Travers Smith LLP is delighted to be amongst a group of leading institutions, including BT, CISI, Euroclear and the SWIFT Institute, to have funded a unique research into CREST, the UK and Irish securities settlement system for dematerialised domestic and international equities, government securities and money market instruments.
Over the last year, a team of academic researchers, led by Dr Hermann Rapp and Dr Cristiana Parisi, have been analysing the introduction of the CREST settlement system, widely regarded as one of the most successful projects to be introduced in financial services for over 20 years. Their remit was to ascertain why and how the CREST project team delivered such a successful system on time and within budget.
Today, on the 20th anniversary of the launch of CREST, CREST Revealed: From Paper to Automation, the first in a series of research reports has been published.
This report covers the period from 1993, when the project was initiated, to its launch in 1996, and examines the environment that prompted its instigation. The report looks at the massive cooperation of Government, industry and a range of different service providers that all came together, under the central control of the CREST project team. It proposes five reasons why the CREST project was successful and looks at why the CREST system continues to be at the heart of UK settlement, 20 years on.
Travers Smith has acted as the main legal adviser on the CREST project from its inception in 1993 to its successful implementation in 1996, and beyond to the present day.
As the report underlines, 'the early selection of Travers Smith was instrumental in CREST being able to meet the regulatory targets set by the government in time for implementation'.
From the very outset, it was vitally important that the design of CREST was able to, not only supply operational efficiency, but that it was legally robust. CREST, therefore, required the introduction of new laws and amendments to existing laws. Travers Smith was able to offer CREST a broad range of complementary legal expertise, both domestic and international, including knowledge on securities, payments and operation with CCPs, which would have produced significant benefits throughout all phases of project delivery.
Significant changes in law were required to secure users of CREST, in particular the Settlement Finality Regulations and the Financial Markets Insolvency Regulations. At a later stage, getting direct access to central bank money to support the safety of CREST settlement was a crucial improvement, a major step that Travers Smith helped CRESTCo to obtain from the Bank of England.
Additionally, Travers Smith fulfilled a vitally important role in combining technology, design, and operational objectives with legal necessity. This is a rare achievement, which has been widely be recognised as a fundamental component in CREST’s success and in the history of the City.
Mark Evans, who is Travers Smith’s relationship partner for Euroclear UK & Ireland, which operates the CREST settlement system, commented:
“It is impossible to exaggerate the significance of CREST’s successful launch and subsequent operation in maintaining London’s pre-eminence in the international securities markets. CREST was and remains peerless in its courageous and imaginative approach in responding to and resolving the complex business, operational and legal issues that affect the operation of our financial markets.
I am delighted that Travers Smith was in a position to support and contribute to “CREST Revealed: From Paper to Automation’, which identifies important lessons shared for the benefit of all those who maintain an interest in the stability, efficiency and effectiveness of the UK’s financial market infrastructure.”
To view a copy of CREST Revealed: From Paper to Automation click here.