CREST (securities depository)


CREST is a UK-based
central securities depository A central securities depository (CSD) is a specialized financial organization holding securities A security is a tradable financial asset A financial asset is a non-physical asset In financial accountancy, financial accounting, an asset is an ...
that holds UK
equities In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities i ...
and UK
gilts Gilt-edged securities are bonds issued by the UK Government. The term is of British British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Depe ...
, as well as Irish equities and other international
securities A security is a tradable financial asset A financial asset is a non-physical asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication o ...
. It was named after its securities settlement system, CREST, and has been owned and operated by
Euroclear Euroclear is a Belgium Belgium ( nl, België ; french: Belgique ; german: Belgien ), officially the Kingdom of Belgium, is a country in Western Europe Western Europe is the western region of Europe. The region's countries and territori ...
since 2002. The name CREST is not an acronym. CREST allows shareholders and bondholders to hold assets in a dematerialised, i.e. electronic form, rather than holding physical
share certificate In company (law), corporate law, a stock certificate (also known as certificate of stock or share certificate) is a legal document that certifies ownership of a specific number of share (finance), shares or Share capital, stock in a corporation. ...

share certificate
s. CREST also serves a number of other important functions, such as assisting in the payments of dividends to shareholders. It is also an "electronic trade confirmation system" ("ETC") (using Trax). When parties to a transaction make a deal, they both electronically confirm their sides of the transaction via electronic transfer. Both parties are required to submit confirmation details to Crest. In the event that transaction details do not match, CREST will highlight the issues and ensure that the problems are resolved as soon as is practicable.
Stamp duty in the United Kingdom Stamp duty in the United Kingdom is a form of tax charged on legal instruments (written documents), and historically required a Impressed duty stamp, physical stamp to be attached to or impressed upon the document in question. The more modern ver ...
is only payable on physical share certificates therefore no stamp duty is payable on shares settled via CREST, however to compensate for this the UK government added a Stamp Duty Reserve Tax which is collected by CREST on behalf of
Her Majesty's Revenue and Customs , type = Non-ministerial government department Non-ministerial government departments (NMGDs) are a type of Departments of the Government of the United Kingdom, department of the Government of the United Kingdom that deal with matters for whic ...


The project was launched in 1993, following the
TAURUS Taurus is Latin for 'bull' and may refer to: * Taurus (constellation), one of the constellations of the zodiac * Taurus (mythology), one of two Greek mythological characters named Taurus * Taurus (astrology), the astrological sign * ''Bos taurus' ...
fiasco, and the operating company CrestCo was founded in 1996. CREST was acquired by
Euroclear Euroclear is a Belgium Belgium ( nl, België ; french: Belgique ; german: Belgien ), officially the Kingdom of Belgium, is a country in Western Europe Western Europe is the western region of Europe. The region's countries and territori ...
in August 2002.


There are two classes of members on CREST: members and sponsored members. Members are usually pension funds, inter-dealer brokers or other large
financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entit ...
s with significant resources. Sponsored members have the same rights and responsibilities as members. However, given that they do not have the financial or technical resources of the full members, they rely on their sponsoring member to interface with CREST.

Registrars and CREST Depository Interest (CDI)

UK stocks are held by registrars who are members of CREST and are therefore integrated into the transfer of ownership. Irish equities and ETF securities are also settled directly through CREST members.Irish Stock Exchange
Settlement of ISE trades For international stocks, CREST holds a pool of them in a local depository, such as
Clearstream Clearstream is a post-trade services provider owned by Deutsche Börse Deutsche Börse AG () or the Deutsche Börse Group, is a German company offering marketplace organizing for the trading of shares In financial markets A financial m ...
for German stocks and
CDS The compact disc (CD) is a digital Digital usually refers to something using discrete digits, often binary digits. Technology and computing Hardware *Digital electronics Digital electronics is a field of electronics The field of ele ...
for Canadian stocks. CREST then issues a CDI to each holder of the security, which can then be transferred in CREST just like a UK equity. This is similar to the depositary receipts issued in other countries. However, restrictions apply to CDIs. They are not withdrawable or depositable into/out of CREST. This is because a CDI is an electronic reflection of the underlying security held in the domestic (country of origin) market. The security provided by CDI are "international securities" in deed poll which includes security through equity shares, Eurobonds, domestic bonds and depository receipts. International securities must be eligible to be held within or through a CSD, which includes Euroclear, DTC, SIS SegaIntersettle (the Swiss clearing system) and any other national or international central securities depositories from time to time specified in the CREST International Manual.CDIMemo.pdf The economic rights are not affected by the use of the CDIs.

How does it work?

To take the US as an example, the electronic settlement system in the US is called Depository Trust & Clearing Corporation, DTC and if a shareholder holds electronic stock in the US they will hold their securities electronically in DTC. In reality, they will hold the securities via a custodian, so the custodian's nominee details will appear on the company's register. This is known as holding stock in the 'domestic' market. Securities held this way can only be traded domestically i.e. in the market of the country of origin. If the shares are listed in more than one market (for example in the US and in the UK) a shareholder who wants to trade their securities within CREST outside of the US 'domestic' market can instruct their custodian (in this example the DTC) to transfer the securities to the CREST account within DTC. Restrictions apply, only securities that have a UK quote can be transferred to CREST's DTC account. CREST is a member of DTC. Once the securities have been transferred from the shareholder's account within the DTC and into CREST's account CREST will 'create' the CDI within the CREST and the CDI will appear in the shareholder's account within CREST where the CDI can now be traded in the UK market. The CDI which is traded within CREST will typically have the same ISIN as the UK share itself. The legal holder to the share will continue to be the nominee for the DTC.

Stamp Duty Reserve Tax

HMRC consider that a CDI is a chargeable security for the Stamp Duty Reserve Tax. However, where the underlying security is loan capital and that loan capital satisfies the loan capital exemption the trade of the CDI should be exempt from SDRT. Other treatments to the Eurobonds are included in the bulletin published by Euroclear.


* Uncertificated Securities Regulations 2001 (SI 2001/3755) * Central Securities Depositories Regulation (CSDR) Supplemented by CREST rules and conditions in the ''Crest Reference Manual'', June 2009

See also

*London Stock Exchange *SEAQ


External links

CREST official site

Further reading

* ''CREST: its Recognition and Approval'', by Brian Smith, The Securities and Investments Board, 1996 *Madeleine Yates and Gerald Montagu ''The Law of Global Custody'' (4th edn.,2013) Bloomsbury Professional, Chapter 9 {{DEFAULTSORT:Crest Central securities depositories Securities clearing and depository institutions Finance in the United Kingdom Economy of the Republic of Ireland Economy of the Isle of Man Organizations established in 1993 1993 establishments in the United Kingdom 1993 establishments in Ireland 1993 establishments in Guernsey 1993 establishments in the Isle of Man 1993 establishments in Jersey