This will give investors 10 working days after a trade to deliver the stock or pay for the shares. The new timetable is a dress rehersal for squeezing the delay down to five days - T+5 - and then three days - T+3.
Ten days should be plenty of time for clients to send in share certificates or cheques. But pressure to hold shares in the brokers' nominee names will start to build up. Regular clients will also increasingly be expected to hold cash with their broker, although many brokers believe that Delta or Switch debit cards will allow speedy payments without the need for clients to have cash ready.
Many private-client brokers are taking the initial change in their stride. Previously the account periods meant that clients could have anything from six to 19 days to settle trades. The new system will be easier to understand and remember.
The Stock Exchange is producing calendars that are colour-coded to show the settlement days that correspond to every working day.
For instance, a trade on the first day of the new regime, Monday 18 July will have to be settled on Monday 1 August. These dates are both shown in the same colour, dark green.
The final settlement day for trades under the old system will be 25 July. The two-week dealing period was introduced in 1821, and only interrupted during the Second World War.
David Jones, the chief executive of Sharelink, said: 'It's not really going to affect us, although it will smooth out the workload. There will be some advantage in people going into nominee names, but we will maintain choice. The bulk of private investors are entirely happy for someone reliable to hold their certificates.'
Ben Houghton, director of operations at Wise Speke, said clients would have to be educated to react more quickly in sending back documents. He said that although using nominee names to hold shares and using the brokers' own cash-holding service were for the stockbrokers' benefit, it was essential to ensure that clients got a good deal. The firm is moving to a tiered or banded system to benefit those who held large sums with the firm.
He said that using a nominee would have to be made less expensive than dealing on your own account to persuade clients to make the move.
Waters Lunnis, the broker owned by Norwich & Peterborough Building Society, is used to handling over-the-counter trades for the building society and the Co-Op Bank. 'With 10-day settlement we don't think that it's necessary for clients to be put into a nominee account.'
Richard Twydell, marketing manager of Henderson Crosthwaite, said it would be impractical if clients who dealt regularly were not using nominee names and a cash deposit facility. But the nominee could be run by a solicitor or bank 'as long as the certificates are somewhere where we can access them in a professional and reliable manner. We don't want to have clients who sell stock and then go off on a six-week Caribbean cruise.'
Phil West, marketing manager of Fidelity Brokerage, said there was no charge for the nominee service, and any investor who wanted to receive report and accounts or notices of annual meetings could do so without charge.
One effect of the change is that it will not be so simple to 'deal within the account'. This was the practice of buying and selling the same share and only having to pay the amount needed to settle the net effect of the trading.
When paperless trading comes into force it will make moving to a short settlement timetable feasible.
The calendar and an explanatory leaflet are available for private investors from the Stock Exchange. Call 071-797 3630.Reuse content