Crest wins an eleventh-hour SIB reprieve

Crest, the City's new securities settlement system, won an eleventh-hour reprieve last night when its board decided to stick to a timetable of commissioning by next April.

The board's decision, after two hours of fierce cross-questioning of executives running the project, came after pressure from the City to put back the timetable to allow a catalogue of problems to be sorted out.

The critical factor in the decision to continue the present commissioning timetable appears to have been a favourable reaction from a meeting of all the main City regulators last Friday, convened by the Securities and Investments Board.

The regulators have the power to suspend or close Crest if settlement delays threaten the financial health of securities firms. Crest was set up on the initiative of the Bank of England as a replacement for the Stock Exchange's Taurus system which was abandoned after it had cost City firms pounds 400m.

CrestCo, the company which has taken over the project from the Bank, said the regulators' meeting "recognised the concerns of market-users but acknowledged both the recent improvements in Crest performance and CrestCo's commitment to the SIB that these would be maintained and developed."

On this basis there was no need "at this stage" to make further changes to the transition timetable - beyond those made by Crest itself last month. But the SIB would "continue to monitor the situation closely".

Crest's own changes gave a six-week breathing space from 2 December to mid-January in which loading of new securities on to the system will be slowed and then halted, while keeping to the April target for completion.

Scott Dobbie, chairman of CrestCo, said the board's confidence was helped by the fact that improvements to the system introduced last Friday were "planned, promised and also worked".

Iain Saville, CrestCo chief executive, said that a survey by the Securities and Futures Authority and the Stock Exchange found that three-quarters of firms supported a continuation of the timetable.

Mr Saville said Crest's share of the settlement market had risen from 25 to 40 per cent in two weeks and that the number of settlements achieved on the day intended had risen from 60 to 70 per cent in the last 10 days, compared with the 79 per cent at the Stock Exchange's old paper-based clearing system, Talisman. Crest hoped to match Talisman by mid-January.