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
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

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future