Statements

Stock market performances too have featured a differentiated trend and over the 12 months operators have disclosed expectations of a rather limited growth which has taken into account the persistent rise in the price of raw materials and oil.

In fact companies all over the world are undergoing an important "adjustment" process as their development plans must now reckon with the constant growth and competitiveness of the Asian economies and above all the Chinese economy.

Within this context the Italian stock market has performed better than other European stock markets and the U.S. stock market, due largely to its sectorial composition and, in the last two years, has seen the Mibtel index register a 34% increase and the S&P/MIB a 31% increase.

The capitalisation/GDP ratio has once again started to rise and towards the end of the year positive signs in terms of new listings and demand for securities have been registered.

In 2004 integration of the Borsa Italiana Group companies continued with the aim of increasing efficiency of market infrastructures, a fundamental requirement to dealing with the new competitive scenarios taking shape within the context of the single market of financial services and with the progressive integration of European payment systems".

"The year which draws to a close has been a decidedly positive one for Borsa Italiana - says Massimo Capuano, CEO of Borsa Italiana - and has seen confirmation of the growth trend which was already emerging in 2003. In fact, in terms of performance, Borsa Italiana rates among the leading European stock markets, with the S&P/MIB index registering an improvement of 15% and Mibtel one of 18%. This result clearly exceeds the advances registered by other international stock markets.

The year 2004 has been characterised by a sharp recovery of share prices and by a rise in traded volumes, which have driven the capitalisation of listed domestic companies to 581 € billion, equal to 43.1% of the GDP, thus registering a 19% rise on last year's figures.

Thanks to S&P/MIB, which from September has represented a new stock market benchmark, our companies listed abroad have been able to increase their visibility and our market has attracted ever growing numbers of investors.

Stock futures and stock options on the IDEM have witnessed a growth of standard contracts of 265% and 18% respectively, while SeDeX, the Italian securitised derivatives market has registered a 49% rise in turnover.

An additional sign of recovery has been perceived in the interest which the retail public has shown towards the market, by participating in placement operations, and also by investing in the new products, such as the ETF, offered by our markets. This provides further evidence of the capacity to react already witnessed with regard to some critical cases which had marked the beginning of the year.

A positive signal is also coming from newly admitted companies (the number of which has doubled compared to 2003). The first two newly admitted companies started off on Expandi, the market designed by Borsa Italiana to facilitate the listing of small and medium size businesses. However, eight IPOs are still too few, especially if we consider Italy's strong potential. Indeed, the domestic economy is underrepresented in our list. Indeed, the domestic economy is underrepresented in our list. This is an issue of concern in our country's system and it is one of the issues Borsa Italiana continues to address with the aim - which must be shared by everyone - to be able to fill the gap as soon as possible.

If Italian businesses were more widely represented on the Stock Exchange, this would increase their growth capabilities, help attract capital and allow the country to strengthen its position within the European scenario.

However, in 2004, the Stock Exchange raised over €15 billion fresh capital.

The delayed listing of Borsa Italiana might be a disadvantage on the European stage, where international stock exchanges are consolidating at a fast pace and where the risk is a less weighty participation to the same. [you should consider whether to mention this so briefly in an international release, as it probably gives quite a negative tone without knowing all the background to the local issues around this]

The activities implemented this year - continues Massimo Capuano - represent a further fine-tuning of our markets, which are among the best in the world presently in terms of micro-structure and technology. Borsa Italiana is in first place in Europe in terms of turnover velocity (an indicator that testifies to the high liquidity and efficiency of the market).

The Borsa Italiana Group recorded important results in terms of development, efficiency and transparency of the markets, thanks to the investments made across the post-trading activity spectrum.

Express II, the settlement system supplied by Monte Titoli since the beginning of the year has come on stream and recently (27 October) achieved a record high in terms transactions settled (445,000) - thus confirming its very high degree of operative reliability.

BIt Systems, Borsa Italiana's ICT company, kicked off the new Application Services Providing systems, a project aimed at simplifying access by brokers to the financial markets.

Work continued on the development of the activities of the subsidiary company Piazza Affari Gestione e Servizi, which operates the Congress and Training Centre of Palazzo Mezzanotte.

At home, the new contracts on the S&P/MIB index (which recently obtained the no-action letters from CFTC and SEC for the offer and sale of these products on the US market) were successfully launched.

The STAR segment is progressively demonstrating that it has been able to enhance the value of quality small and medium size businesses, with the MibSTAR index sharply outperforming (+ 24.5%) the general index.

The covered warrant market segmentation was modified, with an allocation of products into classes of like type and investment purpose. The market was renamed SeDeX to better represent the wide range of listed securitised derivatives (including both covered warrants and certificates).

techStar was started up - this being the new sector for the companies listed on the Nuovo Mercato that meet specific income-related and performance requirements.

MOT (the electronic bond and government securities market) was migrated to the technological platform that supports the MTA (the electronic equity market) and was thus enriched with the functionalities already developed for the MTA, gaining significant improvements in terms of microstructure efficiency, operative and processing capabilities and flexible access for brokers.

EuroMot widened its offer of products listed and traded on its markets with the listing of the first asset-backed securities.

On the front of market disclosure, Borsa Italiana defined the format of its price-sensitive report - a standardisation aimed at increasing clarity, completeness and efficiency of disclosure of information to the market by listed companies.

The activity of promoting the Italian markets continued with Italian and foreign brokers, today numbering 128 - where the number of international operators is particularly noteworthy, rising to 40 in the year.

Lastly, the Borsa Italiana web site www.borsaitaliana.it set up new records this year, with approximately 300,000 unique visitors, 10 million page views per month and over 30,000 registered visitors. Thanks to its information products, it ranks amongst the top Italian financial web sites.

2005 with election of the Vice President of the WFE (World Federation of Exchanges), will be the year in which Borsa Italiana will be able and will have to commit itself even further in order to affirm its guiding role both in respect of the development of European Directives and in the consolidation between the various continental stock exchanges.

2005 may become a turnaround, whereby the Italian Stock Exchange may contribute towards boosting the vitality of the country system by tapping Italian financial resources and attracting increasing international resources for the benefit of companies, investors and the community as a whole so as to enhance development and wealth, including via the equity market."

Milan, 30 December 2004