Cassa di Compensazione e Garanzia S.p.A application to become a recognised overseas clearing house under s288 of the Financial Services and Markets Act 2000

4 March 2009

On 17 December 2008 Cassa di Compensazione e Garanzia S.p.A. (CC&G) applied to the Financial Services Authority (FSA) to become a Recognised Overseas Clearing House in the UK, under section 288 of the Financial Services and Markets Act 2000 (FSMA).

CC&G is owned by Borsa Italiana SpA (86 per cent) Unicredit has a minority stake of 14 per cent. Borsa Italiana SpA is a fully owned subsidiary of London Stock Exchange Group It is supervised in compliance with the Italian Consolidated Financial Law by Bank of Italy and Consob.

CC&G currently acts as clearing house and central counterparty (CCP) for transactions executed on, or through, (a) IDEM Equity Derivatives Market; (b) IDEX Energy Derivatives Market, (c) MTA Cash Equity Market; (d) ETFplus ETF & ETC Cash market; (e) MTS Italian Government Bond Market (Cash and Repo); (f) Euro MTS for Italian Government Bond Cash and Repo Transactions and (g) BrokerTec for Italian Government Bond Cash and Repo Transactions. Markets (a) to (d) are managed by Borsa Italiana; markets (e) and (f) are managed respectively by MTS SpA and EuroMTS Limited (which is wholly owned by MTS S.p.A). MTS S.p.A is part of the LSE Group. Market (g) is managed by ICAP.

It also plans to provide Central Counterparty services for Baikal, the pan-European non-display MTF owned by LSE.

CC&G currently falls under the UK overseas person exclusion regime. Clearing services are typically provided in the UK by either Recognised Clearing Houses or Recognised Overseas Clearing Houses. CC&G is in the process for applying for Recognised Overseas Clearing House Status with a view to Baikal.

Under section 303(3) of FSMA 2000, the Office of Fair Trading (OFT) must report to H.M. Treasury, the FSA and the Competition Commission on whether any of the regulatory provisions or combination of regulatory provisions of an applicant for recognition have a significantly adverse effect on competition. When assessing competition in this context, the OFT is likely to pay particular attention to the applicant's rules on participation criteria, its arrangements with those exchanges for which it clears trades and its arrangements for the settlement of trades.

The OFT is currently conducting its competition assessment of CC&G's application. As part of this process, the OFT invites comments from any parties that have an interest in the application. A current copy of CC&G's rules have been posted on the CC&G website.

If you wish to respond to this consultation please contact us using the email below. All that is required is a brief indication of your intention to respond (rather than a full response) we will then write to you:

Telephone: +44 (020) 7211 8283
Email: Robleh.ali@oft.gsi.gov.uk

The consultation period lasts six weeks in total. In order for the OFT to follow up responses, if relevant, the deadline for answers to this response is 17 March 2009.

The remaining four weeks of the consultation period will be used to follow up issues raised, if any. The consultation period will end on 9 April 2009.

Please note that the OFT may choose to refer to comments received in response to this consultation in future publications. If you consider any document or information that you provide to the OFT to be confidential, that document or information should be placed in a separate annexe and marked 'confidential information' at the time that it is provided to us. At the same time, you should also provide a written explanation as to why the document or information should be treated as confidential. All information received is subject to Part 9 of the Enterprise Act 2002.

If you are replying by email, these provisions override any standard confidentiality disclaimer that is generated by your organisation's IT system.

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