Crest oversees the dawn of a paperless City

Final agreements are expected to be locked into place today and tomorrow for the new Crest paperless share clearing system, three years and pounds 25m of expenditure after work started.

The Securities and Investments Board will meet, in a ceremony next Monday, to give the regulatory approval essential before the system can be inaugurated by Kenneth Clarke, the Chancellor of the Exchequer.

The big share registrars that will use the system are also due to sign their contracts with CrestCo, the operating company, over the next 24 hours.

There have been hiccups in recent days over some of the details of the contracts between share registrars and the information network companies, Swift and Syntegra, a BT subsidiary, which handle the movement of data. These have to be signed at the same time as the contracts with CrestCo.

But Tom Morrison, chief registrar of the Royal Bank of Scotland, which had been digging in its heels over the contract negotiations, said yesterday: "There has been some movement today and all the parties appear confident that it will be sorted out this week."

Ralph Walrond, managing director of Lloyds Bank Registrars, said: "I firmly expect all the contracts to be signed off this week. Crest will not be held up by contract squabbles and will be operational next week."

The contract disagreement was over who bears the cost of fines for delays in service if they are caused by the network providers. But Mr Walrond said he understood this to have been solved a fortnight ago and the remaining details were "not show stoppers". CrestCo agreed to put a cap on the penalties to be paid by the registrars.

Crest is the settlement system masterminded by the Bank of England when the Stock Exchange's ill-fated Taurus system was abandoned in 1993, having cost the City as much as pounds 400m in wasted outlays.

Crest, headed by Pen Kent, an executive director of the Bank of England, has so far had a direct cost - excluding spending by firms gearing up to use it - of pounds 25m, with a further pounds 4m to spend during the run-up period which lasts until next April. Shareholders, which includes the Stock Exchange with just 3 per cent, have put in pounds 12m equity, and there is pounds 17m of debt.

The first five weeks of operation will be used to set up accounts in Crest and to enter data, prior to the first settlement of a share deal on 19 August.

Mr Walrond expects about two-thirds of quoted British companies to transfer to Crest from October to December. By the end of April, more than 2,800 securities will be settled on Crest, representing 95 per cent of transaction volume on the Stock Exchange. Paper will have virtually disappeared for City institutions.

Mr Walrond said the vast majority of small private investors would not notice any difference as Crest started up and dismissed fears that dealing costs would rise, saying the worst that could happen was that costs to small investors would stay the same.

He said the workload of registrars such as Lloyds after switching to an electronic system would be unaffected since small investors, who own about 20 per cent of British equities, account for 80 per cent of the volume of work for registrars. The dramatic change would be for institutional shareholders, who account for most of the value of shares on the Exchange but only 10 per cent of the work for registrars.

Over the next few years, it is planned to reduce the Crest settlement period from the present five days, first to three days and then to immediate payment on delivery. Mr Walrond said it would also be "hugely beneficial" for London as an international market if Crest was combined with the Bank's Central Gilts Office in a single settlement organisation.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there