Settlement process - Italy

23.03.2018

Settlement cycles

Stock Exchange trades
All trades executed on Borsa Italiana:T+2
OTC trades
All instruments (except BOT):T+2
BOT:T+2

Settlement flow

Settlement on the Italian market takes place in T2S. Please refer to Settlement process in T2S.

Registration

Corporate bonds, most equities and government securities are in bearer form and no registration is required. Equities (except savings shares) are issued in registered form.

Registration process in Italy, even though rare, sometimes applies to physical or some unlisted securities. The only securities registered in the name of final beneficial owner are the ones held in physical form. Registration exists also in case of increased voting rights, where in order to benefit from provisions stipulated by the issuers, beneficial owners have to be registered at the shareholder Registry of the Issuing company.

Stamp duty

Italian stamp duty taxation is regulated by Legislative Decree no 435 of 21 November 1997, which established the following guidelines:

  • All trades negotiated on the Stock Exchange and on other regulated markets (IDEM, Mercato Retretto, MIF, MTS) are not subject to stamp duty.
  • All trades in securities listed on the regulated markets but negotiated between banks/brokerage houses and non-residents outside the regulated markets (OTC) are not subject to stamp duty.
  • All trades negotiated on non-listed securities by non-residents are not subject to stamp duty.

Penalties (buy-ins)

There is a compulsory buy-in/sell out procedure for CCP guaranteed trades.

Depending on the type of securities as per the details below CC&G activates the buy in procedure

1. Buy-in notice is sent to the parties (ISD = Intended settlement date)

  • on ISD+1 for shares of the Share Section and the Equity Derivatives Section.
  • on ISD+4 for Financial instruments other than shares, that is convertible bonds, warrants, units of close-end funds, units of open-end funds, securitised derivatives financial instruments.
  • on ISD+7 for bonds.

2. The last delivery date is three (3) business days later

  • on ISD+4 for shares of the Share Section and the Equity Derivatives Section.
  • on ISD+7 for Financial instruments other than shares, that is convertible bonds, warrants, units of close-end funds, units of open-end funds, securitised derivatives financial instruments.
  • on ISD+10 for bonds.

3. Buy-in is executed one (1) business day later

  • on ISD+5 for shares of the Share Section and the Equity Derivatives Section.
  • on ISD+8 for Financial instruments other than shares, that is convertible bonds, warrants, units of close-end funds, units of open-end funds, securitised derivatives financial instruments.
  • on ISD+11 for bonds.

As a part of buy-in procedure CC&G gives the buy-in agent the order to buy, to the detriment of the member in fail. The company that manages the settlement services or the collateral management service is required to remove the failed settlement instructions. If the buy-in agent fails to buy the financial instrument in question, the agent can buy it on the following day.

CC&G will inform the parties as follows:

  • Members of fail and in bonis via report on buy-in procedure.
  • The amount in euro to be paid out or received if the countervalue of the non-derivative instruments bought by the buy-in agent is greater or lower.
 

Sell-out procedure

CC&G initiates the sell out procedure for transactions that remain unsettled at EOD on the requested settlement date due to the lack of cash. CC&G first notifies the member in fail. CC&G may postpone the terms of the sell-out, notifying the member in fail.

CC&G appoints a sell-out agent that will sell the securities delivered by the member in bonis.  If the sell-out agent does not succeed to sell the securities on the sell-out execution day, or only partially succeeds, they may sell them on the following trading day before 15:00.

CC&G shall inform the member affected by the failed contractual positions by report with respect to:

  • the status of the sell-out procedure;
  • the amount in euro to be paid to CC&G if the countervalue of the non-derivative financial instruments sold by the buy-in agent is less than that of the original contracts.

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