Ir­ish share­hold­ers set to es­cape Brexit fall­out from trades switch

Ir­ish Stock Ex­change owner Euronext plans to trans­fer share set­tle­ment to Brus­sels af­ter UK leaves EU

Irish Independent - - Business - John Mul­li­gan

A PLAN by the Ir­ish stock ex­change to trans­fer the set­tle­ment of Ir­ish shares to Brus­sels from the UK af­ter Brexit shouldn’t have any im­pact on thou­sands of small share­hold­ers, ac­cord­ing to Ir­ish As­so­ci­a­tion of In­vest­ment Man­agers CEO Regina Bre­heny.

For al­most 20 years, the Ir­ish stock ex­change, which is owned by Euronext, has re­lied on the UK-based elec­tronic se­cu­ri­ties de­pos­i­tory Crest to set­tle trades.

But post-Brexit, Crest, which is op­er­ated by Euro­clear, prob­a­bly won’t be able to of­fer that ser­vice here be­cause it will lose fi­nan­cial pass­port­ing rights.

Th­ese en­able any fi­nan­cial firm au­tho­rised to pro­vide ser­vices in one EU coun­try to of­fer ser­vices in any other EU mem­ber state with min­i­mal ad­di­tional au­tho­ri­sa­tion re­quire­ments.

Thou­sands of small Ir­ish share­hold­ers hold shares in com­pa­nies elec­tron­i­cally, and the pur­chase or sale of shares is of­ten done via Crest.

News agency Bloomberg re­ported yes­ter­day that while Ir­ish se­cu­ri­ties and ex­change­traded funds are set­tled in Crest, Ir­ish gov­ern­ment bonds are set­tled at Euro­clear Bank in Brus­sels.

The agency said that Euro­clear Bank plans to base the fu­ture stock-set­tle­ment ar­range­ments on that ex­ist­ing op­er­a­tion, ac­cord­ing to brief­ings to in­dus­try rep­re­sen­ta­tives in Dublin and the UK last month.

Ire­land is the only EU coun­try with­out its own cen­tral se­cu­ri­ties de­pos­i­tory. The Ir­ish Stock Ex­change was ac­quired this year by Euronext.

Euronext has al­ready in­di­cated that the Bel­gian model has shown it can work in an Ir­ish con­text. The plan would be ready by the time the Brexit tran­si­tion pe­riod fin­ishes at the end of 2020, it’s ex­pected.

In the mean­time, Euro­clear wants the cur­rent Crest sys­tem to re­main af­ter March 2019 – when the UK is due to leave the EU – via so-called grand­fa­ther­ing. That gen­er­ally means ex­empt­ing ex­ist­ing prod­ucts or con­tracts from new laws.

Ms Bre­heny said she doesn’t ex­pect the costs of set­tling out­side the Crest sys­tem to be any higher for small share­hold­ers.

Ire­land is the only EU coun­try with­out its own cen­tral se­cu­ri­ties de­pos­i­tory

EU owner: For­mer ISE CEO Deirdre Somers and Stephane Bou­j­nah, CEO of Euronext, in Dublin last year

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.