The process of trading

Process	Explanation	LSE Group’s involvement

Electronic trading	Computerised systems for matching orders of financial instruments, such as equities, bonds and derivatives.	Equities – London and Italian trading platforms and Turquoise pan-European trading ETFs, ETCs – London and Italian trading platforms Bonds – MTS, MOT and ORB Derivatives – EDX, IDEM and IDEX
Clearing	After a trade has been matched, usually by a trading system, it is cleared. At this stage, a central counterparty (CCP) stands between the buyer and seller. By simultaneously buying from the seller, and selling to the buyer, the CCP reduces the counterparty risk to both parties. This is because if one party defaults, the CCP will ensure the trade is completed with the other party.	CC&G acts as a CCP for Italian cash equities, derivatives and fixed income. CC&G also provides clearing processing functions for London Stock Exchange equities and Turquoise derivatives.
Settlement	Settlement is the process of delivering title to the financial instrument to the buyer against payment to the seller. For equities, this normally takes place three days after the trade. Netted settlement reduces a large number of positions to a single position / payment. Settlement operates both for transactions through a trading system and those completed over the counter (OTC).	Monte Titoli operates the X-TRM and EXPRESS II systems, which cover Italian pre-settlement and settlement, creating netted settlement instructions, making the actual payments and delivering securities.
Custody	A custodian or Central Securities Depositary (CSD) undertakes the safekeeping and administration of securities on behalf of issuers and investors.	Monte Titoli provides Italian custody services for all the financial instruments it holds, whether dematerialised or in paper form. De-materialised securities are those that can be held without the need for paper certificates.

Trading under MiFID

	Explanation	Attributes	LSE Group's involvement
Exchange model for trading	Traded through trading platforms run by an operator of a regulated market.	Regulated Order driven Neutral Transparent Liquid Widest stock coverage Widest client base	Trading platforms offered by the London Stock Exchange and Borsa Italiana, including securities listed on the Group’s primary markets
	Reported business done off order book and reported to regulated market.	Telephone trading	On exchange trade reporting and publication
MTF	MiFID allowed for the setting up of Multilateral Trading Facilities (MTF), new pan-European trading ventures thereby promoting venue choice. Trading is of securities listed on the primary market of a regulated exchange.	Regulated Order driven Neutral Transparent Can include dark pool trading	MTF services provided through Turquoise and Euro MTS
OTC	Over the counter (OTC) / negotiated market operated by electronic networks or telephone. Electronically connected market consisting of dealers who are in constant contact thereby facilitating trading directly between two parties.	Regulated Large or block trades Way to trade less liquid stock	OTC trade reporting and publication service