LONDON (Reuters) - The Bank of England said on Friday it had commenced supervisory action against Euroclear UK and Ireland over an outage last September of its CREST financial markets settlement system.
Settlement forms the crucial, underlying plumbing of financial markets for the orderly completion of a stock or bond trade.
The outage caused the BoE to delay one of its regular purchases of British government bonds under quantitative easing.
"In light of the incident's serious and disruptive nature, and in recognising the importance of ensuring implementation of these remedial actions, the Bank has issued a direction under section 191 of the Banking Act 2009 requiring EUI to implement the recommendations of the independent reviewer," the BoE said in a statement.
The BoE said it was using its powers to require Euroclear to appoint an outside person to "assess the implementation of the recommendations" and report back to the Bank in the first half of next year.
Brussels-based Euroclear said it had kept the regulator, clients and stakeholders informed of the review process and the resulting recommendations, which are now being implemented.
"Euroclear UK & Ireland is fully committed to implementing these changes and in fact a number of the recommendations have already been executed," Euroclear said.
Euroclear's CREST system suffered technical problems on Friday Sept. 11, with some additional problems on the following Monday when full settlement service resumed later that afternoon.
The BoE said its action does not "imply the breach of a regulatory requirement and does not constitute enforcement action".