In a circular to clients, Philip Hooker of Hoare Govett says that Crest is currently the leading real-time transaction processor, and new system hardware means it now has enough surplus capacity. Deutsche Borse Clearing is due to launch a competitor system, Trust, in late 1999. But Hook warns that London will likely move from five-day settlement to three days. Although “T+3” is the international and German standard, and has been in use in the US and the eurobond markets since 1996, the LSE has delayed a decision on this because member firms are preoccupied with year 2000 and euro-related IT work. One problem is the number of private client shareholdings that are not “dematerialised” for certificate-less trading on SETS. Individual investors faced with a T+3 system will incur extra commission charges for delayed settlement, use a broker’s dealing service that includes pre-lodgement of share certificates or have their shares held in Crest. “Crest holdings will then be the natural first choice for all new shareholders,” Hooker argues.
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