Euroclear's single settlement engine, the European depository's flagship platform that integrates its five domestic and cross-border units, is facing teething problems that have delayed the introduction of a system for the gilts market.

The snags have become apparent since Crest, the UK and Irish settlement platform and the largest domestic securities depository in the Euroclear group, was integrated with the engine in August. According to CrestCo, the central securities depository for the UK and Irish equities market which operates Crest, the platform has suffered from blocked messages, systems instability and slow settlement. These have resulted in failures and extended delivery time. The problems slowed settlement to what Crest called "unacceptable speeds". The problems have irked market participants and delayed the launch of an LCH.Clearnet product for the UK government bond market. The London-based clearer had been scheduled to launch the service for the sterling repo markets on October 23, but told members last week this would be delayed. It said: "The operational difficulties experienced by CrestCo in the aftermath of their implementation of the single settlement engine are such that we feel it would be inappropriate to introduce sterling GC. We have therefore decided, with CrestCo, to postpone the implementation of sterling GC until the issues with CrestCo's production environment are resolved." The snags are the latest embarrassment to hit the single settlement project, originally hailed as a revolution for post-trade processing in European markets and likely to deliver up to €300m of savings to users. Euroclear was due to deliver the first phase last year but it did not go live until May. LCH.Clearnet and Euroclear declined to comment.