[ M A R K E T R E V I E W | B R E X I T A N D P O S T - T R A D E ] own CSD , and its stock exchange has historically used the CREST platform operated by Euroclear UK and Ireland ( EUI ). At the end of last year , the European Commission extended the temporary equivalence for EUI to continue to settle Irish-domiciled funds and securities until 30 June 2021 , six months after the Brexit transition period ended . This means after June , EUI would no longer be able to provide issuer CSD services for Irish securities . Around 90 % of all securities quoted on the Irish exchange also have a listing in London , as it has been easier for investors to settle deals using deposits held on account at the Bank of England . As EU regulators seek to reduce their reliance on London as a financial services hub , banks and investment firms have been tasked with shifting activities from EUI to the ICSD model . This has involved amending contract and settlement instructions , and has also required shareholder approval . “ The transfer of Irish securities from CREST to Euroclear has caused a lot of middle- and back-office work for the industry . Firms receiving shares in Euroclear and settling in CREST will require a realignment of their post-trade operations ,” says Linda Gibson , head of regulatory change , BNY Mellon ’ s Pershing . “ Following the migration over 12- 14 March , we expect to see a lot of realignments as Euroclear Bank will be the primary place for settlement , and there may be some disruption with securities being held in the wrong place for settlement .” Euroclear recently completed the migration of around 50 Irish securities representing ¤ 100 billion of assets . EUI also announced that it plans to continue to offer Euro settlement on and from 29 March , enabling it to provide Euro settlement in central bank money alongside its existing settlement arrangements for GBP and USD . Yet there are further complications for Irish ETFs , which account for nearly 60 % of Europe ’ s ETF assets under management and are mostly denominated in GBP or USD . TARGET2 Securities ( T2S ), the pan-European securities settlement platform , only supports Euro and Danish Krona settlement , while GBP and USD are unlikely to be included in the future . T2S does not provide an alternative for Irish ETFs that are often listed on multiple exchanges , meaning the ICSD model is the only option for most asset managers . While 80 % of the $ 480 billion Irish ETF market is already issued using the ICSD model , it still leaves the potential migration of more than $ 100 billion of ETFs . According to a report by BNY Mellon last year , some ¤ 61 billion of Irish exchange traded products ( ETPs ) migrations to the ICSD model were set to be complete by the end of 2020 .
Post-trade fragmentation The lack of cross-border equivalence for both clearing and settlement of securities means clear lines have been drawn between UK and European posttrade venues . Banks are concerned with the effect of fragmentation on increased costs for clearing and settlement . “ We expect to have two different jurisdictions – for EU financial instruments we will use EU CSDs , and in the UK only with EUI . We think liquidity at settlement level will split for
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