The responsibilities of registrars
The responsibilities of registrars, and those issuers who need their services, are rarely explained. However the evolutions of capital markets means registrars – who already play a fundamental role in the security of investments – are going to become even more important in the future.
Historically, many companies were custodians of their own share registers.
With share trading being settled on periods as long as ten days, the role of maintaining an accurate register of ownership could feasibly be conducted on an in-house basis.
However, moves to provide a better post-trade settlement service – including a shortening of the settlement period and in turn reducing settlement risk – required a major rethink of existing processes.
This evolution was driven by a number of factors including competitive pressures from other European exchanges and the Big Bang of 1986. Although that may be remembered as a London-centric event, in 1973 the Irish Stock Exchange merged with other stock exchanges from across Great Britain and Ireland, only regaining its independence again in 1995.
As a result, the Big Bang saw trading in both London and Dublin shift from a paper-based, to an electronic system known as CREST – the Certificateless Registry for Electronic Share Transfer. Shortening the time between trade and settlement meant that counterparty risk could be reduced.
As a consequence of Brexit, from March 2021 Irish issued securities were no longer permitted to be held in CREST and have since migrated to Euroclear as the issuer CSD of Ireland.