CC&G is the LSEG Italian-based provider of risk management, open access clearing and CCP services to 12 markets, including Borsa Italiana’s markets, NEX Group’s BrokerTec and Hi-MTF.
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 provides services across a diverse range of asset classes including equities, ETFs, derivatives, close-end funds, fixed income and commodity derivatives. CC&G has an interoperability agreement with LCH S.A. for European Bond and Repo markets.
The full list of markets and financial instruments covered is below:
CC&G has 83 Financial Institutions as at end of 2017 from 10 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 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.
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):