On 18 October 2016 - after a public consultation opened on 9 May 2016 - the Italian regulator (Consob) published a new recommendation on the distribution of financial instruments through a trading venue.

In particular, Consob recommends issuers and intermediaries to use a regulated market or an MTF for the distribution of financial instruments to retail investors, in order to allow:

  1. The issuer, to market the entire issue size directly on the selected trading venue
  2. The market participants, to purchase or execute clients' orders on such trading venue, in compliance with the relevant market rules.

In addition, in respect of the "primary market phase", Consob recommends issuers to spin the commissions, to be paid to distributors, off the relevant issue price. To this extent, the investor should be charged with distribution fees only in the case that a distribution service is provided.

In the case that the issuer, or the intermediary, does not use any trading venue, it should assess, under its responsibility, whether or not the adopted distribution process satisfies the required transparency and efficiency conditions. In particular, in the case that the issuer/intermediary does not follow such recommendations, it should:

  1. Describe the safeguards and the adopted distribution methods, with the purpose of granting the liquidability of financial instruments
  2. Specify whether financial instruments will be negotiated on systematic internalisers or other trading systems;
  3. In the latter case, describe in detail the functioning of such trading systems
  4. In the case that the abovementioned conditions will change after the distribution of financial instruments to retail clients, describe in detail the measures adopted in order to grant the liquidability of the financial instruments.

The issuers and the intermediaries will communicate to Consob within 6 months from the publication of the recommendation if they will comply or not with such recommendation.

For more information, read the full recommendation, available in Italian.