[Newsletter n. 8]

 

In view of its application as of 3rd of January 2018, Italy is moving forward in the implementation of MIFID II (Directive EU/2014/65) and delegated Directive at both primary and secondary level legislation.

 

 

PRIMARY LEGISLATION

With respect to the amendments of the Italian Financial Act (Legislative Decree 24 February 1998, n. 58, also “TUF”), the Italian Government submitted a Scheme of Legislative Decree to the parliamentary approval. The Parliament is carrying out its analysis and consulting technical committees, before approving the scheme. Once approved, it will become law after publication on the Italian Official Gazette.

 

 

SECONDARY LEGISLATION

In order to adjust the applicable regulations affected by MIFID II, CONSOB has launched several public consultations before adopting the final amendments to its regulations on intermediary and on markets. In particular:

 

1.- CONSOB Regulation on Intermediaries

1.1.- Public Consultation concerning investor protection, knowledge and skills of intermediaries’ personnel, opened on 6 July 2017 (responses may be submitted before 21 August 2017).

The main amendments concern the following items:

  1. Amendments required to fine tune this CONSOB Regulation with TUF.
  2. Amendments required to take into account the provisions of EU Regulation 2017/565, including, inter alia:
    • Information and promotional and marketing communications: additional requirements concerning, without limitation, the indication whether the financial instruments are targeted to retail or professional client (in light of new product governance rules) as well as the disclosure regime of related costs and charges.
    • Suitability and appropriateness: 1) more specific identification of the criteria to be followed for the assessment of suitability and 2) new obligation for intermediaries to provide retail customers with a declaration of suitability when carrying out investment advisory services.
    • Complex financial instruments: exemptions concerning the execution and receipt and transmission of orders.
    • Best execution
    • Management of customers’ orders
    • Reporting to customers
    • Relationships with eligible counterparties: intermediaries have the duty to act honestly, fairly and professionally also in the transactions with eligible counterparties.
  3. Amendments concerning contracts relating to investment services: written form is required also when dealing with professional clients, even when the service provided is financial advice and a periodic assessment of suitability is carried out. The provisions set out by CONSOB Regulation on Intermediary concerning the content of the financial contract entered into with retail investors remain not applicable to professional clients.
  4. Amendments concerning inducements: introduction of three new chapters concerning: i) inducements in relation to the provision of investment services other than portfolio management and independent advisory (Chapter 1); ii) inducements of portfolio management and independent advisory services (Chapter 2) and iii) investment research (Chapter 3).
  5. Amendments concerning the product governance: introductions of two distinct sets of provisions for “producer intermediaries” and “distributor intermediaries”.
  6. Amendments concerning the knowledge and competence of personnel of financial intermediaries.

 

1.2.- Public Consultation concerning financial advisors, opened on 28 July 2017 (responses may be submitted before 30 September 2017).

CONSOB submits to the public consultation the proposed addition of the provisions of the existing CONSOB Regulation 1730/2010 concerning the recently established Financial Advisory Authority (the “OCF”) as integral part of CONSOB Regulation on Intermediaries.

The OCF is responsible of keeping the “Register of financial advisors” (“Albo dei consulenti finanziari”) and supervises the three new categories of financial advisors: i) financial advisors enabled to door-to-door offering; ii) independent financial advisors; and iii) financial advisory firms.

 

1.3.- Public Consultation concerning authorization of investment firms and access in Italy of EU investment firms and rules applicable to collective asset managers, opened on 31 July 2017 (responses may be submitted before 30 September 2017).

This consultation regards the following main areas:

  1. implementation of the new MIFID II rules governing the procedure to be followed to grant authorization to Investment Firms, and
  2. application of the rules on investor protection that are under the consultation sub 1.2 also to asset managers carrying out investment services
  3. addition of a new Section to CONSOB Regulation on Intermediary concerning the procedural and organizational requirements of asset managers (which basically reflects the set of rules under CONSOB’s supervision already contained in the existing Joint Regulation of Bank of Italy and CONSOB dated 29 October 2007).

 

2.- CONSOB Regulation on Markets

Public Consultation concerning the amendments to CONSOB Regulation on Markets, opened on 31 July 2017 (responses may be submitted before 30 September 2017).

The main amendments concern the following areas:

  1. Replacement of the Titles from I to VI in order to implement the MiFID II provisions aligning the rules governing MTFs with the rules governing regulated Stock Exchanges and introducing the new type of trading platform, so called organised trading facility (OTF).
  2. Supply of the service of collecting trade reports for financial instruments (by consolidated tape providers).
  3. Rules on the position limits and controls over the management of positions in commodity derivatives.
  4. Transparency of trading and reporting of transactions on financial instruments.

 

We remain at your disposal for any clarification or to assist you in submitting a response to any of the above mentioned consultations.

 

Contacts:

Vito Vittore
Senior Partner

Elena Pagnoni
Of counsel

Luigi Bonifacio
Associate