It might be tempting to think of this as further evidence of the way regulation and bureaucracy is swamping the City and commerce.But it would be wrong to do so. It is all very well and jolly nice to be the recipient of a selective leak, whether you are a newspaper or a dealer, but it doesn't make for fair and efficient markets As for manipulating the press, good luck to him Lord Stevens certainly succeeded in outmanoeuvring us. We had a scoop and he deprived us of it.Crest risks a rebellion over software problemsIt is hard to exaggerate the anxious concern in the City over the software teething problems of Crest, the City's new share settlement system. Crest was set up by the Bank of England to replace the Stock Exchange's ill- fated Taurus clearing system. Now an independent company, Crest announced last week that it was delaying the entry of a number of FTSE 100 companies to early next year to give a breathing space while the problems are being sorted out.Crest's board is to meet at the end of the month to have another look at progress. One of the options is to reduce further the rate at which companies transfer to the system. That would delay full operation beyond the target date of next April.
Some firms believe there is now a real danger of the system failing, for example if there is heavy trading after the Halifax is floated next year, unless there is a radical and complete overhaul of the software. If there were the remotest prospect of that, the Securities and Investments Board would have to intervene, because of the threat to the health of securities firms of any serious settlement delay.Some firms go further, and say that delaying a few more companies' entry into Crest is not enough. Instead they believe the commissioning programme should be suspended altogether while Crest is sorted out. That means the winding down of the old Talisman settlement system would have to be put on hold, to avoid total chaos.
The loss of face for the City, and especially for the Bank, would be hard to bear so soon after the Taurus fiasco.Whether all this is exaggeration or not, it is nonetheless symptomatic of extreme, widespread and very real concern. Crest is not yet operating at more than 25 per cent of capacity. If it is having severe software problems now, what's it going to be like when it runs at full steam? Claims that it knows how to put the problems right are greeted with justified scepticism.One of the problems is that Crest has simply not given customers enough information to convince them that the software can be put right. Unless Crest can reassure customers soon, it will face open rebellion from the brokers, companies, registrars and investors who the system is set up to serve.. The Stock Exchange is planning to tighten rules on the disclosure of material changes to the role of company directors, after confirmation yesterday that Lord Stevens, the chairman of United News & Media, will work only part-time from next spring. News of Lord Stevens' plans, revealed in an interview in the Financial Times, was the subject of Stock Exchange inquiries yesterday into whether the company should have issued a formal statement about the chairman's diminished managerial role. United's shares rose 11p on the news, receding later in the day to close at 685p, up 7.5p. According to a senior regulator, United would have been obliged to make a statement to the market had a new rule, to be implemented on Monday, been in effect this week.The rule will state that "any important change in the functions or executive responsibilities of a director" must be notified as soon as it is decided.Changes to Lord Steven's job will result in a sharp reduction in his pounds 510,000 annual salary and generous expense account.Lord Hollick, the chief executive, was believed to have been seeking such an outcome for some months.Up until now United has consistently refused to comment publicly on the matter, even going so far as to deny the plans outright in off-the-record comments recorded by the Independent just prior to the publication of the Financial Times interview.The Stock Exchange formally gave consideration yesterday to whether the leaking of the news constituted partial disclosure, which might have been against the rules.Confirmation that Lord Stevens will work only part-time from May is believed to be a first step toward his eventual resignation from the company.Sources close to United claimed last night that Lord Stevens had a "lavish lifestyle and a generous expense account".One source said: "David Stevens knew it was time the gravy train came to an end.
He was one of the last true Fleet Street spenders."United declined to comment on the level of Lord Stevens' expenses, or on suggestions that he would be paid just pounds 150,000 a year in his part- time position. Information on his new salary would only be publicly available when the next annual report was published, a company spokesman said.A source close to the company said that "a drop in his remuneration would be only natural in line with his changed duties".Lord Hollick is widely viewed as the key architect of United's strategy, while Lord Stevens' role has been increasingly marginal.Under Lord Hollick's leadership, United has recently expanded further in the exhibitions sector, with its pounds 592m purchase of Blenheim, and taken a 20 per cent stake in HTV, the ITV company, in a step most observers believe will lead to a full bid."The fact that the share price rose on this news is proof the market sides more with Lord Hollick than with Lord Stevens," one leading media analyst said yesterday.. The long-awaited takeover bid for East Midlands Electricity finally materialised yesterday when the regional electricity firm recommended a pounds 1.3bn cash offer from Dominion Resources, the US utility company. Sir Nigel Rudd, East Midlands chairman, urged shareholders to accept the offer, arguing that it represented fair value for the company. But there were growing fears in the markets that this latest bid, and last month's pounds 766m offer from US-owned CE Electric for Northern Electric, would be referred to the Monopolies and Mergers Commission."This dramatically increases the chances of an MMC reference," a leading electricity analyst said last night.The fears kept East Midlands shares well below the 670p offer price The shares closed 11.5p higher at 622.5p Shares in Northern Electric slipped a further 15p to 593.5p. If both bids go through, it would bring to five the number of regional electricity suppliers owned by American companies.In addition, it would leave just three of the 12 privatised regional electricity companies still in independent hands with separate stock market listings: London, Yorkshire and Southern. One theory is that the regulator, Professor Stephen Littlechild, will ask for the bids to be blocked because he would have too few quoted companies to use to make share price comparisons.
Thomas Capps, Dominion's chairman, and Norman Askew, chief executive of East Midlands, spoke to Professor Littlechild on the phone yesterday. However Mr Capps had earlier insisted he saw no reason his bid should be referred to the MMC."We see no reason for it and we don't think it will. There's plenty of data out there," Mr Capps said.Dominion directors, who will visit East Midlands' Nottingham offices for the first time today, claimed to have bold ambitions for the group. They are likely to encourage the planned expansion into domestic gas and electricity in the rest of the UK when competition arrives in 1998.Mr Askew disclosed that East Midlands would be selling to homes in parts of the south of England in competition trials in the new year. Mr Capps said the UK was further ahead by five or six years in introducing utility competition: "The UK is a good learning laboratory for us."In addition, East Midlands could launch a range of mortgage and consumer credit products, which Dominion sells in the US. Linwood Robertson, the group's senior vice-president, claimed Dominion was one of the largest providers of new mortgages in the US.
