[Newsflash n. 61]

On 28 February 2019, Consob has published a Warning for the intermediaries to be compliant with MiFID II rules on transparency of costs.

Compared to MiFID I, MiFID II transparency and disclosure regime requires a more significant and intensive pre- and post-trading activity to intermediaries to ensure that clients are continuously aware of the aggregate amount of costs affecting their investments, with the ultimate goal to put them in the condition to take an informed decision also thanks to an easier and more straightforward comparison of services and financial instruments.

The Warning highlights some important steps that intermediaries shall take into account as regards costs’ transparency also in accordance with ESMA’s Q&A as from time to time updated, such as:

• Information on costs shall be correct, clear and not misleading and presented in plain language and in aggregate form;
• If the information on the financial instruments are not publicly available, distributors should be able to obtain the necessary data from the manufacturer. If the distributor is not able to gather sufficient information on the products to fulfill MiFID II requirements, according to its product governance policies, it should avoid to include them in its range of marketed products;
• Ex-ante information must be provided in good time before the provision of the service.
  In the absence of punctually identifiable costs before trading a financial instrument, the intermediary shall make sure to be able to provide at least a reasonable and accurate estimate to the client;
• Ex-post information should be reported at least on a yearly basis.

In the Warning, Consob clearly stresses out that it is and will be carrying out strict supervision on the correct application of these rules and concludes with a reminder that Italian intermediaries and EU investment firms and banks operating in Italy via a branch shall include an indication of the measures adopted in order to comply with the above mentioned obligations on ex-ante and ex-post transparency in their periodic reporting to Consob.

In addition, the Compliance Report (pursuant to Consob Resolution 17297/2010) together with the comments and determinations by the competent corporate bodies, shall include the outcome of the relevant controls on the compliance with the above obligations.

Please do not hesitate to contact us should you need any further clarification on the above and any related matter.

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Contacts:

Vito Vittore
Partner

Elena Pagnoni
Partner

Roberta Talone
Associate