Ireland: Settlement Finality: Ireland Will Implement Recital 7 On A ‘No-Deal' Brexit

Last Updated: 12 March 2019
Article by Aiden Small, Robert Cain, Phil Cody and Brendan Wallace
Most Read Contributor in Ireland, February 2019

In its draft 'no-deal Brexit' omnibus legislation (the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019), the Irish Government is proposing to implement Recital 7 of the Settlement Finality Directive into Irish law to ensure continued access for Irish participants in designated UK payment and settlement systems (including CREST) if there is a 'no-deal' Brexit.

Settlement Finality Directive

The Settlement Finality Directive (the Directive) regulates systems (Designated Systems) used by financial market participants to transfer financial instruments and payments. It was transposed into Irish law in 2010 by the European Communities (Settlement Finality) Regulations 2010 (the Irish Regulations).

The Directive ensures that a transfer order that is entered into a Designated System is finally settled, regardless of whether the sending participant subsequently becomes insolvent, and regardless of whether the transfer order is revoked. Related netting arrangements, and rights in respect of collateral security, are also protected. The participants in Designated Systems are typically financial institutions (such as banks), systems operators (such as central securities depositories), clearing houses and central counterparties.

The Irish Regulations protect transfer orders and associated transfers of financial collateral from the effects of Irish insolvency law.

What would a 'no-deal' Brexit mean for Settlement Finality and Ireland?

The settlement finality regime relies on automatic mutual recognition by EU Member States of the systems designated by other EU Member States to ensure consistent protections for transfer orders and related collateral arrangements.

On a 'no-deal' Brexit, the automatic recognition of the UK's Designated Systems by the remaining EU Member States (including Ireland) will cease, as the UK will become a 'third country', outside the EU.

For risk management reasons, it is possible that UK Designated Systems will then be forced to limit participation by Irish participants in those systems (and that Irish participants will be forced to limit their participation in UK Designated Systems) unless Irish law is amended to protect payments and transfers of securities in UK Designated Systems from the effects of Irish insolvency proceedings.

This issue is particularly relevant for issuers of shares and exchange traded funds listed on Euronext Dublin (formerly the Irish Stock Exchange), as trades in these instruments settle in Euroclear's CREST system, which is subject to both UK and Irish settlement finality laws.

When publishing the General Scheme of its no-deal Brexit Omnibus Bill on 24 January 2019, the Irish Government suggested that, without suitable legislative amendment:

"in a no-deal Brexit scenario [...] Euronext Dublin would not be able to continue using the CREST system as the UK would become a third country, outside the EU".

This would clearly have a very significant impact on trading on Euronext Dublin.

Our briefing on the General Scheme of the Bill is here: Brexit: Irish Legislative Update (8 February 2019).

What is Recital 7?

Recital 7 of the Directive allows a Member State, such as Ireland, to apply the Directive's provisions to domestic (i.e. Irish) participants in third country systems (i.e. UK Designated Systems following a 'no-deal' Brexit). The Irish Government is proposing to implement Recital 7, so as to protect payments and transfers of securities in those UK Designated Systems from the effects of Irish insolvency proceedings. Until now, Ireland had not reflected Recital 7 in the Irish Regulations.

What is proposed?

Part 7 (Financial Services: Settlement Finality) of the Bill provides for the following:

Temporary designation of existing UK designated systems (Section 62 of the Bill):

Existing UK Designated Systems with Irish participants would be treated in a similar manner to Irish Designated Systems for a maximum of 9 months, provided that:

  • the Designated System and its rules meet the requirements in Regulation 7 of the Irish Regulations (which set out requirements for the rules of Designated Systems),
  • the operator of the Designated System notifies the Central Bank of Ireland and the Minister for Finance that the Designated System is within the scope of section 62 within 3 months, and
  • UK laws on settlement finality remain equivalent to the Irish Regulations.

Non-temporary designation of existing UK designated systems (Section 63 of the Bill):

The Minister for Finance would be permitted to designate (on a non time-limited basis) UK Designated Systems with Irish participants for the purpose of the Irish Regulations provided that:

  • the Designated System and its rules meet the requirements in Regulation 7 of the Irish Regulations, and
  • UK laws on settlement finality remain equivalent to the Irish Regulations.

ESMA Notifications:

The Minister for Finance would be required to notify ESMA of any designation made in respect of UK Designated Systems.

Collateral arrangements:

Changes are proposed to support collateral arrangements in connection with Designated Systems, including amending the definition of "central bank" in the Irish Regulations to include a central bank of the United Kingdom.

Next Steps

The next steps for the Omnibus Bill are:

  • Second Stage in Dáil Éireann (Parliament): commenced this week on Tuesday 26 February
  • Committee and Final Stages in Dáil Éireann: expected to take place next week (week commencing 4 March)
  • Seanad (Upper House) (all stages): expected to take place during the week commencing 11 March

Once the Bill has been approved by Dáil Éireann and the Seanad, it will be sent to the President for signature.

The Bill specifically addresses a 'no-deal' Brexit scenario on 29 March, and it is expected that the Government Ministers representing the 9 Government departments covered by the Bill will only sign the necessary commencement orders commencing the relevant Parts of the Bill should the UK leave the EU without a deal on 29 March.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions