Capital markets: Changes to the entitlement of EU incorporated Issuers to utilise the CREST settlement system in the UK

16th Dec 2020

As a consequence of the Brexit process, it will soon no longer be possible for the securities (or Depositary Interests (“DIs”) issued in respect of such securities) of EU incorporated Issuers to participate in the CREST settlement system in the UK, unless the EU Issuers take further action. By 30 June 2021, EU Issuers must ensure that all of their underlying securities held by the UK registrar are admitted to another EU Central Securities Depositary (CSD) (or admitted to a recognised third country CSD). In the case of Cypriot Issuers, the preferred CSD would most likely be that operated by the Cyprus Stock Exchange. This would then permit the DIs to be admitted to and traded in CREST. Alternatively, an EU Issuer may consider whether its underlying securities could settle in the CREST system by way of the CREST International Service and if eligible, it would be free to choose to settle the same in the CREST system by way of a CREST DI.
Issuers should also examine and seek advice on whether any necessary corporate approvals from their shareholders need to be obtained in parallel with the migration process of their current DI structure to a new operating model.

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