Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	The depository is independent from the trading platform and obtains trade input from participants directly and not from any trading platform. It is not linked to any netting system but there are plans (from February 2001) for it to operate as the data manager for the London Stock Exchange order matching platform (SETS) proposed use of Central Counterparty ("CCP") facilities. It will link the SETS output to the risk engine of the London Clearing House (the CCP for derivatives markets) and also handle trade regulatory reporting and collection of stamp duties on securities transactions. There is no direct link to any payment system as all payments are routed through the UK settlement banks. There are though plans to introduce immediate and trade-by-trade settlement in central bank money between the settlement banks as each customer trade settles, with automatic repo to the central bank of eligible purchased assets, to provide self-collateralisation. This would entail a direct link between the Chaps RTGS system at the Bank of England and the CREST system.
2.	Is there one or more depository or settlement system in the market?	CRESTCo is becoming the single system covering the entire domestic cash market- see below.
3.	If there are several, has a consolidation been considered? If yes, by when?	There were three systems (CGO, CMO and CREST) but CGO and CREST have now been merged under CRESTCO's administration; and the CMO is to be integrated around 2002 subject to enactment of the necessary legislation.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	The CREST system has links to the DTCC, SIS Intersettle, Euroclear and others. There is no discrimination between the service offering to such entities and that provided to local members.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	Yes, subject to confirmation that their membership operates in a legal environment that allows them to be bound by the CREST system rules.