ASIC has determined that Euroclear has a substantial connection to Australia, requiring the Brussels-based settlement bank to apply for a local CS facility licence within one year.
ASIC Requires Euroclear to Apply for a Local Licence Within One Year
On May 27, 2026, the Australian Securities and Investments Commission (ASIC) formally exercised its newly granted powers under financial market infrastructure reforms, announcing that Euroclear Bank SA/NV, headquartered in Brussels, Belgium, has a substantial connection with Australia. This triggers the statutory requirement for the institution to submit an application for a clearing and settlement (CS) facility licence by May 26, 2027. The decision was confirmed in parallel reports by several financial media outlets, including FX News Group, Finance Magnates and LeapRate, on May 27, 2026.
ASIC's Grounds for the Determination and Legal Framework
The power exercised by ASIC this time originates from the financial market infrastructure (FMI) reform legislation passed by the Australian Parliament in September 2024. The legislation grants ASIC three expanded powers: extended licensing powers, supervisory powers and enforcement powers. Among them, the "substantial connection" declaration mechanism allows ASIC to impose mandatory regulatory oversight on overseas settlement institutions that conduct business in Australia but do not hold a local licence.
According to FX News Group's report on May 27, 2026, ASIC completed the following statutory procedures before making the determination:
Conducted a comprehensive assessment of Euroclear's business activities in Australia
Held formal consultations with the Reserve Bank of Australia (RBA) regarding the determination
Based on the assessment results, determined that Euroclear's Australian activities have a substantial connection with the country's financial markets
Formally issued the declaration and set a 12-month transition period
ASIC stated clearly in its announcement that the purpose of exercising these powers is to ensure that offshore service providers whose Australian activities have a substantial connection with Australia's financial markets are subject to appropriate regulatory oversight, supporting the resilience and integrity of Australia's financial markets, including debt securities markets and cross-border settlement activities.
Euroclear's Business Positioning in the Australian Market
Euroclear Bank SA/NV is one of the world's two major international central securities depositories (ICSD), providing cross-border settlement and custody services for various assets, including Australian government bonds. The company has long played an important role in Australia's debt securities market. However, because it is headquartered in Brussels, it had previously remained outside Australia's formal central settlement institution licensing regime.
After ASIC issued the declaration, Euroclear said it would maintain constructive engagement with the regulator throughout the licence application process. To prevent service disruption for market participants during the transition period, ASIC has also granted Euroclear a temporary exemption, allowing it to continue normal operations before the licence application review is completed.
Precedent: Clearstream's Licensing Path
Euroclear is not the first international central securities depository to be brought into Australia's regulatory framework. In June 2025, ASIC granted an overseas CS facility licence to another global settlement institution, Clearstream Banking SA. Clearstream and Euroclear are the world's two major ICSDs, and both operate in similar roles in Australia's bond market.
The Reserve Bank of Australia (RBA) welcomed Clearstream's licensing and noted that Australian CS facility licence holders are jointly regulated by ASIC and the RBA. ASIC is responsible for administering the licensing regime, while the RBA oversees stability standards. Once Euroclear obtains a licence, it will also be subject to this dual-regulator framework.
Questions Related to ASIC's Regulation of Euroclear
What is a "substantial connection" declaration, and why did ASIC exercise this power against Euroclear?
A "substantial connection" declaration is one of the new powers granted to ASIC under the 2024 FMI reforms. When the business activities of an overseas clearing and settlement institution in Australia are considered sufficiently connected with Australia's financial markets, ASIC may issue a formal declaration requiring the institution to enter Australia's local licensing regime. Euroclear has long provided cross-border settlement services for assets such as Australian government bonds, and ASIC determined that its business constitutes a substantial connection with Australia, thereby triggering regulatory requirements.
What does Euroclear's temporary exemption mean?
The temporary exemption allows Euroclear to continue providing cross-border settlement and custody services to Australian market participants before its formal licence application review is completed, without an immediate interruption to its business. This arrangement is designed to protect market continuity and avoid disruption to the normal operation of the debt securities market during the regulatory transition.
What responsibilities do ASIC and the RBA each assume in CS facility regulation?
ASIC is responsible for administering the CS facility licensing regime, including reviewing licence applications, setting compliance standards and enforcing regulatory rules. The RBA is responsible for overseeing the financial stability standards of licensed institutions and ensuring the safe operation of clearing and settlement infrastructure. Together, the two agencies form a dual-regulator framework for supervising CS facility operators in Australia.
What reference value does Clearstream's earlier Australian CS facility licence have for Euroclear?
Clearstream obtained an overseas CS facility licence in June 2025, becoming the first international central securities depository to be brought into Australia's formal regulatory framework. Clearstream and Euroclear have similar business models and both operate in similar roles in Australia's bond market. Clearstream's licensing path provides Euroclear with a direct compliance precedent and also indicates that ASIC takes an open but prudent regulatory approach toward global settlement institutions.
