About CC&G S.p.A.

CC&G (Cassa di Compensazione e Garanzia) is part of the London Stock Exchange Group.  

CC&G has expanded the Central Counterparty (CCP) services to cover a broad range of trading venues and asset classes: shares, warrants and convertible bonds listed on MTA market, ETFs and ETCs listed on ETFPlus, stock, index futures and options listed on IDEM Equity as well as energy futures listed on IDEX, futures on durum wheat on AGREX, closed-end funds, investment companies and real estate investment companies listed on MIV, Italian Government bonds listed on MTS, EuroMTS, ICAP BrokerTec and Repo e-MID, Italian Government bonds and corporate bonds listed on MOT, EuroTLX and Hi-MTF.

CC&G also provides a guarantee service on the NewMIC interbank collateralised deposits market. CC&G eliminates counterparty risk acting as buyer toward the seller and vice versa, becoming the guarantor of the final settlement of the contracts.  

CC&G’s activities are under the supervision of Banca d’Italia and Consob, who approve its regulations.

CC&G’s financial safeguarding system is based on three levels of protection:

1. Clearing Membership
2. Margin system
3. Additional resources

Membership requirements

Membership is CC&G’s first line level of protection, establishing which parties can be admitted to the system. It is possible to join CC&G as a Clearing Member, either General or Individual (becoming a counterparty of CC&G), or as a Non-Clearing Member (becoming the counterparty of a General Clearing Member). Clearing Members must meet minimum Supervisory Capital requirements. Each Member must also have an organisational structure and technological and information technology systems that guarantee the ordered, continuous, and efficient management of the activities and relations foreseen by CC&G Rules.

Margin system

The Margining system is a fundamental risk management tool adopted by CC&G.Members must deposit sufficient guarantees to cover the theoretical costs of liquidation, which CC&G would incur in the event of a Member’s Default, in order to close the open positions in the worst reasonably possible market scenario. All Clearing Members are therefore required to pay margins on all open positions. Margins are calculated using the TIMS methodology (Theoretical Intermarket Margins System) for the IDEM and Share BIt markets, and MVP (Method for Portfolio Valuation) for the MTS and BrokerTec markets. These are efficient, reliable and accurate systems for calculating margins. TIMS is capable of recognizing the overall risk in a portfolio and allows for the offsetting of risk between closely correlated products, as well as allowing for cross-margining between derivatives and equity cash products in the portfolio. CC&G has also introduced additional protection, which functions alongside the margins system, consisting of the Default Fund to cover that portion of the risk, generated by extreme variations in market conditions, that is not guaranteed by the margin system.

Asset and financial resources

CC&G’s net assets at 31 December 2014 stood at 147.2 million Euro. CC&G also has adequate credit lines in place with the main Italian banks, to meet the cash requirements related to the settlement phase (T2S and ICSD).

Default procedure

In case of Default by a Clearing Member, CC&G uses a set of financial resources to cover losses:

  • The initial margin of the defaulting Member. 
  • The contribution to the related Default Fund of the defaulting Member.
  • CC&G shareholders’ equity up to 5 Mln Euro. 
  • The remaining related Default Fund, on the basis of a “loss sharing” principle. 
  • The remaining CC&G shareholders’ equity. 

Advantages of membership of CC&G

  • Elimination of the risk of counterparty default.
  • Netting of transactions with CC&G into an single balance for own/client accounts.
  • The maximization of transactions settled on value date, by virtue of the application of partial settlement. 
  • Automatic activation of the buy-in and sell-out mechanism by CC&G.
  • Lower tied-up capital required by the regulatory authority.
  • Trading anonymity.