enhanced the efficiency of spot prices, whose daily volatility has declined compared with the first half of the 1990s and is approaching the levels recorded in more mature markets. borsa italiana has reached an agreement permitting its participants access to other european financial centres ; interconnection will enable each market to exploit to the full the benefits of the massive investment that has already been made in technology while maintaining a close relationship with domestic firms. foreign investors hold just over 10 % of listed italian shares ; they are more active in derivatives, where they are involved in one third of all trades. compared with the leading stock markets, italya€™s includes a smaller proportion of non - financial companies. although they account for more than 90 % of the value added at factor cost of the private sector in italy, their share of market capitalization was 54 % at the end of 1998. non - financial companies account for more than 70 % of total market capitalization in germany, more than 75 % in the united kingdom and more than 85 % in france. by contrast, the propensity of banks to go public is higher in italy than in other leading countries. banks account for 27 % of the stock market in italy, compared with values of between 10 % and 15 % elsewhere. a contribution to increasing the number of listed italian shares may come from the euro - nm circuit, reserved for innovative small and medium - sized firms with high growth potential. a few months after its inauguration it has 330 securities, listed jointly on several european exchanges, and a total market capitalization of eloolrq % ruvd, wdoldqdmrlqhgwkhflufxlwlq - xqhwkhilyh, wdoldqfrpsdqlhvqrz listed account for about 3 % of the total capitalization. conclusion the global financial market has seen a marked increase in the activity of institutional investors, able to deploy advanced techniques that reduce the costs and risks associated with their investments. stronger competition sometimes prompts asset managers to pursue short - term objectives, thereby tending to accentuate the variance of securities prices around their long - term values. the disappearance of the segmentation caused by exchange risk will foster the creation of a europe - wide stock market. financial intermediaries can look forward to an increase in their volume business. their task is to allocate the flows of savings between countries. in italy, a substantial increase in the role of pension funds is needed.

enhances the value of existing distribution networks. italy, where households have a low level of debt and still relatively undiversified financial assets, is an attractive market. in the last ten years the main european banking groups have become highly profitable, partly owing to the restructuring carried out in national markets. they now have the resources to extend their activity abroad significantly. the growth of the main italian banks has narrowed the gap between them and their leading european counterparts, but has not eliminated it ; the process must continue. it is well known that last year saw important acquisitions of two italian banks by foreign banking groups and of foreign banks by an italian group. this greatly increased the degree of internationalization of italy ’ s banking system, bringing it into line with that of the other leading euro - area countries. foreignowned banks ’ share of the assets of banks established in italy rose from 8 to 14 per cent ; in france, germany and spain the corresponding figure is between 10 and 11 per cent, and in the netherlands it is 14 per cent. the foreign assets of the largest five italian banking groups rose from 11 to 41 per cent of their combined assets, a figure comparable to that in the other countries i have just mentioned. the increase was entirely due to a single acquisition. the spread of multinational banking groups in europe requires supervision performed jointly by authorities from different countries, in accordance with principles established at european level, under which the supervisory authority of the parent company is responsible for coordination. permanent structures, known as supervisory colleges, have been established to coordinate the supervision of multinational groups. the bank of italy has signed agreements with the german authorities and made contact with those of many other european countries with a view to establishing cooperation arrangements for italian groups with a presence of systemic significance in other countries and vice versa. cooperation also relates to the convergence of supervisory practices, to ensure that units of groups located in different countries receive uniform treatment. the law on the protection of savings passed in december 2005 is intended to strengthen the safeguards for savers and increase market transparency, with provisions that affect the regulation of market participants, relations between intermediaries and their customers and the arrangements for supervisory authorities. as regards the latter aspect, the reform is based on the principle of the purpose - based allocation of responsibilities. in accordance with this approach, antitrust activity in the banking sector has been transferred to the antitrust authority and new duties concerning the regulation and control of the supply of financial products by banks and insurance companies have been entrusted to con