Settlement process - UK


Settlement cycles

Money market intruments:T+0

Settlement flow


SD-3:Upon input into CREST, the instruction is alleged to the relevant counterparty for matching.
-The matching is binding, meaning that once a transaction is matched, it cannot be cancelled unilaterally by either party.
-CREST users using settlement netting will have only one settlement instruction to settle in each line of stock as a result of a day's trading.
SDOn settlement date, the CREST payment, which discharges the buyer's obligation to the seller, is accompanied by a simultaneous real-time payment from the buyer's settlement bank to the seller's across settlement accounts at the Bank of England. As a result, the buyer is solely exposed to the risk on their chosen settlement bank and intraday risks between the settlement banks are eliminated. Settlement banks maintain separate accounts for CREST and for “clean payments” (that is, those arising other than from CREST). Settlement banks will balance their available funds between these accounts throughout the day (by means of liquidity transfers) according to the demands arising in CREST or from clean payments.

Once CREST has identified a set of transactions for which sellers have stock, buyers have cash or credit, and buyers' settlement banks have sufficient earmarked RTGS liquidity, these transactions will be settled with finality. Only transactions where both stock and cash/credit are known to be available will be assessed for RTGS liquidity. Where insufficient liquidity is available, uncovered transactions will be left to be reassessed in the next CREST settlement cycle.

Regarding the movement of stock, the register is the evidence of title.
-For securities eligible for Electronic Transfer of Title (ETT), the transferee receives immediate and irrevocable legal title to the dematerialised securities at the point of transfer within CREST.
-For securities not eligible for ETT, the buyer obtains an equitable interest in the stock when a Register Update Request (RUR) is generated by CREST to the issuer's registrar.
In law, the buyer acquires a statutory equitable interest at the moment of settlement. The registrar is obliged to respond to RURs within two hours. After it has amended the register, a message is sent back to the CREST system in confirmation. At this point, the transfer is final.


SD-3:The matching process starts. Once a transaction is matched and provided that there is sufficient stock and cash/credit available, it is put on settlement queues and dealt with in turn by settlement date (members can also apply priority rankings).
SD:The securities side is settled trade-for-trade in the CREST system and the cash side is settled on a trade-for-trade basis via the real-time payment in central bank money process. Transactions, which are interdependent, may be settled on a batch basis during circles processing.

As with equities, regarding the movement of stock, the register is the evidence of title and the procedures and considerations associated with the process are the same as those described above for equities.

The matching and settlement regime (that is, matching and settlement fines) does not apply for gilts.


All equities and gilts are registered in a legal name. If a transaction settles in book-entry form, both CREST and the registrar of the company will update their records.If a transaction settles physically, the registrar of the company will update its records.

Registration for physical stock takes approximately seven days. For those held in CREST, registration is performed via the ETT process or via a Register Update Request (RUR) (see “Settlement flow” on page 3).

Stamp duty

Stamp duty is applied in the UK market according to a 0.5% or 1.5% regime.


CREST penalties

Settlement within CREST is subject to a strict matching and settlement regime, with fines being rigidly applied for late matching and late settlement.

  • Matching fines: Matching is binding in CREST. Trades that are unmatched at end of business on T+1 are subject to matching fines. In the case of stock loan instructions, matching fines will be applied if the stock loan instruction does not match on T. The fines will be levied against the last party to match a trade.
  • Settlement fines: A delivery that remains unsettled in CREST after its contractual settlement date will incur a settlement fine.

    The settlement fine will be calculated on the average market value of the number of all unsettled transactions of the participant that do not reach specific settlement targets. The settlement target is linked to the number of days a transaction remains unsettled after its contractual settlement date.
    The settlement fine will amount to either GBP 5 or 0.05% per unsettled transaction, whichever is higher.

    The criteria for the calculation of the settlement fines are:

    Number of days after contractual settlement date Participant's settlement performance target 
    S+2 to S+995%
    S+10 to S+1598%
    S+16 to S+2099%
    Settlement fines for failed deliveries will be calculated up to 20 local business days after the contractual settlement date.
  • Resubmission fines: All transactions (apart from those of type USE and SLR) that are more than 20 days over their Intended Settlement Date (i.e. ISD +20), with a settlement priority but failing to settle, are charged per day. The charge is levied on the participant that is causing the transaction to fail.

CREST penalties are charged on the basis of periods of two months.

Interest charges for failed receipts and interest credits for failed deliveries

Receipt instructions against payment in CREST that do not settle on settlement date because of lack of cash or credit will be subject to interest charges.

In the same way, each external delivery instruction against payment that does not settle on settlement day because of the counterparty’s lack of cash or credit will be subject to interest credits.

CREST calculates the interest charges/credits as from SD+1, using the overnight LIBOR for the settlement currency (GBP or EUR).

  • If the minimum amount is not reached, the calculated amount stays “attached” to the transaction and is added to it until the transaction is settled.
  • When the minimum amount is exceeded, a claim is triggered.
  • If the transaction settles and the minimum amount has not been reached, CREST will not have raised a claim. The parties must therefore agree separately on how to compensate the late settlement.