Over the last year, a team of academic researchers have been analysing one of the most successful projects to be introduced in financial services for over 20 years - the introduction of the CREST settlement system. Their remit was to ascertain why and how the CREST project team delivered such a successful system, on time and within budget. Today, on the 20th Anniversary of the launch of CREST, the first in a series of research reports based on this research - ‘CREST Revealed: From Paper to Automation - Streamlining UK Securities Settlement’ is published.
This report covers the period from 1993 when the project was initiated, to its launch in 1996, and considers the environment that prompted its instigation. The report looks at the massive cooperation of Government, industry and a range of different service providers that all came together, under the central control of the CREST project team. It proposes five reasons why the CREST project was successful and examines why the CREST system continues to be at the heart of UK settlement, 20 years on.
Gary Wright, CEO of B.I.S.S. Research, who instigated the research project said “We started this project just over a year ago, with the objective of filling the knowledge gap about CREST, as very little has been published about this landmark project. It seemed very fitting that with the 20th Anniversary year upon us, we should document this historic project before all data was lost, and see what could be learnt from its success. One has to remember that in 1993, the financial services industry was in crisis, with the economy failing and the UK withdrawal from ERM. Technical modernisation of post-trade settlement was in its infancy, with many processes, paper based. Big Bang had created a huge surge in transactions and back offices were struggling, and sometime failing to cope. The introduction of the CREST settlement system changed everything. B.I.S.S. Research would like to thank the five sponsors that made this research possible: BT, CISI, Euroclear, the SWIFT Institute and Travers Smith. Their foresight and commitment to this project will leave a lasting legacy for students and future generations.”
Dr Hermann Rapp, who leads the CREST research team along with Dr Cristiana Parisi, comments “Complex technology projects can only be understood by looking not just at the technical characteristics, but also at the wider context in which the financial industry operates. The research enabled a unique look at a lighthouse achievement from several perspectives, and I would like to thank everyone who supported this research. “
Jon Vyse, Head of Post-Trade Services at BT, commented, “We were very pleased to sponsor this independent research, and we welcome its findings. Twenty years ago, replacing existing paper based settlement processes with a secure electronic matching system was considered to be pioneering. CREST’s enduring central role in today’s UK Financial Markets is testimony to the foundations and structure of the service that were established at the outset. As an accredited service partner to Euroclear, BT is proud to have served CREST members continuously since its launch by providing secure, managed messaging connectivity to CREST, and we look forward to extending our support for the service in the future.”
Simon Culhane, Chartered FCSI and CISI Chief Executive said: “We are delighted to have been able to support this important research, which has highlighted just how well this critical piece of financial infrastructure was project managed.”
John Trundle, the CEO of Euroclear UK and Ireland said: "This research provides a timely reminder of how and why CREST succeeded twenty years ago. The principles and values that underpinned the launch of CREST in 1996 are still core to our business today, enabling us to settle transactions for the UK and Irish securities with an average value of £800bn every working day.”
Mark Evans, who is Travers Smith’s relationship partner for Euroclear UK & Ireland, which operates the CREST settlement system, commented: “It is impossible to exaggerate the significance of CREST’s successful launch and subsequent operation in maintaining London’s pre-eminence in the international securities markets. CREST was, and remains peerless, in its courageous and imaginative approach in responding to and resolving the complex business, operational and legal issues that affect the operation of our financial markets. I am delighted that Travers Smith was in a position to support and contribute to “CREST Revealed: From Paper to Automation’, which identifies important lessons shared for the benefit of all those who maintain an interest in the stability, efficiency and effectiveness of the UK’s financial market infrastructure.”