European Code of Conduct

On November 7, 2006 regulated markets, clearing houses and settlement systems have formally agreed to the European Code of Conduct for Clearing and Settlement. The Code of Conduct represents a significant achievement of the self-regulation activity undertaken by the financial industry and is the outcome of the financial institutions’ effort towards enhanced transparency and the development of an integrated European financial market.

The Borsa Italiana Group has actively participated to the drafting of the Code and is among the main promoters of the project. Indeed, Borsa Italiana SpA, Cassa di Compensazione e Garanzia SpA and Monte Titoli SpA have all individually signed the Code of Conduct.

The Code identifies a set of measures that will first make easier for market participants to choose the post-trading organisations of which they intend to become members and, thanks to the implementation of the systems interoperability, will give them the opportunity to focus their operational activity exclusively towards a single organisation.

The measures set by the Code will give an important contribution in enhancing price transparency for regulated markets, clearing houses and settlement systems, by providing market participants with the possibility to take informed decisions.

Moreover, in consistency with MiFID provisions, the Code introduces a right of access for each single post-trading organisation to the services offered by other post-trading organisations.

The Code gives the users the possibility to access each single service provided by the various organisations and, to this end, such organisations must have accounting separation of costs and revenues for each service.

Finally, given for granted the voluntary nature of the Code, monitoring mechanisms have also been foreseen concerning the compliance with the commitments undertaken.

More in detail and within the deadlines stated, the Code intends to:

• ensure price transparency of the services provided and, at the same time, foster price comparability, by December 31, 2006. In particular, the signatories of the Code are committed to make public on their websites the list of services offered and their respective prices, including potential discount and rebates schemes, together with practical examples (transparency of prices and services);
• define the conditions upon which it will be possible to grant access and interoperability among the different systems of trading, clearing and settlement, by June 30, 2007. The signatories are committed to allow the establishment of links ensuring interoperability, subject to the existence of a “business case” for the institutions involved and to the presence of proper risks management arrangements (access and interoperability);
• strengthen further the transparency and efficiency of the services provided, by granting separate access to each service (i.e. unbundling) and giving evidence of the costs-revenues relationship for each service, by January 1, 2008. More specifically, the signatories are committed to allow their clients to buy separately each service at the price applicable to that single service and to inform the competent authority about the costs and revenues related to each single service (unbundling of services and accounting separation).

On June 28, 2007, as established by the Code of Conduct, Access and Interoperability Guideline has been agreed and published (Access and Interoperability Guideline). The Guideline contains detailed definitions and principles which tradings platforms, central counterparties and settlement systems have agreed to apply to the way in which they will seek access to, and interoperability with, each other and it would offer market participants the freedom to choose their preferred clearing and settlement provider, enhancing cross border activities and reducing their cost.

Borsa Italiana SpA, Cassa di Compensazione e Garanzia SpA and Monte Titoli SpA have actively participated to the drafting of the Guideline and have all individually acknowledged the outcome.

 

Compliance with the Code of Conduct

With the aim to analysing the compliance with the Service Unbundling and Accounting Separation a Self-assessment is issued. The document is adressed to the national authorities (regulators). This comes alongside with a certification document (Assurance Report) prepared by external auditors. Borsa Italiana's full compliance has emerged from the Self-assessment. With the purpose to disclose the results of the Self-assessment, in a way that ensure broad publicity, Borsa Italiana has opted for the publication of the Part III - Central Conclusion of the Self-assessment Report on the web site to allow maximum accessability.

Self-assessment Report - Part III - Central Conclusion (file pdf - 36 KB)