News Release
Progress Report on the upgrade of the Central Gilts Office
01 August 1997
The Central Gilts Office (CGO), which provides the electronic settlement system for gilts, is being upgraded. CGO has completed its planned programme of trialling, culminating in three dress rehearsals carried out during July. These rehearsals have demonstrated that the physical infrastructure of the upgraded system can handle the volumes likely to be experienced in live running, and that the system has the necessary settlement functionality in place and is operating substantially as intended.
It was always envisaged that, following trialling, there would be a full review to check that the performance standards which need to be met for inauguration of the upgraded system are fully satisfied. This has been carried out this week. It focused in particular on three areas where trialling had indicated the need for adjustments to the system:
-
Debit caps. There have been occasional instances where debit caps (which limit the amount of intra-day credit members are granted by their settlement banks) have been breached.
-
Stock overdrafts. On occasions trades have settled in circumstances where the deliveror had insufficient stock.
-
Unsettled trades. Some matched trades have on occasions not settled.
The Bank's project team has addressed these items over the past week and has identified the necessary adjustments to rectify them. It is important however that the system be rigorously trialled so that both the Bank and the market can be confident before inauguration that all problems have been resolved and that the upgraded system will operate to the necessary high standard.
It is planned therefore to hold a further dress rehearsal during September, with a view to inauguration of the new system taking place a month after successful completion of dress rehearsal.
In the meantime, a test of procedures for cut-over to the new system will be held over the holiday weekend of 23-25 August, with a view to facilitating cut-over in two days rather than three as presently provided. This will give flexibility for final cut-over to take place over any weekend once successful rehearsal has been completed.
It has been previously announced that the gilt strip market would commence a month or so after the inauguration of the upgraded Central Gilts Office. This remains the intention, subject to satisfactory progress on trialling the stripping and reconstitution functionality of the system.
This plan for progressing towards full inauguration has been reviewed today with relevant market participants and has their full support.
