Monday 23 September 2019

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

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

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 exchange-traded 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.

Read more: 'It'll be resolved but it's tight'

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.

Additional Reporting: Bloomberg

Irish Independent

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