T H E K E Y T O A C C E S S B O R S A I T A L I A N A M A R K E T S

Guide to Membership

2

Index

INTRODUCTION Pag. 3

MEMBERSHIP TO THE BORSA ITALIANA MARKETS Pag. 4

ELIGIBILITY FOR MEMBERSHIP Pag. 5

PARTICIPATION REQUIREMENTS Pag. 6

MARKET CONNECTIVITY Pag. 7

CLEARING & SETTLEMENT Pag. 8

FEES AND INCENTIVES FOR NEW MEMBERS Pag. 10

ADMISSION PROCESS Pag. 11

3

Introduction

This guidance provides the applicant with an overview of Borsa

Italiana membership procedures and documentation, eligibility,

requirements, price list and financial incentives for new members.

The guidance also provides a ’check list’ aiming to keep track of

the progress in the membership process.

4

Membership to the Borsa Italiana markets Borsa Italiana SpA regulates, develops and manages the following markets.

5

Information on membership eligibility is available in the following paragraph.

All applicant firms should fulfil Borsa Italiana membership requirements in regard to their corporate

organisation and technical infrastructures. They also need to have, at all times, adequate clearing and

settlement arrangements.

Applicant firms may submit an application to access all markets or separate applications for each single

market.

Eligibility for membership The following type of firms can apply for membership:

Financial Firms Firms authorized under the law or regulations to provide the services and engage in the activity of dealing for own account and/or executing orders on behalf of clients (i.e. banks, investment firms). The participation of non-EU firms is subject to the execution of an agreement between Consob and the corresponding home country Regulatory Authority.

Non financial firms Companies set up in the legal form of a società per azioni, società a responsabilità limitata or equivalent in which:

• the personnel performing administrative, management and supervisory functions and those responsible for

trading activity and the internal control function satisfy integrity and experience requirements equivalent to

those applying to intermediaries that deal in financial instruments. This requirement is waived for firms

authorised by an EU competent Authority to provide an investment service or activity, other than the

activity of dealing for own account and/or executing orders on behalf of clients, or to provide collective

portfolio management;

• have established an internal auditing function that does not depend hierarchically from any person with

operational responsibilities and that periodically monitors the trading activity; Borsa Italiana may waive this

requirement, further to the evaluation of the firm’s size (according to the so-called proportionality principle);

• have adequate shareholders’ equity as shown in their latest audited annual financial statement.

6

Participation requirements

Applicants firms shall fulfill the requirements

outlined in Borsa Italiana Rules, and in particular

they need to have, at all times:

• sufficient staff with adequate knowledge,

experience, training and competence at least in the

key role of the business;

• adequate clearing and settlement arrangements;

• adequate internal procedures and controls;

• one or more compliance officers having a good

knowledge and understanding of Borsa Italiana

Rules and of the rules governing the functioning of

the markets and who, among his/her functions,

shall manage the relationship between the firms

and Borsa Italiana Market Supervision Team.

• adequate technical infrastructures and market

connectivity according to the type of activity they

want to perform and the number of

interconnections they have. Software shall be

accredited with Borsa Italiana. Such infrastructures

can be outsourced to a third party or a Service

Provider but they must be compatible with Borsa

Italiana technical platform.

In addition to the fulfillment of the above criteria,

firms intending to act as market makers/specialists

on IDEM (IDEM Equity, IDEX, AGREX) shall have

their traders to complete successfully an

examination. More information can be found on the

Borsa Italiana Academy website

www.academy.londonstockexchange.com

More details on membership eligibility can be found

in the ‘Rules’ section on the Borsa Italiana website:

http://www.borsaitaliana.it/borsaitaliana/regolamenti/regolamentoborsa-istruzionialregolamento.en.htm

7

Market connectivity

A range of different connectivity options is available to applicant firms depending on their financial needs and

business model:

• VPN connection via Internet;

• Direct connection through dedicated lines installed at the firms’ or a third party’s location (leased

lines) Extranex/Bit Network;

• Co-location/Hosting services supported by the London Stock Exchange Group (more details are

available on the Borsa Italiana and the London Stock Exchange websites;

• Connection through an accredited Service Provider (the list of accredited Service Providers is

available on the Borsa Italiana website).

More details on connectivity services are available on the Trading Services Manuals at the following Borsa

Italiana websites links:

Markets traded on the Millennium IT platform: http://www.borsaitaliana.it/borsaitaliana/gestione-

mercati/migrazionemillenniumit-mit/millenniumitmigration.en.htm

Markets traded on the SOLA platform: http://www.borsaitaliana.it/borsaitaliana/gestione-

mercati/migrazioneidem/migrazioneidem.en.htm

8

Clearing & Settlement Member firms must at all times have adequate clearing and settlement procedures in place.

Trades executed on the MTA, TAH, ETFplus, MIV, DomesticMOT and IDEM markets are cleared by a Central Counterparty (CCP) System. The CCP manages counterparty risk by acting as a

seller for the buyer and as a buyer for the seller of each trade executed on guaranteed markets.

On Borsa Italiana markets this function is carried out by Cassa di Compensazione e Garanzia S.p.A.

(CC&G).

Applicant firms may become members of CC&G, acting as General Clearing Member (GCM), Individual

Clearing Member (ICM) or Non Clearing Member (NCM).

For further information please refer to the CC&G website: www.ccg.it

9

Trades executed on the MTA, TAH, ETFplus, MIV, SeDeX, DomesticMOT and AIM Italia-MAC markets are settled via ‘ Express II’ run by Monte Titoli, the Italian Central Securities

Depositary (CSD) for Borsa Italiana markets. Express II is a settlement service managing net and gross

settlement functions for transactions in non-derivatives transactions.

Applicants trading on guaranteed markets can access Monte Titoli directly or indirectly regardless of their

CC&G membership. Should they act as NCMs on the CC&G with no direct access to Monte Titoli, they need

to have their trades settled either by their GCM or by their GCM’s settlement provider. Should they act as

NCMs on CC&G and direct member on Monte Titoli they need to be authorized by their GCMs to settle

trades via their own account at Monte Titoli.

Trades executed on the EuroMOT market are settled via Clearstream Banking Luxembourg and Euroclear Bank. As a result, EuroMOT participants need to be a direct or indirect member of one the above CSDs. In case of indirect access they will use an account of a settlement provider.

Trades executed on the ExtraMOT market are settled on Monte Titoli or Clearstream Banking

Luxembourg/ Euroclear Bank depending on the securities traded. Therefore ExtraMOT participants need to

be a direct or indirect member of both the Italiana CSD and the foreign CSDs, In case of indirect access they

will use an account of a settlement provider.

In order to send execution feeds from the MTA, TAH, MIV, SeDeX, DomesticMOT, EuroMOT, ExtraMOT

and AIM Italia-MAC markets to a CSD applicants need to access to X-TRM pre-settlement system managed

by Monte Titoli. Access to this system can be direct or via a power of attorney granted to a third party.

10

Fees and incentives for new members

Price List Incentives for new Members

For the purpose of applying the price-list two pricing options

are available: Pricing Package 1 that normally charges only

variable costs and Pricing Package 2 that charges fixed costs

but lower variable costs. Variable costs on certain

markets/segments, are progressively reduced. Members are

free to choose the most suitable pricing package. These

options apply to all Borsa Italiana markets, except for IDEM.

All new clients of the London Stock Exchange group can

benefit from financial incentives.

Fees are structured as follows:

• Annual membership fee

• Annual subscription fee, debited on a monthly basis, for

each individual market (if firms subscribe for package 1 this

is available only for DomesticMOT)

• Unit cost per transaction applied to each contract/lot (IDEM

Equity) /MWh (Megawattora) (IDEX)/ metric ton (AGREX)

and to each executed order (for markets different from

IDEM). An executed order means a trade originated by a

single order entered by the member and executed at the

same price. On MTA, AIM Italia-MAC, ETFplus markets

transaction costs are calculated on the basis of their trade

value

• Annual fee for connectivity debited on a quarterly basis

Annual fee for logical linkups debited on a monthly basis.

More specifically for the first 12 months the following

incentives are applied:

• waiver of Borsa Italiana annual membership fee

• waiver of the MTA/AIM Italia-MAC/SeDeX/ETFplus/MOT

subscription fees

• waiver of the IDEM Equity volume category fee

• waiver of the IDEX volume category fee

A 50% discount on CC&G annual membership fee is also

applied (for additional information about the clearing fees

please visit the CC&G website).

For IDEM Equity members a ‘Proprietary Trading Program’ is

also available. The initiative applies to:

- Firms becoming new trading members on Borsa Italiana

markets

- Existing member firms deciding to extend their membership

to other Borsa Italiana markets/segments.

For information on charges and payment instructions please

refer to the Price List for Trading Services enclosed to the

General Conditions of the membership contract and available

on the Borsa Italiana website - Intermediaries section –

Contracts area.

Information on incentives for new members is available on the

Borsa Italiana website - Intermediary section - Membership

area.

11

Admission process Membership applications can be managed on line via the BIt Club website (www.bit-club.it).

Access to BIt Club can also be found in the Membership section of the Borsa Italiana website

http://www.borsaitaliana.it/borsaitaliana/intermediari/membership-e-servizio-bit-club/membership.en.htm.

For more information on the completion of the membership documents on BIt Club please refer to the

Membership Guide, available on the BIt Club website.

Timeline, steps/actions and documentation

To start the process applicants need to submit a Request for Service. The process ends when market

admission is granted provided that all membership requirements have been satisfied by the applicants.

A check list of all steps of the membership process is provided in the next paragraph.

12

Checklist

1 Access to BIt Club (www.bit-club.it)

Upon completion of a ‘Welcome Card’ applicants is going to receive a UserID and a password to access to the

‘Prospect Area” of BIt Club

2 Request for Service (RfS) (contract proposal)

Once applicants completed the RfS providing a Contract Representative’s contact details, they print it and send the

Membership Team a copy signed by the Legal Representative of the Company.

Firms should also include:

• Contract Representative’s Specimen of signature (a form for the specimen of signature can be

downloaded from the website)

• A proof of regulatory authorization to provide investment services, if applicable

• The form on the “Traceability of financial flow” (Law 13th August 2010 no. 136) downloadable

at he following link: http://www.borsaitaliana.it/borsaitaliana/intermediari/guide-e-moduli/modulodichiarazionetracciabilita.en_pdf.htm

Further information are available on General Conditions Part I (Intermediaries/Contracts area on website).

3 Borsa Italiana letter confirming receipt of the RfS

Applicants receive a letter of acknowledgement from Borsa Italiana, requesting to complete the Participation

Document on BIt Club. The Contract Representative receives a new userID and password to access BIt Club and

can delegate information management on BIt Club to different Company Users’ acting as a deputy of the Contract

Representative

4 Confirmation of the participation requirements

The following information should be provided online:

- Declaration of fulfillment of the participation requirements as outlined by the Rules, including the additional

authorisation requirements requested to unauthorized firms

- BIC code confirmation

- Pricing package confirmation (if applicable)

- Confirmation of IT sites and trading office addresses

- Confirmation of technical set up including:

• order of connectivity lines (if applicable)

• request of USAPs/User IDs

• request for market data channels

The applicant can now request access to the testing environment for third party connectivity providers via VPN.

Access to the testing environment is required if the applicant’s software applications are not accredited by Borsa

Italiana yet and need to certified. If the applicant needs to set up connectivity lines this should be completed at this

stage.

- Confirmation of Compliance Officer and Deputy(if any) contacts

- Confirmation of the list of persons authorized to request order deletion

- Confirmation of the type of participation in the clearing and settlement system. If the applicant is getting access to

non guaranteed markets and is going to have its business settled by a third party, a copy of the notification letter of

their settlement agreement signed by both parties should be provided

5 IT configuration

A configuration in CDS is required only for conformance tests and functional tests (so called check list)

6 Participation to the clearing and settlement systems

Confirmation of participation in the settlement and clearing services provided by the companies managing such

services

7 Admission to trading

A go live date is agreed with the applicants upon approval of membership application. Borsa Italiana informs the

market on new member admissions by publishing an announcement normally the day before the go live date. If

trading on a derivatives market new members receive a User and password to access the production environment.

13

For additional information Please visit www.bit-club.it www.borsaitaliana.it www.ccg.it www.montetitoli.it www.londonstockexchange.com www.academy.londonstockexchange.com or e-mail the membership Team: membership@borsaitaliana.it For technical information: clients-services@borsaitaliana.it

14

© Settembre 2011 Borsa Italiana – London Stock Exchange Group.

Tutti i diritti sono riservati

La pubblicazione del presente documento non costituisce attività di sollecitazione del pubblico risparmio da parte di

Borsa Italiana S.p.A. e non costituisce alcun giudizio, da parte della stessa, sull’opportunità dell’eventuale investimento

descritto. Il presente documento non è da considerarsi esaustivo ma ha solo scopi informativi. I dati in esso contenuti

possono essere utilizzati per soli fini personali. Borsa Italiana non deve essere ritenuta responsabile per eventuali

danni, derivanti anche da imprecisioni e/o errori, che possano derivare all’utente e/o a terzi dall’uso dei dati contenuti

nel presente documento. I marchi Borsa Italiana, IDEM, MOT, MTA, STAR, SeDeX, MIB, IDEX, BIt Club, Academy,

MiniFIB, DDM, EuroMOT, Market Connect, NIS, Borsa Virtuale, ExtraMOT, MIV, Bit Systems, Piazza Affari Gestione e

Servizi, Palazzo Mezzanotte Congress and Training Centre, PAGS nonché il marchio figurativo costituito da tre

losanghe in obliquo sono di proprietà di Borsa Italiana S.p.A. Il marchio FTSE è di proprietà di London Stock Exhange

plc e di Financial Times Limited ed è utilizzato da FTSE International Limited sotto licenza. Il marchio London Stock

Exchange ed il relativo logo, nonché il marchio AIM sono di proprietà di London Stock Exchange plc. I suddetti marchi,

nonché gli ulteriori marchi di proprietà del London Stock Exchange Group, non possono essere utilizzati senza il

preventivo consenso scritto della società del Gruppo proprietaria del marchio. La società Borsa Italiana e le società

dalla stessa controllate sono sottoposte all’attività di direzione e coordinamento di London Stock Exchange Group

Holdings (Italy) Ltd – Italian branch. Il Gruppo promuove e offre i servizi Post Negoziazione prestati da Cassa di

Compensazione e Garanzia S.p.A. e da Monte Titoli S.p.A., secondo modalità eque, trasparenti e non discriminatorie e

sulla base di criteri e procedure che assicurano l’interoperabilità, la sicurezza e la parità di trattamento tra infrastrutture

di mercato, a tutti i soggetti che ne facciano domanda e siano a ciò qualificati in base alle norme nazionali e

comunitarie e alle regole vigenti nonché alle determinazioni delle competenti Autorità.

Borsa Italiana S.p.A

Piazza Affari, 6

20123 – Milano

T 02 72426.1

membership@borsaitaliana.it

www.borsaitaliana.it