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current rules in each market and not create a situation where shareholders could use T2S to ‘hide’ from an issuer. Whilst it is too early to suggest how the working group might conclude, initial debate focused around both transactional data (i.e. real-time data that would allow all issuers the ability to update their registers thus preserving the Irish and UK current practice) and underlying holder information. E.g. could T2S be used as a transactional hub to facilitate a European equivalent of section 81 in Ireland and section 793 in the UK?

The timing for such a proposal is opportune given the potential of a European Securities Law directive (see below). The next two meetings of the working group will take place in May and June and an update will be provided in the next issue of Registration Matters and on our website.

Corporate actions The registrar community is also very concerned about how corporate actions will work in T2S given the information that we have seen from the ECB. As it has been defined so far, it does not appear to satisfy the requirements of the Irish or UK markets and would lead to a reduction in efficient processing. As a community we have written to the ECB’s T2S team with our concerns but we have yet to hear back from them.

Sterling and T2S The ECB and the Bank of England continue their discussions about whether sterling should be a part of T2S but we have not yet heard a conclusion. Given the continued discussions many in the market had concluded that sterling would not be part of T2S on day one. There are, however, rumours that T2S may be delayed from its original target date which may impact this assumption. The Financial Times reported that the system may be delayed for 12 months, meaning that it will now go live in 2014. The ECB have noted that this is not official but they have also publicly commented that, now they have finalised their requirements, they are reviewing their timetable and original assumptions (around volumes etc) and that suggests that we should not be too surprised if news of the delay is confirmed officially in the coming months.

EUROCLEAR UPDATE

In the previous edition of Registration Matterswe noted how dividends might change in relation to the Single Platform and promised to update readers on changes relating to corporate actions and company meetings. Since then two important changes have taken place. The first is the market drive to remove paper from the dividend process (see pages 20-23) and the second is Euroclear’s announcement that the Single Platform has been delayed again.

Euroclear have stated that they are putting their delivery timetable on hold until such time as they have reviewed the project and can provide certainty of delivery.

As such, we have also put our development on hold pending further announcements. This is disappointing as Capita was far advanced in development of the functions needed for the Single Platform.

The ICSA registrars’ group has written to the CEO of the Euroclear Group expressing our concerns and setting out the issues we believe need to be resolved prior to further work taking place. The main themes in the letter cover: » Cost escalation (the increasing costs borne by registrars and their clients)

» Timetable and certainty (our views on the time needed to restart the project)

» Technical (the exact functions that will be delivered), and

» Project management and communication (how best to ensure the project is delivered).

Euroclear has acknowledged the letter but at the time of publication we await the final response. However, there has been open and helpful discussions with Euroclear UK and Ireland where some of the issues in the letter have been resolved. For example, it has been agreed that Euroclear will give the market at least 18 months’ notice prior to testing so as to give all market participants time to restart their projects. Euroclear Group will have a new CEO from early April and we look forward to working

with him and his team on the matters raised by the issuer and issuer agent community.

Although no formal announcement has been made we do not expect the Single Platform to go live before the latter end of 2012 at the earliest. Given this development we have decided to put on hold the articles explaining the changes to corporate action and company meeting processing until there is more certainty regarding the delivery date.

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Please contact your relationship manager if you would like to receive a copy of the ICSA letter to Euroclear.

SPRING 2010

Dematerialisation Dematerialisation is back on the agenda following the recent budget. The Government has been asked by members of industry to look at the removal of the requirement for paper share certificates and share transfer forms in order to transfer shares. A working party (who will report to the Financial Services Secretary to the Treasury) is to be established to clarify the benefits of this proposal for shareholders and others who will be affected.

EU directives One major new initiative is that the European Commission is proposing a directive on securities law across Europe. This is currently at the ‘expert discussion’ stage although the draft directive is expected to be issued later this year. David Cooper, Associate Director, and Courtney Adams, In-House Legal Adviser, have already taken part in meetings at HM Treasury and the Financial Services Authority about this and we will keep you up to date with any developments as and when they happen. The proposal is expected to address four issues: » the legal framework of holding securities held in nominee accounts ensuring consistency across the EU

» the legal framework governing the exercise of investors’ rights flowing from securities through a ‘chain’ of intermediaries, in particular in cross-border situations

» the establishment of free, EU-wide choice of issuers regarding the initial entry of their securities in the relevant holding structures, in particular central securities depositories, and

» the submission of any activity of safekeeping and administration of securities under an appropriate supervisory regime. Further details of the proposals can be found in the Internal Market section of the EU website. 

Michael Kempe is Chief Development Officer of Capita Registrars.

UK representatives on the group are Susan Henderson from Smith and Nephew (see page 31), Chris Prior- Willard from Bank of New York and Michael Kempe.

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T2S could either be a major barrier to shareholder visibility or an opportunity to help create a European

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