Thomas Murray Issues a CSD Rating for Monte Titoli

London - Thomas Murray, the specialist custody rating, risk management and research firm is pleased to announce the issue of a Public Depository Rating to Monte Titoli S.p.A.. Monte Titoli has been awarded a Public CSD rating of ‘AA', being a rating representing very low risk.

Monte Titoli is the sole depository for all eligible securities in Italy. Monte Titoli has a sound ownership structure being part of the Borsa Italiana Group vertical silo which also includes Borsa Italiana and Cassa di Compensazione e Garanzia (CC&G). Monte Titoli has relationships with a number of other depositories, including OeKB, Euroclear France, Clearstream Banking Frankfurt AG, Euroclear Nederland, Iberclear, SIS SegaIntersettle, and the ICSDs Euroclear Bank and Clearstream Banking Luxembourg SA.

Monte Titoli is run on sound operating principles and good control measures are in place. Monte Titoli is regulated by CONSOB and the Banca d'Italia as well as the Collegio Sindacale (Statutory Auditor). Internally it adopts good operational control practices, driven by detailed Risk Maps set by senior management and Audit Plans established by the Internal Auditing function and approved by its Board of Directors.

Monte Titoli demonstrates a very low overall risk profile and has been awarded a rating of AA with a ‘Stable' outlook by Thomas Murray. A ‘Stable' outlook has been assigned since there are no imminent developments that could change the current rating. Nevertheless, Monte Titoli is planning future developments including further direct access for foreign institutions and a decision to act in a Principal capacity for certain services to those institutions. Furthermore, there are developments planned or likely to be undertaken within the Eurozone related to the TARGET2 payment platform and TARGET2 Securities that will have an impact on Monte Titoli services should and when they proceed. It is also unclear, at this stage, as to how the proposed London Stock Exchange / Borsa Italiana merger will affect Monte Titoli. These developments could change the outlook in the future.

Monte Titoli demonstrated particular strengths in its core settlement practices on its Express II platform which offers multiple settlement routes with the option of high netting efficiency or real-time gross settlement. Fail rates are extremely low by international standards. Monte Titoli has addressed Counterparty Risk by employing simultaneous, Delivery versus Payment (DvP) settlement for all against payment transactions. All on-market equity transactions benefit from central counterparty coverage from CC&G, while bond transactions executed on MTS or BrokerTec may be optionally covered by CC&G or LCH.Clearnet S.A.

Most key services are highly automated resulting in virtually total straight-through-processing for settlement and asset servicing. The depository uses an on-line messaging and reporting tool, MT-X, but mainly makes use of SWIFT messaging. Monte Titoli assumes liability by law for any participant's direct losses attributed to Monte Titoli through its fraud, error or wilful misconduct (excluding force majeure). However, there have been no claims related to asset servicing in the last 10 years. Financial risk exposure is considered to be very low as Monte Titoli is continuously profitable, has substantial reserves on its own balance sheet and benefits from being part of the Borsa Italiana Group. Monte Titoli retains a special guarantee reserve against operational claims and a comprehensive insurance policy. Due to the high level of service automation and dematerialisation in safekeeping, Operational risk exposure has been substantially reduced. Comprehensive facilities management and Disaster Recovery is outsourced to SIA, an IT services provider to the financial industry.

Simon Thomas, CEO and Chief Ratings Officer of Thomas Murray said when announcing the CSD rating of Monte Titoli S.p.A., "Monte Titoli has sound risk management controls and processes that work well within the Italian marketplace and is a progressive depository that is well-supported by market participants. Over the past few years, Monte Titoli has continued to enhance its services and the efficiency of its core processing and safekeeping capabilities while keeping costs down. Nevertheless, Monte Titoli faces challenges in the future particularly from the developing capital market infrastructure environment in the EU. Overall, the rating reflects Monte Titoli's capabilities and commitment to mitigating risk in the Italian securities marketplace and places it within the top tier of CSDs based on Thomas Murray's rating methodology."

The Central Securities Depository rating assesses the risk exposures for investors associated with the processes the CSD has in place to facilitate the safekeeping and the clearing and settlement of securities, where applicable. It assesses six key risks.  The methodology considers the capabilities of the depository and the quality and effectiveness of its operational infrastructure.  It also assesses the depository's willingness and ability to protect its participants or clients from losses. As part of the rating, the scope and quality of the depository's services is assessed. The ratings are on a consistent global scale, using the familiar AAA to C ratings scale. Once the rating is assigned there is an ongoing surveillance process to monitor the depository.

Separately, Thomas Murray maintains proprietary assessments of over 140 CSDs globally as part of the Thomas Murray Depository Risk Assessment services. These reports are available via Thomas Murray at: www.thomasmurray.com

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Thomas Murray is a specialist custody rating, risk management and research firm specialising in the global securities services industry. Thomas Murray was established in 1994. The Company tracks and analyses over 250 custodians globally and monitors the risk of over 100 capital market infrastructures.  The Company has a strong position as a provider of public and private ratings and risk assessments on global custodians, domestic custodian banks and capital market infrastructures.

www.thomasmurray.com

About Monte Titoli S.p.A.

Monte Titoli S.p.A. is the sole central securities depository in Italy and was established in 1976. It provides settlement, custody and depository services for equities, government bonds, corporate bonds, other debt securities tradable in the capital market, UCITS, and money market instruments. Monte Titoli is a for-profit limited company, 98.77% owned by Borsa Italiana S.p.A.. It is supervised by CONSOB and the Banca d'Italia.

www.montetitoli.it

Attachments

CSD Rating for Monte Titoli

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