Newsletter - CONSOB AND ITS ACTIVITIES
Newsletter
News of the week:
Watch for scams! Financial fraud: Consob blacks out 5 more abusive websites
Cryptoassets, ESMA urges speedy preparations for full implementation of MiCA Regulation
Consob provisions on securitisation are adopted
Artificial intelligence and market abuse, the dilemma of the rules at a Consob-Tor Vergata conference 17:00, Financial Education Course for SMEs
Save The Date: On 25 October 2023 at 17:00, Financial Education Course for SMEs
Save The Date: On 27 November 2023 at 10:00-12:00 - Conference to mark the “International Day for the Elimination of Violence against Women”: FREE TO COUNT - More
Financial Awareness Less Economic Violence
Commission decisions taken during the week
Consob has ordered the black-out of 5 new websites that offer financial services illegally.
The commission availed itself of the new powers resulting from the "Decreto Crescita" ("Growth Decree"; Law no. 58 of 28 June 2019, Article 36, paragraph 2-terdecies), on the basis of which Consob can order internet service providers to block access from Italy to websites offering financial services without the proper authorisation.
Below are the sites Consob has ordered to be blacked out:
- Axiancefx (website https://axiancefx.co);
- Investment Analysts (website https://investment- analysts.com and its page https://client.investment-analysts.com);
- Switchtrades Ltd (website www.switchtrades.com and itshttps://clientzonearea.accountifft.ppdashboard.webtraderclientzone.com);
- Top Markets Ltd (website www.europetrade.me and its page https://wt.europetrade.me);
- BTC System Pty Ltd (website https://btcsystem.net).
The number of sites blacked out since July 2019, when Consob was given the power to order the black-out of websites of fraudulent financial intermediaries, has thus risen to 955.
The measures adopted by Consob can be consulted on the website www.consob.it.
The black-out of these websites by internet service providers operating on Italian territory is ongoing. For technical reasons, it can take several days for the black-out to come into effect.
Consob draws investors' attention to the importance of adopting the greatest diligence in order to make informed investment choices, adopting common sense behaviours, essential to safeguard one's savings: these include, for websites that offer financial services, checking in advance that the operator with whom you are investing is authorised, and, for offers of financial products, that a prospectus has been published.
To this end, Consob would remind you that on the website www.consob.it there is a section on the homepage, "Watch for Scams!", providing useful information to warn investors against financially abusive initiatives.
ESMA, the European Securities and Markets Authority, issued a statement today urging governments, national authorities and market participants to accelerate as much as possible the transition process towards full implementation of MiCA, the European regulation governing cryptocurrencies and cryptoassets (https://www.esma.europa.eu/document/effective-application-mica-regulation).
In light of the risks to the protection of savings associated with cryptoassets, ESMA's Chair, Verena Ross, in a letter addressed to the EU ministers of the Economy and Finance, brought together in the ECOFIN Council, also calls on the governments of the Member States to identify without delay the national competent authorities, given that the EU Regulation - taking into account the differences in the architecture of the supervisory systems of the various Member States - refers, to the individual States, the task of identifying which authorities will have to perform the supervisory functions envisaged by MiCA at a national level.
At the same time, ESMA also recommends implementing the MiCA regulatory framework "as soon as possible" and in a convergent manner.
The Regulation, in fact, will come into force from the beginning of 2025, but provides the option for Member States to postpone by eighteen months the full application of the safeguards with which the MiCA regulation intends to protect investors from the risks of cryptoassets, until 1 July 2026.
ESMA emphasises that the MiCA represents a key step in the regulation of a sector that, to date, has eluded European financial services legislation. Even once MiCA has fully come into force, savers and investors need to be aware that there are no cryptoassets that can be considered safe and risk-free.
Following the public consultation with the market concluded on 16 May, the Commission adopted the Implementing Provisions of Article 4-septies.2, of the Consolidated Law on Finance - TUF, in order to:
(i) regulate, to the extent permitted by directly applicable European legislation, the notification of securitisation transactions to Consob and the organisational requirements applicable to the parties involved in the securitisation transaction,
(ii) specify the methods for submitting the request for authorisation, in accordance with Article 28 of the Securitisation Regulation, of third parties assessing the compliance of securitisations with the STS criteria (resolution no. 22833 of 9 October 2023, published in the Official Gazette of the Italian Republic no. 244 of 18 October 2023, effective from 19 October 2023).
The Regulation (EU) 2017/2402 (hereinafter, the "Securitisation Regulation") introduced a harmonised EU-wide framework for securitisations and a specific framework for simple, transparent and standardised securitisations (the STS securitisations), applicable as of 1 January 2019.
The aforementioned Regulation was subsequently amended by Regulation (EU) 2021/557, which set specific rules for securitisations of impaired assets and for so-called synthetic or on-balance-sheet securitisations.
Legislative Decree no. 131 of 3 August 2022 made amendments to Legislative Decree no. 58 of 24 February 1998 ("Consolidated Law on Finance - TUF") in order to adapt the national legislation to the provisions of the Securitisation Regulation. In particular, Article 4-septies.2 of the TUF assigns at a national level the supervisory powers arising from the Securitisation Regulation to Consob, the Bank of Italy, IVASS and COVIP.
Consob is responsible for supervising:
1. compliance with Article 3 for the sale of securitisations to retail customers;
2. compliance with Articles 6, 7, 8 and 9, when neither the originator, nor the original lender, nor the special purpose vehicle company, are supervised entities (i.e. banks, investment firms, management companies, financial intermediaries entered in the register provided for in Article 106 of Legislative Decree no. 385 of 1 September 1993, insurance companies or reinsurance companies, and institutions for occupational retirement provision) and there is no sponsor;
3. compliance by originators, sponsors and special purpose vehicle companies with Articles 18 to 27 of the STS Securitisation Regulation;
4. the third party verifier referred to in Article 27(2) of the Securitisation Regulation and to grant and revoke the authorisation referred to in Article 28.
Pursuant to Article 4-septies.2(9) of the Consolidated Law on Finance (TUF), Consob is vested with the power to lay down implementing provisions for the aforementioned Article within the scope of its powers.
The implementing provisions adopted confirm the framework presented to the market in the public consultation. In response to requests from respondents to the consultation, certain changes have been made to the data template submitted for consultation that can be used to fulfil the notification requirements established by the implementing provisions, in order to reduce the burden on operators where possible.
In particular, two separate data templates have been prepared for the notification of information referred to in Articles 6 to 9 and for the notification of data applicable only to STS securitisations.
For this second case, operators are allowed not to include in the data template the information they have already submitted via various templates to other supervisory authorities (ESMA, the ECB and the Bank of Italy), requiring instead that these templates be attached.
The two data templates and the technical procedures for their compilation and submission are published on Consob's website:
Template A - Corporate Securitisation
Template B - STS Securitisation.
The requirements for notification to Consob, established by the adopted provisions (Section II, paragraph 1, and Section III, paragraph 1), apply to securitisations issued after the entry into force of those provisions and to the securitisations issued after 1 January 2019 that are still outstanding at the date of entry into force of the provisions.
The requirements referred to in Section II, paragraph 2, concerning event-driven disclosure and those of Section III, paragraph 2, apply to securitisation transactions issued after 1 January 2019.
Section IV defines the timing and manner of compliance with the disclosure requirements; this includes specific provisions for transactions issued within three months of the effective date of the provisions, as well as for transactions issued after 1 January 2019 and that are still outstanding at the date of entry into force of the provisions.
The resolution for the adoption of the provisions together with the Report illustrating the results of the consultation are published on the Consob website at the following address: https://www.consob.it/web/area-pubblica/consultazioni?viewId=consultazioni_concluse.
The advance of Artificial Intelligence (AI) in finance, with systems capable of making autonomous investment decisions without human input, of interacting with each other and operating on the basis of opaque processes enclosed in a 'black box', raises the legal and ethical problem of the attribution of financial offences such as market abuse.
How to apply the rules, particularly the European regulatory framework for market abuse, is the question that the speakers attempted to answer at a conference, organised by Consob and the University of Rome - Tor Vergata, at which Consob's Legal Research Paper no. 29 "AI and Market Abuse: Do the Laws of Robotics Apply to Financial Transactions?" was presented.
At the conference, held in Rome at the Scuderie di Palazzo Altieri, the speakers considered the main possibilities, each with their limitations, for regulating 'strong' AI systems, equipped with self-learning capabilities, for which current rules cannot be applied, as they cannot be traced back to human instructions. Should 'strong' AI systems be given a legal personality? Should the cost caused by the offence be borne by the community? Should liability be attributed to the producer, programmer or user who created the risk of an offence by using the AI?
A risk-based approach is that which is examined by the proposed EU regulation on artificial intelligence, where a precautionary principle places strict limits on the use of AI systems with an "unacceptable" risk, while a preventive principle regulates those with a "high" risk.
However - emerging from the conference - if the creation of a risk capable of producing the event is sufficient for attribution, this could lead to an extension of the activities and services that qualify as "high risk", among which trading activity could also be included. This would result in more stringent requirements for operators.
Whichever solution is chosen - emerging from the conference - it will have to reconcile the desirability of not excessively restricting the margins of technological development with the need to ensure adequate levels of protection for the smooth functioning of the market.
Consob's Legal Research Paper no. 29 published last May "AI and Market Abuse: Do the Laws of Robotics Apply to Financial Transactions?" written by Federico Consulich (University of Turin), Marco Maugeri (European University of Rome), Carlo Milia, Tommaso Nicola Poli and Gianfranco Trovatore (Consob).
- conference poster, held at the Scuderie di Palazzo Altieri in Rome.
The third and final meeting of the Financial Education Course dedicated to SMEs will be held on 25 October, from 17:00 to 18:30, and the following topics will be discussed: "Development of the financial management of SMEs" by Cristiana Schena and Rossella Locatelli (UnInsubria) and "New financing channels for companies in the Capital Markets Union's vision" - by Federico Picco (Consob). Other speakers include Paola Mazzucchelli (YouCFO Partner) and Nicola De Rosa (Sales Manager of Max3 Spa).
Click here to attend the meeting.
The first meeting, on the subject of digital finance, was held on 11 October, with speeches by Irene Tagliamonte (Consob), Valeria Portale (Blockchain & Web 3 Observatory of the Politecnico di Milano Polimi) and Paola Squeri (Consob).
The second meeting, on "Fintech Decree-Law and the Pilot regime trial" was held on 16 October by Maria Tecla Rodi, Luca Astorri and Tommaso Poli of Consob.
On 27 November, from 10:00 to 12:00, at the Consob Auditorium in Rome, Via Claudio Monteverdi 35, the conference entitled "FREE TO COUNT - More financial awareness Less economic violence" will be held to mark the "International Day for the Elimination of Violence against Women".
The proceedings will be opened by the Chair of Consob, Paolo Savona, and Undersecretary of State, Minister of the Economy and Finance, Federico Freni.
Director and performer Micaela Ramazzotti will speak.
Discussing the issues are: Gabriella Alemanno (Consob Commissioner); Magda Bianco (Head of the Department of Customer Protection and Financial Education, Bank of Italy); Claudia Cattani (Chair of BNL-BNP Paribas); Maria Rosaria Covelli (Head of the Inspectorate General, Ministry of Justice); Alessandro Grispini (Head of Mental Health Unit District 2 - ASL Roma 1); Luisa Todini (Entrepreneur - Chair of Todini Finanziaria).
The conference moderator will be Roberto Sommella (Director, MF-Milano Finanza)
The detailed programme of the event will be available shortly.
Participation is free.
For organisational reasons, please register online: http://www.consob.it/web/area-pubblica/iscrizione-seminari.
Pursuant to Article 65-sexies, paragraph 6, of Legislative Decree no. 58/1998 ("TUF"), Article 38 of Consob Regulation no. 20249/2017 ("Market Regulation") and Article 6 of Delegated Regulation (EU) no. 2017/584, the outsourcing to the company WeMatch.live R&D Ltd of the technological services underlying the trading platform of the new segment of the MTF "BondVision Europe" for trading "dealer-to-client" interest rate swaps and, more specifically, the activities of technical management of the applications ("application management") and management of the technological infrastructure ("facility management"), has been authorised (decision of 18 October 2023).
Forfeiture, by express waiver, by Etianus Srl of the authorisation to carry out the activity of managing portals for the collection of capital and deletion of the company from the register provided for in Article 50-quinquies (2) of Legislative Decree no. 58 of 24 February 1998 (resolution no. 22849 of 18 October 2023).
Order, pursuant to art. 7-octies, letter b) of Italian Legislative Decree no. 58 of 24 February 1998 (Consolidated Law on Finance) to cease infringement of art. 18 of Consolidated Law on Finance, put in place by:
- Axiancefx via the website https://axiancefx.co (resolution no. 22853 of 18 October 2023);
- Investment Analysts via the website https://investment-analysts.com and its page https://client.investment-analysts.com (resolution no. 22854 of 18 October 2023);
- Switchtrades Ltd via the website www.switchtrades.com and page https://clientzonearea.accountifft.ppdashboard.webtraderclientzone.com (resolution no. 22851 of 18 October 2023);
- Top Markets Ltd via the website www.europetrade.me and its page https://wt.europetrade.me (resolution no. 22852 of 18 October 2023);
- BTC System Pty Ltd via the website https://btcsystem.net (resolution no. 22850 of 18 October 2023).