Borsa Italiana enlists S&P for novel index

Wealthy private investors are one of the key targets of a new set of initiatives likely to follow an initial collaboration between the Italian stock exchange and index provider Standard & Poor’s. Borsa Italiana, the Italian stock exchange based in Milan, has been working closely with US benchmark provider Standard & Poor’s to create the first in a new series of products aimed at attracting new international investors and luring clients away from Europe’s rival bourses. Central to this strategy is the education of high net worth investors and their advisers about the exchange’s capabilities. The first collaboration is the S&P/MIB index, which will replace the existing MIB30 at the beginning of June as Italy’s main equities indicator. The S&P/MIB will cover approximately 80 per cent of the Borsa’s E460bn market capitalisation. This is the first free-floating regional index. This structure means the number of constituents is not finalised, but regularly adjusted according to the market capitalisation and performance of the companies. Initially, there will be 40 constituents. These include the biggest Italian companies such as energy company Eni, insurer Generali, Telecom Italia and banking giant Unicredito Italiano. But new entrants include high-tech companies Tiscali and E.Biscom, previously listed on the Nuovo Mercato. The exchange will wait for the market’s reaction to the new index before moving forward with other planned developments. “This is our first step in a new adventure together,” said Raffaele Jerusalmi, Borsa Italiana’s executive director for Italian exchange markets. “If we decide to go with an index provider in a joint venture, it is because we need broader exposure to the international marketplace for our products. Our range of products is not as wide as we wish it to be. In the future, we want to create pan-European products to compete with other exchanges in Europe.” But Mr Jerusalmi also sounded a cautionary note: “It will take time for this relationship to be established and working. It is not easy to conduct an overseas relationship in general and it will take some time to harmonise our habits.” An ETF index is likely to be the next stage, to benchmark the 10 exchange traded funds currently listed from Société Générale, Merrill Lynch, BGI and Crédit Lyonnais. Derivatives – aimed at retail and wealthy private clients in particular – are likely to follow.