Press releases 2001
18 June 2001
EXCHANGE TO LAUNCH ELECTRONIC SHAREHOLDING SCHEME
The London Stock Exchange today announced a new scheme that will make it easier for its shareholders to hold their shares electronically. Due to coincide with its planned listing in July and reflecting its desire to move towards a fully electronic register in its shares, the Exchange has decided to waive the annual service fee for investors holding shares in the company.
As part of a wider promotion of electronic shareholding, the Exchange intends to make the service available to private investors in the shares of other companies. The Exchange is offering this service as part of its commitment to greater capital market efficiency.
The new service is designed to appeal principally to retail investors who currently hold paper certificates, which can be both slow and costly to process. The Exchange will act as an independent sponsor for private investors to be Personal Members of CREST, the UK's electronic settlement system. Investors using the service will be free to deal with a choice of brokers whilst retaining the full rights and benefits of legal ownership of their shares.
The main benefits of the Exchange's new service are:
- shares are held electronically;
- private investors can deal on the same settlement terms as professional investors (for settlement just three days or less after trade date) - the investor no longer needs to deliver share certificates before settlement;
- the Exchange will provide an internet facility, allowing investors to check their shareholdings and to submit instructions on moving stock; while
- the investor remains the full legal owner, with the same rights and benefits as shareholders of paper certificates; and
- the investor remains free to deal with a choice of brokers and can seek the most appropriate, possibly cheaper, level of service.
Clara Furse, Chief Executive of the London Stock Exchange said:
"The London Stock Exchange is committed to removing barriers to growth in capital markets - certificated trading is clearly inefficient. We would like to see the whole market move to electronic shareholding.
"The service we intend to offer is an attractive new option for investors who currently hold paper certificates. We see this offering as entirely complementary to other industry initiatives and welcome any such measures that aim to promote greater electronic shareholding in the UK."
Angela Knight, Chief Executive of the Association of Private Client Investment Managers and Stockbrokers (APCIMS) said:
"APCIMS welcomes the initiative of the Exchange in advancing the promotion of dematerialisation. We believe that embracing the electronic world will bring efficiencies to trading and settlement and so benefit all investors."
Richard Hunter, Head of Dealing Services at NatWest Stockbrokers said:
"This is a very interesting spin on the current CREST Personal Members service. If ever there was a time for retail investors to take the plunge and benefit from dematerialisation - and free of charge for London Stock Exchange shares - then surely this is it."
More details of the service will be posted to shareholders and made generally available in early July.
- Ends -
For further information, please contact:
John Wallace 020 7797 1557
Tiffany Hardie-Evans 020 7797 1395
How it works
The London Stock Exchange will act as sponsor for private investors in CREST. Each investor will enter into the standard Admission Agreement with CRESTCo and a Client Agreement with the London Stock Exchange.
Use of CREST is subject to the terms and conditions applied by CRESTCo.
The Exchange will administer the investors' accounts within CREST, including entering instructions for settlement of transactions. The investor will inform the Exchange - either directly or through his broker - of transactions undertaken and instruct the Exchange to move stock on his behalf. Each instruction must be accompanied with, and validated by, security information known only to the Exchange and the investor. Settlement monies will, as now, pass between broker and investor. The Exchange will not hold client money on account.
The Exchange will provide a dedicated hotline and internet website to allow investors to check their shareholdings and to give instructions on moving stock. Investors will be provided with regular statements of holdings within the service and with an updated statement on completion of each transaction. Brokers will also be able to use the hotline and website to check shareholdings of their clients.
Use of the service will normally be subject to an annual fee to cover the cost of Personal Membership of CREST and charges for each transaction undertaken. The charges are set out separately in a document, entitled "London Stock Exchange Sponsored Personal Membership - Schedule of Charges", which will be available in early July.
The annual fee will be waived for investors holding shares in London Stock Exchange plc.