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Shares: Computerised Settlement Costs

Volume 569: debated on Wednesday 14 February 1996

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asked Her Majesty's Government:Whether, in view of their policy to encourage wider share ownership, they consider that concern among smaller private investors about the higher costs which are expected to arise from the introduction of the new CREST (electronic share transfer) settlement system is justified.

Central settlement costs form only a small proportion of trading costs, and any increase in settlement costs compared with existing costs will itself be small. Even if the increase implied by CREST's tariff proposals (up to 90p in some cases) was passed on fully to investors. this would be unlikely to affect their investment decisions.The Government remain committed to wider share ownership. and have kept the interest; of private investors firmly in mind when considering the proposed introduction of computerised settlement. The enhancement of the London market which CREST is designed to deliver should benefit all investors, from private investors to institutions. The Government have also ensured that investors will be able to retain their share certificates if they choose, and have supported the inclusion of "sponsored membership- arrangements in CREST. Sponsored membership should provide an important new option for private investors, allowing them to gain the benefits of computerised settlement while retaining their name on the company register. The Government also support the Nominee Code designed to enhance links between companies and investors in nominees.