Clearing, Central Counterparties and Settlement

Question 1

Clearing

Answer 1

Process of buying and selling obligations defined and legally formalised

Question 2

Central Counterparty

Answer 2

Imposes itself between both parties

Acts as buyer / seller

Remain anonymous . Novation process

Question 3

What is CREST

Answer 3

Settlement system , a custodian , CSD (central securities depository)

Available to participants , even individuals

Question 4

Delivery vs payment

Answer 4

Simultaneous movement of shares for cash

Question 5

Crest

Answer 5

• Not bank and does not effect transfers of cash
• Settlement agency for gilts
• does handle certificated transfers

Question 6

Member of CREST

Answer 6

Person who holds stock in accounts within system, appears legal owner of securities on company registers

Question 7

Cash Transfers

Answer 7

• Cash transfers happen outside CREST, between payment banks

Question 8

CMA

Answer 8

Cash Memorandum account

monitor how close to reaching their bank account limit.

Is a record

Question 9

RUR

Answer 9

Registration update request

Crest telling registar to update records as crest changing ownership

Question 10

Payment Banks

Answer 10

Monitor payments of CREST members

Question 11

UK + European Equities settlement

Answer 11

Both 2 business days