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The responsibilities of registrars

The responsibilities of registrars, and those issuers who need their services, are rarely explained. However the evolutions of capital markets means registrars – who already play a fundamental role in the security of investments – are going to become even more important in the future.

Historically, many companies were custodians of their own share registers.

With share trading being settled on periods as long as ten days, the role of maintaining an accurate register of ownership could feasibly be conducted on an in-house basis.

Banks often took on the role too, with Lloyds and NatWest being examples of some of the household names historically active in this field.

However, moves to provide a better post-trade settlement service in the UK – including a shortening of the settlement period and in turn reducing settlement risk – required a major rethink of existing processes.

This evolution was driven by a number of factors including competitive pressures from European exchanges and the Big Bang of 1986, that shifted trading in London from a paper-based, to an electronic system. Shortening the time between trade and settlement means that counter-party risk can be reduced.

The registry management solution that we deliver to clients is also without parallel in today’s market.

An electronic system called CREST was established, to allow the nominated participants, so called CREST members – including stockbrokers, custodian banks and, in some instances, institutional investors – to send and receive ownership data in a standardised electronic format.

It worked with the existing registration systems, but it also came with a requirement that companies – or their appointed registrars – would have to acknowledge that any changes to records had been updated in a timeframe not exceeding two hours.

To meet this objective, existing registry systems were forced to abandon the idea of a manual back-office process and move on-line.

The new landscape for registrars

Those companies who had been running ownership registers internally were left to find outsourcing partners whilst the big banks, faced with the demands of hefty capital investments, either established new entities – or exited the business altogether.

The 1990’s saw a raft of new entrants move into the corporate registry system. Legal changes in 2001 meant that instead of CREST feeding information to registrars who would then maintain records, the book entries held in CREST would be seen as the definitive list of ownership.

Despite this fundamental change in the role of registrars, the services offered by the sector’s legacy names has seen little evolution.

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