Bank of England takes action against Euroclear for September outage

The Bank of England said it has started supervisory action against Euroclear UK and Ireland following a settlement system outage on 11 September last year.

The central bank’s 25 June statement said the outage of its CREST financial markets settlement system caused “notable” market disruption and also delayed an asset purchase facility gilt purchase operation, when the Bank buys UK government bonds under quantitative easing.

The settlement system is a key part of market infrastructure used for clearing, settlement and recording of payments, securities or other financial transactions. The outage was caused by an issue with the messaging software, the Bank said.

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“In light of the incident’s serious and disruptive nature, and in recognising the importance of ensuring implementation of these remedial actions, the Bank has issued a direction under section 191 of the Banking Act 2009 requiring EUI to implement the recommendations of the independent reviewer,” the Bank said.

The Bank also said it has required Euroclear, which had commissioned an independent external review into the outage’s causes, “to appoint a skilled person to assess the implementation of the recommendations” and report back in the first half of 2022 to ensure the outcomes required by the recommendations have been met.

“Euroclear has kept the regulator, clients and stakeholders informed of the review process and the resulting recommendations, which are now being implemented,” Euroclear said in a statement.

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“EUI is fully committed to implementing these changes and in fact a number of the recommendations have already been executed,” the clearinghouse added. “We will continue to work with clients and other financial market participants to implement these recommendations and to further strengthen EUI’s business resilience.”

To contact the author of this story with feedback or news, email Bérengère Sim

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