European Code of Conduct

On November 7 2006, regulated markets, clearing houses and settlement systems agreed on the European Code of Conduct for clearing and settlement, an important self-regulation tool aimed at contributing to the efficiency and integration of the post-trading sector. The document also intends to provide market participants with the appropriate means to make a conscious and informed choice on which of the post-trading organizations they wish to become members.

London Stock Exchange Group signed the Code of Conduct.

Monte Titoli has always adhered to the transparency principles that inspired the adoption of the Code of Conduct. For this reason, the company stands as one of the main promoters of the Code of Conduct and has indeed extended the scope of the document, covering cash equities and all the other asset classes managed in its system. Monte Titoli remains convinced that the general application of the principles of the document increases efficiency and transparency.

The Code of Conduct covers three areas:

  • Price transparency
  • Access & Interoperability
  • Unbundling and accounting separation

To receive additional information about the Code of Conduct, please contact Monte Titoli at the following address

Compliance with the Code of Conduct

Compliance with the Code of Conduct is monitored by Monitoring Group of the Code of Conduct on Clearing and Settlement (MOG).

The group is chaired by the European Commission and consists of representatives of the European Commission, the European Central Bank and the Committee of European Securities Regulators (CESR). The undersigning organizations of the Code of Conduct periodically report to MOG the outcomes of the checks that they perform on the application of the document.
Checks are performed on two different levels:

  • A General Implementation Report, related to the general application of the principles of the Code of Conduct, contains all information about compliance with the three sections: Price transparency, Access & Interoperability, Unbundling and Accounting Separation. It is addressed to the MOG.
  • A Self Assessment Report analyses compliance with the Service Unbundling and Accounting Separation sections and is addressed to the national authorities (regulators). This comes with a certification document (Assurance Report) prepared by external auditors.

The undersigning organizations of the Code of Conduct release, in a way that ensures broad publicity, a Public Statement communicating the results of the Self Assessment. Monte Titoli’s full compliance is apparent from the Self Assessment. The company has opted for the publication of this document on the web site to allow maximum accessibility.

Price Transparency

The undersigning organizations of the Code of Conduct agreed upon on the introduction of elements of price transparency to allow customers’ comprehension of the services provided and comparison of the prices charged by different providers. Implementation of this section of the Code of Conduct started from December 31 2006.

Monte Titoli has always acknowledged the importance of transparency in the application of prices and has made its fees for services provided to participants available on its website.
Following the signature of the Code of Conduct, the company adopted measures to ensure clearness and comprehensiveness, which has, according to European authorities, made Monte Titoli one of the most transparent CSDs at the European level. The aforementioned measures are as follows:

  • Changes to the price lists through the introduction of an invoice code for each service that the client is provided with. The code is also used in the bills addressed to the clients, so that billing reconcilability is made easier.
  • Example of invoice: Publication of a model to facilitate customers in the comprehension of invoices and to further increase transparency in the application of fees.
  • Discount and Rebates: The company issues information about the adoption of such measures on a yearly basis.
  • Simulation of fees: A simulator for fees was prepared allowing customers to calculate the fees applied to the services they use.
  • Conversion Table: ECSDA members agreed on the contents of a table describing their services to facilitate a comparison between the different providers’ offerings.

Access & Interoperability

The Code of Conduct introduces a right for each post-trading organization to access another organization’s services.
The document also lays down the requirements for the development of interoperability between the systems, subject to the existence of a business case for the institutions involved and to the presence of proper risk management arrangements.

The Access & Interoperability section of the Code of Conduct also intends to boost the implementation of links between trading and post-trading firms providing market participants with the means to effectively enforce access rights acknowledged by the Markets in Financial Instruments Directive (MIFID).
This section of the Code of Conduct states the principles and general criteria applicable to the requests for access and interoperability so that transparency and correctness is granted in the execution of the connected procedures.

Such sections were implemented by June 28th, 2007 through the publication of the document Access and Interoperability Guideline by the organizations involved, with the active contribution of Monte Titoli.

Unbundling & accounting separation

The Service Unbundling and Accounting Separation section shares the global aim of the Code of Conduct to increase the efficiency and transparency of European capital markets.

The undersigning organizations have committed themselves to allow customers to purchase each single service individually, at the relevant applicable price, without compelling them to jointly purchase another service (unbundling) and to inform the competent authorities about the costs and revenues related to each single service (accounting separation).

The structure of the Fees applied to participants for the services that they use demonstrates Monte Titoli’s compliance with the Accounting Separation principles.
In view of the implementation of the Service Unbundling section of the Code of Conduct, ECSDA members agreed on a common understanding of the services, which have to be unbundled according to the Code of Conduct, and reflected the outcomes in a common ECSDA Glossary.

The framework is completed by the 'Terms of reference for auditing compliance with service unbundling and accounting separation and assessing general compliance'. The document reflects the agreement of the undersigning organizations on the monitoring and auditing methods of the general compliance with the Code of Conduct. They have also agreed to apply these methods to monitor the compliance of the specific statements regarding Service Unbundling and Accounting Separation starting from 2008

Monte Titoli’s checks on the implementation of such sections of the Code of Conduct for the fiscal year April 1st, 2008 - March 31st, 2009 revealed the company’s full compliance with the Code of Conduct on both sides of Service Unbundling and Accounting Separation. Information on this matter was provided to Italian authorities. Monte Titoli provides information on the positive results of such checks through the publication of a public statement.