Ireland assessing CSD options as Brexit concerns grow

Ireland assessing CSD options as Brexit concerns grow

Ireland’s stock market operator is in talks over its options for a central securities depository (CSD) and settlement system for Irish securities.

Most European markets already have their own CSDs, critical market infrastructures which settle vast amounts of securities on behalf of investors.

However Irish securities currently settle in CREST, the UK-based CSD owned and operated by Brussels-based Euroclear since 2002.

Dublin officials now fear that under a so-called ‘hard Brexit’, which is looking increasingly likely, there is no guarantee that CREST would be granted equivalence with the EU’s CSDR (Central Securities Depositories Regulation).

“We are engaged with the market, policy makers and partners on the options for a CSD and settlement system for Irish securities in a post-Brexit environment,” an Irish Stock Exchange spokesperson told Global Investor/ISF on Tuesday.

Potentially, the plans could result in the creation of an entirely new Dublin-based CSD. 

Another route could lead to Ireland taking advantage of the passporting rights under CSDR and settle Irish securities in an already established EU CSD. 

The two major European CSDs Euroclear and Clearstream along with Irish Funds - the representative body for the international investment fund community in Ireland - were unable to comment immediately.

Earlier this week Sean Tuffy, senior vice president and head of regulatory intelligence at Brown Brothers Harriman, said Brexit has the potential to be “quite disruptive” in the usually sedate world of security settlements.

“The disruption won’t be in the UK, rather it would be felt across the Irish Sea in Dublin,” he added.

Under the EU’s CSDR, one of the key regulations adopted in the aftermath of the 2008 financial crisis, a CSD must be authorized by a local EU member state regulator.

“Since the UK will no longer be part of the EU post-Brexit, the question is whether this cross-border arrangement will be allowed to continue when Brexit is all said and done,” Tuffy said.

He added that EU policymakers want to make sure that, in the event of a hard Brexit, CSD equivalence isn’t simply a “backdoor into the EU market”.

"Alternatively, Ireland could establish its own CSD."


Such a move by the Irish Stock Exchange could means that Ireland could choose to connect to the European Central Bank’s T2S (TARGET2-Securities) platform.

T2S is designed to harmonize security settlements across Europe and provide centralised settlement in central bank money. 

Euroclear Belgium, Euroclear France and Euroclear Nederland connected in September last year.

Clearstream Frankfurt and LuxCSD joined the platform over the weekend along with CSDs in Hungary, Slovenia, Slovakia and Austria.

Due to objections from UK policymakers, CREST is not participating in T2S.

Over 800 fund managers from over 50 countries have assets administered in Ireland. All but two of the top twenty global asset managers have Irish domiciled funds.