Finance put in place for Crest

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The move towards a paperless share settlement system took a big step forward yesterday on confirmation that development finance of pounds 12m was in place.

Crest, a Bank of England initiative following the disastrous and costly attempt by the Stock Exchange to devise a similar system called Taurus, is expected to be running by 1996.

The initial pounds 12m will finance the build phase of the project until the end of next year.

Some 69 institutions have subscribed for shares in CrestCo, the company that has been established to finance the development of the paperless system.

Shareholders in CrestCo are divided into four tiers to take account of different types and amounts of investment. Tier 1 investors will have subscribed at least pounds 375,000 each, tier 2 at least pounds 200,000, tier 3 at least pounds 100,000, and tier 4 pounds 30,000 each.

Pen Kent, an executive director of the Bank, said: 'This is a key milestone in the progress of the project. It demonstrates broad support from all sectors of the industry for the development that is now under way.'

The Bank will carry out the development work. Its costs will be reimbursed through CrestCo.

Shareholders in CrestCo provide a wide degree of coverage of potential users of Crest.

They include all the leading market-makers, firms accounting for more than 90 per cent of all share registration activity and a large number of fund managers.

There are two limits on the size of investment in CrestCo to ensure that its shareholders remain well spread across the securities industry.

No individual shareholder can hold more than 10 per cent of the shares, and no sector - which has to be defined by the board of CrestCo - may hold more than 30 per cent.