respect by the consolidated law on finance. the mandatory nature of the passivity rule has to be confirmed and there must be strict and extremely limited conditions for invoking the reciprocity clause. finally, considering the importance of shareholder agreements in the control of italian corporations, the law transposing the directive should confirm shareholders ’ right to withdraw from such pacts in the case of a takeover bid. in other countries pension funds, along with other institutional investors, help to ensure the efficiency and the liquidity of the financial markets. they stimulate innovation and competition between intermediaries, they increase the resources available to firms in the form of equity and bond issues, and they exercise continuous monitoring of the strategy of listed companies, to the benefit of the transparency and quality of corporate governance. the relative underdevelopment of pension funds in italy is an impediment to the growth of the financial system and to the restructuring of the productive economy. bringing forward the entry into force of the new retirement system rules to this year has been a step in the right direction. enrolment in supplementary pension plans is low especially among the groups whose public pensions are likely to be smallest – self - employed workers, young people and women, all penalized by the greater variability and discontinuity of their earnings. these workers must be offered pension plans that afford ample freedom in determining contribution flows and facilitate totalization and the portability of contributions, including those paid in different phases of one ’ s career, from one form of retirement saving to another. the possibility of enjoying the advantages of supplementary pension plans should be extended to public employees. the investment of severance pay in supplementary pension plans can bring substantial benefits for workers. accumulation over a considerable time horizon is necessary in order to reach pensions of adequate size. on the financial markets investment strategies can be used to obtain, with limited risks, real rates of return in line with or higher than those delivered by the revaluation of severance pay funds. over long time horizons higher rates of return can be achieved through investment in equities, though at the cost of additional risk. according to recent surveys, workers continue to overestimate the amount of their future pensions by a large measure and are still poorly informed about supplementary pension schemes. it is their right to get clear, regular and complete reports on their accumulated position in their compulsory pension system ; the experience of other countries, especially sweden, is enlightening in this regard. it is necessary to increase workers ’

the eurosystem central banks are weighing the possibility of directly managing the final phase in the settlement process, in order to lower costs and facilitate the settlement of transactions. the european commission has recommended a code of conduct for market operators, securities depositories and central counterparties to eliminate barriers to access to the various services, enhance transparency on costs and income, and achieve interoperability. together, these developments will result in a rapid and significant heightening of competition and concentration at european and world level. the challenge has been issued. italian banks and the stock exchange must take note and prepare to meet it. the banks will have to make choices, and promptly. the main initiatives already taken in europe range from stepping up the internal provision of trading services to forming consortia. in italy the major banks, if they do not consider they have the size and range of business to follow either of these courses, must capitalize on their position as shareholders of the organized markets. thanks to low prices and the quality of its services, borsa italiana has a powerful competitive tool at its command. in addition, it can still benefit from the informational edge deriving from the customary practice, common to all financial marketplaces, of channelling trading in securities, especially in equities, to domestic exchanges. nevertheless, the spur of growing competition will inevitably make itself felt. in the long run, the significant network externalities and economies of scale that characterize financial markets and the natural gravitation of liquidity to deeper markets threaten to squeeze out exchanges that remain isolated. this is what happened to italy ’ s regional bourses. looking to the future, a failure to exploit scale economies could even undermine the competitiveness of borsa italiana ’ s prices. in the choices it makes, the exchange must succeed in combining the advantage deriving from its roots in the national economy with the benefits of integration. its shareholders will have a unique opportunity : to make the most of their investment while simultaneously contributing to the development of italy ’ s corporate sector. the transposition of the european directive on takeover bids into italian law is now imminent. the fruit of an unhappy compromise, the directive lays down only minimum harmonization and leaves considerable scope for national law to limit the contestability of control of listed companies. this approach threatens to undo past progress in the protection of minority shareholder rights in countries, such as italy, where these safeguards are strongest. transposition must not provide the occasion for overturning the principles established in this