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Following consultation with, and the agreement of, the Financial Services Authority (FSA), as well as consultation with the joint administrators of Lehman Brothers International Europe (LBIE) and other market participants, Euroclear UK & Ireland (EUI) which operates the CREST settlement system has instructed its members that all outstanding settlement instructions involving Lehman be match deleted by LBIE and counterparties.
The FSA and EUI believe that this action will promote market confidence by providing certainty that all outstanding LBIE's transactions, by whatever route they were initially conducted (whether on-exchange, through other trading platforms or over the counter) will not settle through the CREST system, and will resolve the operational risks for CREST which have arisen out of LBIE's default.
Resolution of the status of those underlying contracts not subject to the default rules of the relevant exchanges and/or clearing houses will remain a matter for bilateral agreement between the joint administrators and the counterparty concerned.
For further details, please see Joint EUI FSA announcement and EUI operations bulletin.
