Italy: Enhancement of the T2S link to Monte Titoli to offer fixed income securities

16.11.2017

With the implementation of our enhanced Investor-CSD solution, effective

26 March 2018

CBF1 is pleased to announce the enhancement of our link to Monte Titoli and the eligibility of all Italian securities for settlement in T2S.

Customer benefits

  • Highest protection of assets under collective safe custody (CSC);
  • CBF as a single access to all Monte Titoli eligible Italian securities;
  • Best in class Asset Services thanks to our local partner Intesa SanPaolo, Milan;
  • All eligible Italian debt instruments available for increased liquidity pooling.

In addition, the following are benefits of our Investor-CSD model that Clearstream Banking will gradually introduce throughout 2018:

  • Pooling of assets in T2S with increased efficiency both operational (one single access to all EUR markets) and further centralised collateral management opportunities;
  • Single point of access to all T2S markets and benefit from all T2S functionality, in all instruments;
  • Direct ECB assessed CSD links into all T2S markets for Euro monetary policy operations;
  • New Connectivity solutions, with single user interface and harmonised A2A formats;
  • New asset class settlement in central bank money.

Type of securities

The securities to be eligible for holding in CBF in CSC are, but not limited to2:

  • Government bonds;
  • Corporate bonds;
  • Listed equities:
    • Ordinary;
    • Preferred;
    • Savings.
  • Warrants

Tax summary

In Italy, interest payments on bonds paid to non-residents are taxed at source at either the standard rate of 26%, or for government bonds at a reduced rate of 12.5%.

Four different account settings exist for tax purposes:

  • E: Excluded from Italian tax
  • S: Exempted single beneficiary account
  • X: Exempted omnibus account
  • N: Omnibus not exempted account

Certification requirements

All customer accounts will be defaulted to account setting N (taxable) and taxed accordingly.

Customers that want to benefit from exemptions must provide the relevant documentation including their tax identification numbers (TIN) to CBF to allow the exemptions to take place.

Different account settings can be put in place for main accounts and each sub-account used for segregating assets.

Submitting instructions

The TIN will become mandatory for settlement instructions in Italian Bonds on X accounts.

This applies to any type of settlement transaction whether OTC, cleared stock exchange transactions or non-cleared stock exchange transactions.

Note: Instructions for X accounts without a valid TIN will be rejected. Stock exchange instructions without a valid TIN however will be put on hold and must be repaired in LION.

Capital gains tax

Italian securities held in CBF are subject to the "regime ordinario" (the ordinary or declarative regime) where the beneficial owner declares gains in an annual Italian tax return and pays due tax directly to the Italian Tax Authorities. CBF does not apply capital gains tax at source, either as custodian under the "regime amministrato" or as asset manager under the "regime gestito". Only customers that can and accept to adhere to the “regime ordinario” are eligible to trade Italian securities in CBF.

Market claims - Tax rate of compensation and tax adjustment

Internal trades will follow the Italian market rule for the tax rate of compensation. Market claims will be paid gross and treated as a price adjustment to the buyer, therefore no further tax adjustment will be processed.

Further information

Further details, including Tax Forms, are available in the latest version of the Market Taxation Guide – Italy.

------------------------------------------

1. This announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
2. All securities will be eligible upon activation of the link. However CBF will only create ISINs for the securities where CBF has a position.