Northern Rock Settlement Arrangements

1. Introduction

As detailed in Euroclear UK and Ireland Operational Bulletin 1420 published on 22 February 2008, settlement of Northern Rock plc Ordinary 25 pence shares has been disabled. 

This circular informs members of the arrangements that LCH.Clearnet Ltd will put in place in order to settle any outstanding Central Counterparty (CCP) transactions that remain unsettled in CREST.

It is important to note that these settlement arrangements only apply to members who have unsettled transactions with LCH01 or LCH02 participants in CREST.

2. Settlement Arrangements

The Northern Rock plc Compensation Scheme Order 2008 provides that there will be a payment of compensation determined by the appointed Valuer and paid by HM Treasury.   However, the precise timing and amount of compensation has yet to be determined. 

Once the exact compensation amount and timings become clear, LCH.Clearnet Ltd will cash settle any outstanding CCP transactions in CREST using that amount as the price at which to Invoice Back.

This process will involve LCH.Clearnet Ltd calculating the total compensation to be passed from selling members to buying members and the total consideration values (of the underlying transactions) to be passed from buying members to selling members.  The ‘net’ cash amount will then be credited/debited to/from the relevant member through CREST. 

LCH.Clearnet Ltd will contact affected members with further details of the ‘Invoicing Back’ procedure once the compensation amount has been announced.

3. Further Information

If you require any further information, please contact the LCH.Clearnet Ltd Business Operations Department on 020 7426 7601 or e-mail

equityclearbusinessops@lchclearnet.com

Information on Northern Rock is also available on the following websites:

www.euroclear.co.uk
www.hm-treasury.gov.uk

Yours faithfully

Mike Jones
Senior Manager – Cash Equities
LCH.Clearnet Ltd