The EQ view: We are supportive of the ambition of the taskforce and agree that digitisation of the industry is long overdue. To that end, we would have liked the report to have contained more detail on how the transition elements of the recommendations would work. There are a few key challenges that we think need to be considered and overcome.
These elements have the potential to delay delivery. We believe, however, that the full digitisation of the UK market could be delivered very quickly if appropriate consideration is given.
Our report is very detailed and we have identified and addressed several of the unintended consequences that could result. Particularly if a cost/benefit analysis is not undertaken by the taskforce. We have picked up on:
- How the taskforce has been able to make a recommendation to mandate all holders to appoint a nominee, given the lack of detail on: transition plans, analysis of where the costs lie, and who would be liable for these.
- The unintended consequences on companies with a global investor base if there is no option for shareholders to hold a position outside of CREST. Particularly, the impact on international employees and multiple listings, and the concerns these investors may face in appointing a nominee. These appear to be at odds with the UK government’s initiative to encourage foreign investment in the UK capital markets.
- The impact on shareholder rights. In particular, the failure of the recommendations to meet the taskforce objectives of ensuring no degradation of the rights for currently certificated shareholders.
We cover many more points in our response that we’d be happy to talk you through. Please ask your client relationship lead for more information.
The Digitisation Taskforce has made it clear that they will be prioritising views from shareholders and issuers. We urge you to engage further with the taskforce to make your views known. It is unclear as to when the final recommendations will be made to the government, although it could be in Q1 of 2024.