Introduction

On 23 August 2018 the Bank of Italy opened a public consultation(1) on certain regulatory provisions to be enacted in order to bring forward the implementation of the EU Markets in Financial Instruments Directive (2014/65/EU) (MiFID II) and the EU Markets in Financial Instruments Regulation (2014/64) (MiFIR). The proposed provisions aim to supplement the Italian legal framework regarding the organisational duties of regulated intermediaries that provide investment services and activities, including banks.

In particular, the proposed provisions, which will apply in accordance with the principle of proportionality,(2) aim to:

  • ensure the sound and prudent management of entities;
  • contain any risk;
  • ensure the financial stability of entities; and
  • align the Italian legal framework with the applicable EU provisions.

The proposed provisions also took into account the European Banking Authority's recommendations on outsourcing to cloud services.

The Bank of Italy's proposed provisions are as follows:

  • Part I – the definition of a new Bank of Italy regulation pursuant to Articles 4undecies and 6(1)(b) and cbis of Legislative Decree 58 of 24 February 1998 (the draft regulation), which will replace the current Bank of Italy and Italian Companies and Exchange Commission Joint Regulation and Bank of Italy Regulation 1097 of 29 October 2007; and
  • Part II – integrating Bank of Italy Circular 285 of 17 December 2013 .

Draft regulation

The draft regulation contains provisions regarding:

  • corporate governance;
  • whistleblowing;
  • internal control functions;
  • remuneration policies and practices;
  • the outsourcing of essential operational functions;
  • operational continuity; and
  • the deposit and sub-deposit of client assets relating to the provision of investment services and activities.

The relevant provisions will also apply to asset management companies that manage both undertakings for collective investment in transferable securities and alternative investments funds. Although asset management companies are not directly subject to MiFID II or MiFIR, the Italian legislature has deemed it appropriate to provide a single regulation which will apply to all regulated intermediaries to the extent that they provide investment services and activities.

Supplements to Circular 285

Part II of the proposed provisions concern the authorisation process for the provision of financial services and activities by:

  • Italian banks in Italy or abroad; and
  • EU and non-EU banks in Italy.

Circular 285 has been amended with regard to Italian and non-EU banks in order to:

  • specify the Italian legal framework applicable to such authorisation requests;
  • clarify the information that must be included in authorisation requests; and
  • define the lapse and withdrawal of authorisation requests.

As regards EU banks, Circular 285 has been amended to include a reference to the EU Delegated Regulation (2017/565),(3) which indicates the content and procedures for submitting a preliminary information report concerning the provision of investment services and activities in Italy to the competent authorities.

For further information on this topic please contact Andrea Giannelli or Marco Penna at Legance Avvocati Associati by telephone (+39 02 89 63 071) or email (agiannelli@legance.it or mpenna@legance.it ). The Legance Avvocati Associati website can be accessed at www.legance.com.

Endnotes

(1) Remarks, comments and counterproposals can be submitted to the Bank of Italy until 23 October 2018.

(2) In accordance with the principle of proportionality, detailed corporate governance provisions will be applicable only to larger intermediaries.

(3) The EU Delegated Regulation supplements MiFID II as regards the organisational requirements and operating conditions for investment firms.

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