Notice N50/99

LONDON STOCK EXCHANGE
10 August 1999


For the attention of the
chairman/senior partner/compliance officer,
all member firms                                                  N50/99

STOCK EXCHANGE NOTICE 

Please ensure that the contents of this Notice are brought to the attention of
your Head of Settlement.

TRANSACTION REPORTING - USE OF CREST CROSS BORDER LINKS AND THE REPORTING OF
IRISH SECURITIES

1. Stock Exchange Notice N24/99, issued on 26 April 1999, provided member
firms with transaction reporting guidance relating to the 1999 CREST
enhancements.  The purpose of this Notice is to provide further detailed
guidance on the use of these enhancements for reporting transactions to the
London Stock Exchange ('the Exchange') and to also give guidance on the
transaction reporting of Irish Securities.

Cross Border Links, free of payment

2. The Exchange notified member firms in Notice N24/99 of its intention to
recognise CREST's cross border delivery instruction (AXDN) for the purpose of
transaction reporting.  The following guidance clarifies further the
situations in which the instruction may be used.    

3. Member firms can use the AXDN to transfer Swiss securities to or from
participants in the Swiss SEGA system.  Any payment between the member firm
and SEGA participant is made outside CREST.  Member firms needing to
transaction report any of this business to the Exchange (as determined by
rules 2.1 and 2.2) should adhere to the guidance outlined below.

International Equity Market Securities

  a) A member firm sells Swiss stock to a Swiss counterparty and needs to
report the transaction to the Exchange.  The member firm inputs an AXDN
instruction into CREST completing all of the transaction reporting fields,
including the Trade System of Origin field (TSO) set to 'S'.  Even though no
payment is made through CREST, the trade price and currency fields must be
completed.
 
      
  b) A member firm buys stock from a Swiss counterparty.  Settlement of the
transaction is initiated through SEGA, therefore, the transaction cannot be
marked as having been dealt on Exchange.  If the member firm needs to report
the transaction to the Exchange, a non-settling Own Account Transfer (OAT)
should be used.
       
  UK Equities 
       
  (When the free of payment link is enabled for the transfer of UK equities.)

  c) A member firm sells UK equities to a Swiss counterparty and needs to
report the transaction to the Exchange.  The reporting requirements for the
member firm are the same as those stated in paragraph (a). 

  d) A member firm buys UK equities from a Swiss counterparty and needs to
report the transaction to the Exchange.  In this situation, CREST requires
that the member firm matches the AXDN instruction alleged against them by
their counterparty.  Although the matching AXDN instruction can be entered by
the member firm on trade date, CREST will not match the transaction until
settlement due date, at which point it is forwarded to the Exchange.  Since
this does not meet the transaction reporting deadlines, the Exchange cannot
recognise the member firm's input as a transaction report, therefore, the TSO
field should be left blank.  For transaction reporting purposes, a
non-settling OAT should be submitted on the trade date as required under rule
8.5.

4. When submitting transaction reports using an AXDN, in addition to any
client reference entered in the relevant Hidden Client ID field, a
counterparty reference must also be entered in the opposite Hidden Client ID
field.  Where non-settling OATs are used for transaction reporting purposes,
the guidance contained in the Regulatory Guide to Transaction Reporting
through CREST and the CGO should be followed.  

5. The guidance contained in paragraphs 3(a) to 3(d) above is also valid for
CREST's forthcoming free of payment links to Germany and Sweden, as well as
any future cross border link where the AXDN instruction is used to facilitate
settlement.

Swiss Stock Exchange Link (Delivery Versus Payment)

6.  In order to use this link, member firms also need to be remote members of
the Swiss Stock Exchange and have access to the Swiss payment system (SIC). 
As a remote member of the Swiss Exchange, the member firm would normally
report this business to the Swiss Exchange.  In this situation, therefore, the
member firm would set the TSO field on the delivery instruction (ADVN) to 'H'
for the Swiss Exchange and not mark it as a report to the Exchange.   

Irish Securities

7. The following guidance relates to the completion of the TSO field on
transaction reports for Irish Securities in order to avoid unmatched
transactions in CREST.  This guidance was previously issued in CREST
Operational Faxes 338 and 340.

Trades executed through the electronic Order Book (SETS)

   (a)  All trades should have the TSO field set to 'S' (LSE).


       Trades executed away from the electronic Order Book (SETS)

   (b) Trades between two UK member firms should have the TSO field set to 'S'
       (LSE).

   (c)  Trades between two Irish member firms should have the TSO field set to
        'I' (Irish Exchange).

   (d)  Trades executed between an Irish member firm and a UK member firm

       (i) *Trades executed in Ireland should have the TSO field set to 'I'
           (Irish Exchange).

       (ii) Trades executed in London should have the TSO field set to 'S'
            (LSE).

*  In this instance, the UK member firm (in addition to its matched
instruction) is required to transaction report through CREST using a
non-settling OAT with the TSO field set to 'S'. 


8.  Member firms that have difficulty in complying with the requirements for
reporting transactions in Irish securities should contact Hugh Brown, Market
Regulation department on 0171 797 3663.




A E Scott-Bishop
Head of Regulatory Development

Any queries or further advice on this Notice should be addressed to the Market
Regulation department, telephone [phone] (STX 33310) or 0171 797 1210
(STX 31210).