Re: [Czechlist] (Cross-posted) Shares
>With some of you, we were recently talking about each of us letting the
>others to nitpick in a piece of what we have translated.
I wonder if any of these links and definitions might help. I appreciate that
you will probably know this already but somebody else might find it useful.
I mean, I did.
A tax relief available to investors paying Capital Gains Tax. Taper relief
was introduced in the 1998 Budget to encourage investors to hold shares for
the longer term. It replaces Indexation Allowances, which were scrapped in
the same budget. Taper relief starts at 5% after three years, rising to 40%
after 10 years or more. Higher rates of relief apply to business assets.
Crest is the computerised system for tidying up or 'settling' purchases and
sales of shares. It came into effect in July 1996 and has replaced the old
paper-based process of settling share deals, known as the 'Talisman' system.
This relied on pieces of paper including share certificates being passed
between investors, brokers and marketmakers. With some 30,000 share trades
on some days, that's a big saving of paper.
As a private investor, if you prefer to buy and sell shares with your
certificates, you will be able to go on doing so - although it's likely
you'll pay more for this than dealing electronically through Crest.
There are two ways for the private investors to be involved in Crest.
Directly - as a direct participant in the Crest system. This will
mean your shares are registered in your name and you will enjoy all the
benefits of ownership, as now. In short you'll be dealing with the company
you invest in 'directly'. CRESTCo will charge the sponsor ?0 per annum for
this service, however your broker may add a service charge of his own, so
Indirectly - you can hold your shares through a nominee account
which is administered by your broker. If you decide to go the nominee route,
your broker will accumulate all your shareholdings and those of other
investors in a nominee company.
Crest is appealing to all but the luddites among us. It should enable
greater efficiency and lower operational costs for stockbrokers which in
turn ought to be passed on to private investors.
And share settlement will also get quicker. At the moment sharedealing is
settled in five days on a rolling basis. Some time in the future, this
settlement process is expected to be brought down to three days and then
become instantaneous .
Ten years after 'Big Bang', which revolutionised how share dealing is
performed, Crest is revolutionising how share deals are settled. It some
ways it's an even 'Bigger Bang'. Its introduction will herald another shake
up in the way the City works - order matching. Unit trusts and shares in
OIECs can also be settled in CREST.
Crest is operated by a private company CRESTCo, which is owned by some 70
stockmarket participants. CRESTCo is not operated for profit and keeps its
tariffs low, basically in line with the cost of the service. In the past
surpluses have been returned to users. The basic charge for stock and cash
settlement, for example, is ?.60p per transaction, regardless of the size of
the transaction. It's address is:
33 Cannon Street,
CREST is now firmly established as a highly effective settlement system, in
which participants are consistently achieving record rates of settlement on
due date (up to 94% on some recent days) - and the improvement looks likely
to continue; CREST participants, with the co-operation of the registrars,
have dematerialised in 1997 a further £750 billion of stock, bringing
the total in CREST to over £1,000 billion. This has been a huge
achievement, and I think it is unprecedented anywhere in the world that such
large volumes have been dematerialised over such a short period; CREST
participants have enormously improved their handling of exceptions, with the
result that the backlog of unsettled trades has fallen very sharply, to
under 35,000 bargains, in the last few days; the industry has agreed, and we
are now building, a settlement discipline regime which will bolster the
performance of the majority who have very sound settlement, by applying
sanctions to the few who do not, and who thus impose costs on the industry
as a whole; despite being in the middle of this extremely fundamental change
in settlement procedures, the UK equity industry managed to cope well with
the demands of the six new demutualising PLCs during the Summer, and with
the reallocation of shares between participants that followed. This massive
recycling of shares from individuals to institutions has not come even close
to creating the chaos predicted by some newspapers; the CREST software has
proved its value in its implementation by the Bank of England for gilts
settlement; and registrars have demonstrated their ability to maintain high
standards of turnround, and of reconciliation performance; they are now
truly part of the infrastructure of our modernised securities market.
''Sponsor' - the person (which may be the Broker) (if any) who acts as the
CREST sponsor of NomineeCo and who is therefore able to send and receive
CREST messages on behalf of NomineeCo;
Glossary: Stamp duty (share dealing)
Stamp duty is a government tax levied on certain legal transactions
including share dealing (and the purchase of property).
Stamp duty on share dealing is levied at a rate of 0.5% .
There is however a higher rate of 1.5% payable in special circumstances
where shares are being purchased in depository receipts or transferred into
a clearance system. CREST.
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