View from City Road: Cut the bull and leave the Bank in the china shop

Why Pen Kent called the City's new share settlement system after a well known brand of toothpaste and a hotel group is a mystery. 'We wanted an encouraging upbeat name with all the right vibrations,' he said, admitting that Crest is not even an acronym but a name chosen out of the blue. Luckily, most of the rest of his task force's report on Son of Taurus makes rather better sense.

The proposed system is nobody's first choice. But Crest has the overwhelming advantage that the Bank of England has been able to carry along with it all the main vested interests, including the registrars, whose stubbornness is blamed by some for making Taurus over-complex and sowing the seeds of disaster.

The Bank is funding the next stage, drawing up detailed specifications. It is widely expected to design and build the whole system, but has drawn back from committing itself, saying it will be willing to take the responsibility if Crest's users decide against ownership.

This is pussyfooting, since the key development that restored confidence after the Taurus debacle was the Bank's direct intervention. There would be disappointment if it did not carry out the whole job. With experience of gilts and money market settlement under its belt and another project on Euro-securities under way, it makes sense for the Bank to finance and run Crest.

Indeed, if the Bank is as good as it thinks, why not aim to float off all the settlement operations at a profit, as a commercial business?

There are plenty of snags to be ironed out. Weaker share registrars may have difficulty meeting the new technical standards. The system will not be able to do everything for market makers that Talisman does. For example, it is hard to see how Crest will cope with stock lending and borrowing. It will handle rights issues, partly-paid new issues, conversions, scrip dividends and takeovers, but some other operations done by Talisman may have to be put back on paper. The argument for this is that Crest must avoid the over-complexity that brought down Taurus.

Small shareholders will worry that higher charges for paper share certificates will force them towards electronic registration. And there is concern that it will be harder for companies to identify their shareholders, as more are encouraged to join a pool of nominee holdings in the electronic system rather than hold shares directly in their own name.

In fact, the registrars will be fed information about changes of ownership direct from Crest's computers. Mr Kent hoped Crest would make it easier and faster to see through nominee holders to the beneficial owners. If the system fails to live up to this promise, the notification threshold for share stakes should be dropped another notch to 2 per cent.

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
News
people
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn