The current trade settlement model relies on a number of fragmented, duplicate, time-consuming and hence, expensive steps. Through the CREST/Omgeo strategic partnership, as soon as trade agreement is reached between counterparties via electronic trade confirmation (ETC) or central matching, Omgeo will send settlement instructions directly to CREST as well as to the settling parties to the transaction. CREST will set-up the instructions for settlement without the need for direct input by either settling party. This new streamlined process will bring major efficiencies to the markets, and lead to a substantial reduction in costs of settling trades for brokers, custodians and their clients. This approach is fully consistent with CREST's new arrangements for netting market-side transactions during 2002 and resembles Omgeo's existing relationship with The Depository Trust & Clearing Corporation (DTCC) for processing and settling US securities.
Iain Saville, the Chief Executive of CRESTCo, said "Omgeo and CRESTCo share a commitment to increasing operational efficiency and reducing risks so that the securities industry can handle increasing volumes at low cost. Currently client-side processing is a fragmented and often manual process; straight though processing from trade to settlement for client side transactions is essential to bring costs down, and to allow shortened settlement cycles."
Kevin Milne, Executive Managing Director of Omgeo, added, "Our strategic partnership with CREST is a major milestone in our commitment to working closely with key industry participants. This is a tremendous step forward in providing a true STP solution that links trading and settling parties as well as depositories."
For detailed information on the CREST/Omgeo plan, please visit www.crestco.co.uk or www.omgeo.com. Both companies will be working closely with the industry to develop the new model throughout 2002; the service is expected to go live in 2003.
