Euroclear UK and Ireland (EUI), the UK Central Securities Depository, suffered a settlement system outage on 11 September 2020. This caused notable market disruption. The Bank of England also delayed an Asset Purchase Facility gilt purchase operation.
The outage was caused by an issue with messaging software which resulted in a discrepancy within the settlement system. Settlement was immediately and automatically halted whilst investigations were undertaken.
Following the incident, EUI independently commissioned an independent external review into its causes. EUI has accepted the outcomes of this review and has begun a remediation programme to implement the recommendations.
The Bank of England has now fully reviewed the incident. 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 is also using its powers under section 166 of the Financial Services and Markets Act 2000 to require EUI to appoint a skilled person to assess the implementation of the recommendations.
The Bank’s action is proportionate to the nature and impact of the incident and does not imply the breach of a regulatory requirement and does not constitute enforcement action.
The skilled person will provide a final report to the Bank in the first half 2022 to provide assurance that the outcomes required by the recommendations have been met.