ESMA Temporarily Recognises Euroclear UK & Ireland CSD
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has announced today that Euroclear UK & Ireland Limited (EUI), the central securities depository (CSD) established in the United Kingdom (UK), will be recognised as a third-country CSD (TC-CSD) after the end of the UK’s transition from the European Union (EU) on 31 December 2020.
The European Commission, on 25 November 2020, adopted an equivalence decision determining, for a limited time period, that the regulatory and supervisory framework applicable to CSDs established in the UK is equivalent in accordance with CSDR.
.@EuroclearGroup UK & Ireland Limited, the central securities depository established in 🇬🇧, will be recognised as a third-country CSD after the end of the UK transition from EU, on 31 December 2020.
🗓️ recognition decision: 1 January – 30 June 2021
— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) December 11, 2020
ESMA’s decision to recognise EUI as a third-country CSD after the end of the transition period will allow EUI to continue providing the following services in the EU:
- notary and central maintenance services in respect of securities constituted under the law of Ireland; and
- central maintenance services in respect of underlying securities constituted under the laws of Cyprus, Luxembourg and the Netherlands, which are represented in the EUI CREST system by means of depository interests.
An equivalence decision is the first of several conditions to be met for the recognition of a TC-CSD under CSDR, which also include the establishment of cooperation arrangements with the home supervisor. In this respect, ESMA has agreed with the Bank of England a new Memorandum of Understanding (MoU) establishing the necessary cooperation arrangements for the recognition and supervision of UK CSDs under CSDR.
Earlier, the UK CSD (EUI) had submitted its application to be recognised as a TC-CSD under CSDR and, based on this, ESMA conducted the recognition assessment, including the consultation of the competent authorities and relevant authorities in accordance with CSDR.
ESMA’s recognition decision will apply from 1 January until 30 June 2021. This time period should give concerned EU issuers sufficient time to transfer their securities to EU CSDs.
The review is an opportunity to recalibrate MiFID II regulations post-Brexit.
Trade associations have asked for an extension of the temporary equivalence decision for UK CCPs.
Temporary equivalence is set to expire on June 30 2022.
IRS trading volumes have fragmented without an equivalence agreement.
Most EU member states had an increase in bankers earning more than €1m.