H.M. TREASURY NEWS RELEASE

HM Treasury News Release

119/99
15 July 1999

MODERNISING SECURITIES SETTLEMENT

Elimination of the gap between settlement and registration for equities is the key element in a range of proposals to modernise securities settlement arrangements set out in a consultation document published by the Treasury today.

Announcing publication, Economic Secretary Patricia Hewitt said:

"Improving settlement efficiency and reducing risk are important elements in ensuring that UK financial markets can continue to compete with the best in the world, and that costs for market participants are kept to a minimum.

"The Government has embarked on a rolling programme of improvements by enabling CREST to assume responsibility for the Central Gilts Office and these proposals take the modernisation process one stage further. I welcome the views of interested parties on how the proposals will affect them."

The Government is proposing that legal title to uncertificated equities/shares should transfer simultaneously with the settlement of transactions within CREST. The Companies Act 1985 will be amended to provide that company membership arises, and legal title transfers, when the securities transfer within the CREST system, rather than as at present, when the transfer within the CREST system is reflected on the company's register.

The elimination of the gap between settlement and registration will reduce risk and the perception of risk in the settlement system and will bring about a significant enhancement to the competitiveness of UK financial infrastructure. The proposal received widespread support among respondents to the Bank of England's Securities Settlement Priorities Review.

NOTES FOR EDITORS

1. The Securities Settlement Priorities Review was published by the Bank of England on 18 September 1998.

2. The current provisions governing the paperless settlement of corporate securities are set out in the Uncertificated Securities Regulations 1995 (SI 1995/3272).

3. If you have access to the Internet, you can find this news release and other Treasury material at www.hm-treasury.gov.uk.