EU steps in to smooth Irish share trading in case of no-deal Brexit

By Huw Jones

LONDON (Reuters) - If Britain leaves the European Union without a deal, Irish customers will be temporarily allowed to continue settling stock and bond trades in London to avoid market disruption.

The European Securities and Markets Authority (ESMA) said on Friday that Euroclear's UK and Ireland central securities depository in London could still settle securities traded on the Dublin stock exchange in the case of a no-deal Brexit.

This follows a similar decision by ESMA to allow the London Stock Exchange's LCH unit to continue clearing trades for EU customers for a year under a no-deal Brexit.

Brussels-headquartered Euroclear is owned by banks and bourses, with the LSE acquiring a small stake recently.

Euroclear said ESMA's "recognition" would apply from 30 March 2019 to 30 March 2021, by which time it is expected that the Irish securities market will have migrated from London to Euroclear Bank in Brussels.

"Euroclear UK and Ireland is working with the European Central Bank and the Central Bank of Ireland regarding continued euro settlement services in a no-deal Brexit scenario and will update clients in due course," it added.

ESMA also said it had authorised U.S. clearing and settlement house DTCC's new Irish data repository with effect from Friday.

Repositories are used by banks and others to record their derivative, commodities, forex, stock and interest rate transactions.

DTCC has a repository in London but it risked being cut off from EU customers if Britain leaves the bloc this month with no transition deal.

"This registration is part of the DTCC Group strategy in response to a no-deal Brexit," ESMA said in a statement.

(Reporting by Huw Jones; Editing by Kirsten Donovan and Alexander Smith)