031001 etf

Exchange Traded Funds, launched by Borsa Italiana on 30 September 2002 on the funds segment of the Electronic Equity Market, yesterday celebrated their first year of activity.

In their first twelve months, a total of 33,012 trades were recorded with a total turnover of €1.16 billion. The market capitalisation of the listed instruments is currently over €4 billion.

These first twelve months have seen a constant growth both in the number of ETFs listed and in the volumes traded: the 3 ETFs traded in September last year have now grown to the current figure of 11, providing geographical and sectorial coverage in a wide area ranging from the Eurozone to the United States.

Volumes have increased from €75 million (October 2002) to €148.6 million (September 2003, +98% on October 2002) whilst the number of contracts has leapt from 1,677 in October 2002 to 6,342 in September 2003 (+278%).

The record month in terms of trading volume was July with €198.3 million whilst the monthly record (6,342) and daily record (448) for number of contracts traded were both achieved in September just past.

September also saw growth in the number of private investors as evidenced by the fact that 60% of contracts were for amounts less than €5,000 (equal to 4% of the turnover). In the same month, the average size of contracts was €23,431 thus confirming the considerable interest of institutional investors in this Borsa Italiana segment.

On 3 September, it was announced that the first ETF was soon to be launched on Borsa Italiana's new S&P/MIB index.

ETFs are index-linked funds listed on the funds segment the Electronic Equity Market, which replicate the yield of their underlying index and can be bought and sold in real time like shares.

In particular, ETFs offer the immediate possibility of taking a position on an index (global, regional, sectorial, etc.) through a single purchase or sale transaction.

The trading hours run from 9:10 to 17:25 and the minimum lot is one share.

For each ETF, at least one specialist is present to support liquidity with the obligation of continually displaying bid and ask prices. For each instrument, Borsa Italiana sets out the specialist's quotation obligations in terms of the maximum bid-ask spread and the minimum quantity displayed.

The successful outcome of the contracts, settled at T+3 by Monte Titoli, is guaranteed by the Cassa di Compensazione e Garanzia acting as Central Counterparty.

Investment in ETFs is characterised by transparency, thanks to the daily availability of the composition of the managed portfolio and by the accuracy of replicating the index, thanks to passive management and to the mechanism of subscription and redemption "in kind".

All brokers qualified to trade shares are automatically authorised to trade ETFs.

The taxation arrangements for ETFs listed on Borsa Italiana are the same as for foreign "harmonised" open-end indexed mutual funds.

Milan, 1 October 2003