The European Securities and Markets Authority (“ESMA”) announced on 11 December 2020 that Euroclear UK & Ireland Limited (“EUI”), the central securities depository (“CSD”) established in the United Kingdom, will be recognised as a third-country CSD after the end of the Brexit transition period until 30 June 2021.
This follows a decision by the European Commission, on 25 November 2020, to adopt 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 the Central Securities Depositories Regulation (“CSDR”).
Following EUI’s application for recognition, ESMA conducted the recognition assessment, including consultation with relevant authorities in accordance with the CSDR.
ESMA’s decision will allow EUI to continue providing the following services in the EU:
- notary and central maintenance services in respect of securities constituted under the laws 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.
ESMA’s decision is one of a series of necessary steps for the recognition of a third- country CSD under the CSDR, which also include the establishment of cooperation arrangements with the home supervisor. ESMA has agreed a new memorandum of understanding with the Bank of England establishing the necessary cooperation arrangements for the recognition and supervision of UK CSDs under the CSDR.
The temporary recognition will give issuers the needed time to migrate their securities from CREST to Euroclear Bank, which is expected to be completed by 31 March 2021, which we have previously written about.