Exclusive: Euroclear expands Crest functionality in private markets in bid to widen investor pool
Euroclear has expanded its Crest functionality in private markets in a bid to open them up to a wider pool of investors, CityAM can reveal.
The securities depository system, most frequently used for the settling of stocks and bonds in public markets, will have greater escrow options to address the needs of private companies who want to offer liquidity to their investors but retain a greater degree of control over who can access their shares.
Crest’s escrow functionality will give businesses ownership over securities while granting control over their transfer to an escrow agent acting on behalf of the issuer. That will allow them to determine who can hold shares in their stock and the size of the stake they can hold, a power unavailable in public markets other than in special circumstances such as takeover offers.
The functionality opens the door to more participation into private markets by institutional investors, many of whom are restricted to transacting through systems like Crest.
Private markets ‘very much in the spotlight’
The move is the latest sign of Euroclear’s increasing involvement in private markets despite the overwhelming majority of its activity servicing public exchanges, in a nod to growing investor appetite for private assets, boosted by the government’s new Pisces private market framework.
Euroclear has already begun rolling out the system with unlisted assets venue JP Jenkins, with the opportunity for other venues to follow suit.
Andrew Foster, Director at JP Jenkins, said: “Private markets are very much in the spotlight right now, seeing material growth and leaving companies and investors alike eager to better understand how this functionality can benefit them.
“The work we have done with Euroclear provides a hugely valuable level of control for private companies who want broader trading in their stock but still need some degree of control when it comes to beneficial ownership. Collaborations like this will play a key role in ensuring London remains at the forefront of financial markets globally.”
CityAM’s parent company, THG Ingenuity, is an issuer member of JP Jenkins and has adopted the functionality.