Dear Stephen

To a certain extent you answer your own question: much of the stockbroker function is becoming unnecessary already, as increasing numbers of shareholders are able to trade online.

In theory, it should be possible for shareholders with personal membership of CREST (that was NOT tied to a specific stockbroker) to trade directly on electronic trading systems, including both SETS and its competitors without having even an electronic stockbroker such as Etrade acting as an intermediary.

In practice, we are moving towards a significant reduction in the cost of trading as the hands-on stockbroker effort involved (and personal participation in the process) becomes less.

Unfortunately, this process was largely subverted, at least temporarily, when CREST was developed with all dematerialised shareholdings (either in nominee accounts or personal membership) tied to stockbrokers.

That has to be addressed in due course.

Toby

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CREST is a system for electronic shareholding. This topic is discussed in a recent report of The Association of Private Client Investment Managers and Stockbrokers (APCIMS) Report of the APCIMS Electronic Shareholding Working Party: a Consultation Document. SETS is an electronic dealing system.

Toby Keynes is saying that if private shareholders could have membership of CREST, without requiring a sponsoring broker, and simultaneously access to SETS, they would then not require a stockbroker for dealing on the stock market.