The pounds 12m to be raised will fund the project until the end of next year when trials are scheduled to begin. The system should start running in the second half of 1996.
The Bank of England will retain control during the initial phase, but when the system is running the participating institutions will have their shares converted to voting shares and the Bank will step back.
Shareholdings are limited to 10 per cent per shareholder and 30 per cent for any one sector such as stockbroking or market-making. The maximum shareholding will cost pounds 300,000. The shares will pay a yield of 4 per cent over a gilt that will be named next Wednesday when the funding is put in place.
Under the new settlement system, individual investors will still be able to keep their paper certificates and trade their shares using these certificates. But once the trading timetable is squeezed from the current 10-day settlement deadline to a five, and eventually, three-day settlement, paper-based trades will be on a longer timetable - at different prices.
With 80 per cent of the 8 million private investors holding fewer than three shareholdings, it is likely that the majority of investors will remain outside the paperless revolution - at least for the next 10 to 15 years.
Many brokers are keen to persuade private investors into the new system by using their nominee share dealing service. But there will also be brokers keen to pick up investors who do not deal actively and will resist going into a nominee account.
Individuals can also become sponsored members of Crest in their own right.
They will have to pay the Crest membership fee, which is likely to be well below pounds 1,000 and may even be below pounds 100, and will be able to have their own name on the share register and receive direct communication from the companies in which they invest.
They will still need to deal through a broker who will use the settlement system on their behalf. This option is initially likely to appeal to small trusts, but there is no reason why interested private investors should not take this route.Reuse content