Which settlement system enables paperless dematerialised settlement in the UK?

Which settlement system enables paperless dematerialised settlement in the UK?

• A. CREST
• B. CHAPS
• C. TARGET2
• D. SWIFT

Answer: (A)

CREST is the system that enables paperless dematerialised settlement in the UK. It acts as the central securities depository for the UK market, handling electronic holding records and the settlement of trades in securities without physical certificates. Trades are settled electronically within CREST, typically on a delivery-versus-payment basis, which provides final settlement and reduces risk by ensuring cash and securities move together. This removes the need for paper certificates and speeds up post-trade processing. In contrast, CHAPS is for large-value sterling cash payments, not securities settlement. TARGET2 handles euro payments, and SWIFT is a messaging network for financial communications, not a settlement system for UK securities.

CREST is the system that enables paperless dematerialised settlement in the UK. It acts as the central securities depository for the UK market, handling electronic holding records and the settlement of trades in securities without physical certificates. Trades are settled electronically within CREST, typically on a delivery-versus-payment basis, which provides final settlement and reduces risk by ensuring cash and securities move together. This removes the need for paper certificates and speeds up post-trade processing.

In contrast, CHAPS is for large-value sterling cash payments, not securities settlement. TARGET2 handles euro payments, and SWIFT is a messaging network for financial communications, not a settlement system for UK securities.