Monte Titoli, the Italian central securities depository, has opened an electronic link with The Depository Trust and Clearing Corporation’s (DTCC) in the United States. The aim is to improve the clearance and settlement of U.S. stocks traded in Italy.
The link, which went live on May 2, will initially allow investors in Italy to settle trades in 67 U.S. stocks traded on various Italian platforms which rely on Monte Titoli for clearance and settlement. The settlement of the securities traded between Monte Titoli’s participants will occur in euro, on a net basis for transactions carried out on Italian trading systems and on a gross basis for OTC transactions cleared through Express, Monte Titoli’s DVP/RTGS system. Entitlements such as dividends and interest will be paid in U.S. dollars.
The link will be one-way, free-of-payment, in that U.S. stocks traded cross border between Italian and U.S. counterparties will be settled through the link, and payment for shares traded will be handled outside the respective securities settlement systems. The communications link is based on the European Central Securities Depository Association (ECSDA) protocol developed for linking CSDs, and uses the ISO15022 message standard.
“Our link with Monte Titoli is the latest in our efforts to help minimize settlement inefficiencies in the increasingly global marketplace,” said Jeffrey Smith, managing director of the DTCC’s International Division. “As trading in U.S. shares increases internationally, we will continue to build links to central securities depositories around the world to lower costs and streamline the steps involved in cross-border trading processing.”
“This new link will allow us to lower the costs for Italians who wish to buy or sell U.S. stocks, which we believe will make for a more active Italian market in those shares as well as will enable our participants to transfer U.S. securities from/to U.S.A. in real time,” said Giovanni Sabatini, CEO of Monte Titoli. “It will allow Monte Titoli to assume a broader role in the global market and enhance our position as a global central securities depository, as we play a larger role in both Europe and the world.”