News Release
Inaugurating the Upgrade of the Central Gilts Office Start Date for Gilt Strips Market
03 October 1997
The upgrade of the Central Gilts Office (CGO), which provides the electronic settlement system for gilts, will be inaugurated on 10 November 1997. This follows a successful dress rehearsal of the upgrade conducted over the weekend of 27 and 28 September. Tests in August and September have demonstrated the feasibility of cutting over from the existing to the upgraded system over a two day weekend. This date has been chosen to avoid too great a proximity to the introduction of the Stock Exchange Trading System (SETS) scheduled for 20 October and because the weekend of 1 and 2 November immediately follows a month end.
The Bank's project team is satisfied that the criteria for a successful implementation of the upgrade have now been met. This view is shared by the relevant market participants and was confirmed this morning at a meeting with them which reviewed the relevant acceptance criteria and agreed that they had been met.
The latest phase of trialling has demonstrated the correct functioning of the gilt stripping functionality of the upgraded system. The planned start date of the official gilt strips facility is 8 December, with trading onawhen-issued basis in strips being permitted from 1 December.
There are a number of key benefits to the upgraded system.
It will:
- Facilitate stripping and reconstitution of gilts.
- Allow back offices to process repos more efficiently, helping them to settle a greater volume of trades as the market continues to develop.
- Effect automatic reporting to regulatory authorities and the Stock Exchange, reducing back office work for all gilt deals settling through CGO.
- Offer more flexible membership and account management arrangements. It is hoped that this will result in a widening of membership and increase the scope for investors, to hold gilts in dematerialised form, thus speeding up settlement and reducing its costs by reducing the volume of paper in the settlement process.
- Allow better control by settlement banks of their exposure to the CGO members for which they act, reducing any residual risk in the ssettlement process.
CREST software is being used in the CGO upgrade, and in following this approach, the Bank and CRESTCo are working to ensure that the option of merging the two settlement systems is kept open.
