Euroclear and Crest, two companies providing settlement systems for securities transactions, have agreed to merge with expected cost savings to be passed on to customers in the cross-border settlement market.

The new group will provide settlement services for markets representing 60 per cent of the Eurotop 300 and 52 per cent of the domestic fixed-income securities in Europe.

Cross-border settlement tariffs for trades in Belgian, Dutch, French, Irish and UK securities will be reduced over time from an average of €15 to domestic levels, currently around 50 cents, according to the new group.

Under its proposed business model, customers will be able to choose whether they hold and transfer securities in these five markets under each country's national legislation or within an international service provided under Belgian law.

"In the European market, people have been demanding better access and cheaper rates at domestic prices," said Mr David Wyatt, development director for Crest. "This merger is about delivering customer value."

Euroclear and Crest settled over 120 million transactions with a value of over €225 trillion between them in 2001.

Transactions in Irish Government bonds are settled through the Euroclear system, while Crest is involved in the UK and Irish equities market.

Crest needs the approval of three-quarters of its shareholders to proceed with the merger, which will see Crest shareholders receive a 19 per cent share in Euroclear. Irish user shareholders in Crest include the Irish Stock Exchange, Bank of Ireland and AIB.

The two companies expect the merger to be completed by mid-September.