Due to the historically close links between the Irish and UK financial systems, there is a sharing of certain financial markets infrastructures including securities settlement systems.
Central Securities Depositories (CSDs) are specialist institutions which operate a securities settlement system. CSDs will be authorised under the framework set out in the EU Regulation on Central Securities Depositories (CSDR). CSDR also sets out a third country regime based on equivalence assessments by the European Commission.
Irish market participants currently use different CSDs in the European Union to settle different financial instruments including Irish listed equities and Exchange Traded instruments, Irish government debt and corporate debt securities. Notwithstanding the significant size of our financial sector, Ireland is the only Member State in the European Union that does not have a CSD.
As the future relationship between the United Kingdom and the European Union remains uncertain, there is a significant risk of disruption to the services provided by financial market infrastructures based in the UK. This uncertainty can also be seen as providing the impetus to the private sector to provide settlement services in Ireland across a range of asset classes.
The Minister considers that the establishment of an Irish based CSD would best ensure the smooth continuation of settlement services to market participants and in doing so, support financial stability. To this end the Minister encourages applications to the Central Bank of Ireland to establish a CSD in Ireland in accordance with the CSDR.
An Irish based CSD that can meet the requirements of Irish market participants will provide increased choice and an opportunity to all Irish market participants currently serviced by CSDs outside Ireland to re-locate that business to an Irish domiciled entity.
27 July, 2017