Financial Sector Assessment Program (FSAP) follow-up
CPSS-IOSCO Assessments of Euroclear UK & Ireland Limited (formerly CRESTCo) and LCH.Clearnet Limited

In 2003, the International Monetary Fund (IMF) published its assessment of the United Kingdom’s financial sector. These findings included an assessment of Euroclear UK & Ireland Limited (formerly CRESTCo, operator of CREST – the UK’s securities settlement system) and LCH.Clearnet Limited (LCH - the UK’s main central counterparty) against the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) Recommendations for Securities Settlement Systems (which include recommendations regarding central counterparties).

To follow-up progress in compliance with the IMF’s recommendations, the Bank of England (Bank) and the Financial Services Authority (FSA) have carried out a further assessment of Euroclear UK & Ireland Limited (formerly CRESTCo) against the CPSS-IOSCO Recommendations for Securities Settlement Systems. In addition, the Bank and the FSA have jointly assessed LCH against the CPSS-IOSCO Recommendations for Central Counterparties, which were developed after the IMF assessment had been carried out.

The CPSS-IOSCO Recommendations for Securities Settlement Systems and for Central Counterparties set out the types and level of risk mitigation that should be exhibited by safe and efficient infrastructure providers. They provide a benchmark against which to consider the major types of risk that such organisations are likely to face.

Euroclear UK & Ireland Limited (formerly CRESTCo) fully observes all applicable recommendations and LCH fully observes all but one recommendation. The Bank and the FSA do not, therefore, currently plan to update these assessments regularly, but will review this decision in the light of any significant changes to either the recommendations or the operations of Euroclear UK & Ireland Limited (formerly CRESTCo) or LCH.

These assessments are not full supervisory or oversight assessments and should not be considered as such, as they do not cover a number of areas that fall within the scope of regulation and oversight in the UK. We recommend that these assessments be read in conjunction with the applicable CPSS-IOSCO recommendations.