the Central Securities Depositories Regulation (CSDR), ESMA considers that the conditions for recognition under Articles 25 of CSDR are met by the UK CSD in case of a no-deal Brexit. Therefore, it has adopted a decision to recognise the UK CSD as a third-country CSD under the CSDR.

The recognition decision would take effect on the date following Brexit date, under a no-deal Brexit scenario.

The announcement is made less than a fortnight after ESMA announced that, in the event of a no-deal Brexit, three UK central counterparties (CCPs) – LCH Limited, ICE Clear Europe Limited and LME Clear Limited – will be recognised to provide their services in the EU. ESMA explained that has made these recognition decisions in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the EU.

In February, ESMA said it had agreed Memoranda of Understanding (MoUs) with the Bank of England (BoE) for the recognition of CCPs and of the central securities depository (CSD) established in the UK, that would take effect in case the UK leaves the EU without a withdrawal agreement.

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