City queues for a ride with Crest: Building costs for new settlement system over-subscribed by 80%

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THE CITY has given the thumbs up to Crest, the Bank of England's automated share settlement system, by over-subscribing its pounds 12m building costs by 80 per cent, writes John Willcock.

More than 70 firms and institutions are committed to financing its building, which should be completed by the end of next year.

The initial list of funders represented a 35 per cent over-subscription, but since last month a further 26 organisations have applied for a stake. Successful bidders include the London Stock Exchange, the main market-makers, institutional fund managers, custodians, registrars and banks.

The Bank of England has been keen to spread ownership of Crest - the replacement for the ill-fated Taurus system - as widely as possible.

Taurus, designed by the Stock Exchange, was over-complicated, and was scrapped in March 1993 at a cost to the City of more than pounds 300m. The Bank has opted for a simpler design for Crest and estimates its total development costs at up to pounds 30m.

The list contains 21 market- makers, out of a total of 28. The top tier includes SG Warburg, Smith New Court and UBS. Firms accounting for more than 90 per cent of all share registration business are represented, as well as 28 retail brokers.

One of the main market-makers said yesterday that the over-subscription represented City support for Crest, but warned that the new system might force additional funding as the move to real-time settlement will make participants pay bills as they fall due.

This is in contrast with the present fortnightly account system where commitments are settled at the end of two weeks.