CC&G is the LSEG Italian-based provider of risk management, open access clearing and CCP services to 18 markets, including Borsa Italiana’s markets, NEX Group’s BrokerTec and Hi-MTF.
CC&G covers a broad range of trading venues and asset classes (please refer to the below): shares, warrants and convertible bonds traded on MTA; ETFs and ETCs traded on EFTPlus; stock, index futures and options, energy futures and futures on durum wheat traded on IDEM (Segments IDEM, IDEX and AGREX); closed-end funds; investment companies and real estate investment companies traded on MIV; Government bonds traded on MTS cash EBM and Nex BrokerTec, Repo traded on MTS Repo, e-MID and Nex BrokerTec; Government bonds and corporate bonds traded on MOT (Segment Domestic MOT, Euro MOT and Extra MOT), EuroTLX and Hi-MTF; Triparty Repo traded on MTS Repo and e-MID Repo.
CC&G was launched in 1992 and developed to cover Italian financial instruments with the following track record:
CC&G eliminates counterparty risk by sitting in the middle of a trade as the buyer to every seller and the seller to every buyer, becoming the guarantor for final settlement of the contracts.
CC&G has 145 Member as at end of 2018 from 7 European countries. The break down of the Clients is reported below:
CC&G is part of the London Stock Exchange: it is controlled by Borsa Italiana S.p.A. and is under the direction and coordination activity of London Stock Exchange Group Holdings Italia S.p.A..
CC&G is incorporated in Italy under the Supervision of Bank of Italy and it is authorized to offer services and activities in accordance with European Market Infrastructure Regulation (EMIR).
Robust Risk management Scheme
In a fast changing and intense competitive and regulatory environment, CC&G is at the fore front in offering a robust and efficient risk management system and to protect its Clients with asset segregation and state of the art margining methodology.
In particular CC&G’s financial safeguarding system is based on the following 3 levels of protection:
1. Membership requirements
Clearing Members must meet minimum Supervisory Capital requirements in accordance with their role (ICM or GCM) and the segment they want to . Each Member must have an organisational structure and IT systems that guarantee the ordered, continuous, and efficient management of the activities and relations foreseen by CC&G Rules.
2. Margin system
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 MARS methodology (Margining 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. MARS 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.
3. Default procedure
The procedure envisages the allocation of the losses and costs sustained by CC&G following the default of a Clearing Member according the below hierarchy (i.e. "default waterfall") set out in CC&G’s Rulebook Article B.6.2.3):