Changes to CCG Instruction Rules

Effective, 5 August 2004, Cassa di Compensazione e Garanzia (CCG) has announced some changes to the instruction rules for CCP trades, as follows:

1. A new Default Fund for government bonds traded on the MTS market - Before the changes, the use of CCG was mandatory for equities traded on the MTA and NM markets as well as derivatives and voluntary for government bonds executed on the MTS market. In order to harmonise market protection schemes across the markets covered by CCG, it has launched a new Default Fund for the MTS market, in addition to the existing Default Fund for the Share BIT and Derivatives Sections.

2. Buy-in rules for failed trades - Under the existing rules of the RTGS cycle, an innocent party's settlement instructions may reach the last validity date with no corresponding failing party's settlement instruction being in place. In this case, CCG cannot initiate the buy-in and must inform the relevant party of any new delayed terms and methodologies of delivery, which are set. Any successful buy-ins will be allocated to the smallest receipients first.

3. Sell-out procedures - Before the new rules were introduced, the sell-out was executed at 10.00am on the day after the failed cash delivery. Under the new procedures, the sell-out is executed at the end of the RTGS cycle on the day of the failed cash delivery.