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Implementation regulation of legislative decree no. 58 of 24 February on the regulation of intermediaries (adopted by Consob with resolution no. 11522 of 1 July 1998 and amended by resolution no. 11745 of 9 December 1998, no. 12409 of 1 March 2000, no. 12498 of 20 April 2000, no. 13082 of 18 April 2001, no. 13710 of 6 August 2002, and no. 15961 of 30 May 2007) 1

The amendments made by resolution no. 15961 of 30 May 2007 are highlighted in bold in the article.

CONTENTS

BOOK I - LEGISLATIVE SOURCES AND DEFINITION

Article 1 Legislative sources
Article 2 Definitions

BOOK II - AUTHORIZATION OF SIMs AND TAKING UP OF BUSINESS IN ITALY BY EU AND NON-EU INVESTMENT FIRMS

Part I - Preliminary provisions
 Article 3 Definitions

Part II - Register
 Article 4 Register
Article 5 Contents of the register
Article 6 Publication of the register

Part III - Procedure for authorization to provide investment services
 Article 7 Applications for authorization
 Article 8 Documentation to be annexed to applications
Article 9 Examination of applications
Article 10 Extension of authorizations
Article 11 Renunciation of authorizations
Article 12 Suspension of the time limits for examinations
Article 13 Lapsing of authorizations
Article 14 Notifications on the performance of investment services

Part IV - Authorization procedure for non-EU investment firms
 Article 15 Applications for authorization
Article 16 Documentation to be annexed to applications
Article 17 Examination of applications
Article 18 Language of the acts
Article 19 Services that may not be provided without establishing branches (repealed)
Article 20 Applicable provisions

Part V - EU investment firms
 Article 21 Establishment of branches
Article 22 Performance of services without establishment of branches
Article 23 Services not subject to mutual recognition

Part VI - Final provisions
 Article 24 Final provisions

BOOK III - PROVISION OF INVESTMENT AND COLLECTIVE ASSET MANAGEMENT SERVICES

Part I - Preliminary provisions
 Article 25 Definitions

Part II - Regulation of the provision of investment and non-core services and of  collective asset management services

Title I - Investment and non-core services
Chapter I - General provisions
 Article 26 General rules of conduct
Article 27 Conflicts of interest
Article 28 Communication of information between intermediaries and investors
Article 29 Unsuitable transactions
Article 30 Contracts with investors
Article 31 Relationships between intermediaries and special categories of investor

Chapter II - Rules for the supply of individual services
Section I - Dealing
 Article 32 Dealing

Section II - Reception and transmission of orders, intermediation
 Article 33 Reception and transmission of orders
Article 34 Intermediation

Section III - Placement and door-to-door selling
 Article 35 Placement of financial instruments
Article 36 Door-to-door selling

Section III- bis – Supply of financial products issued by banks and insurance financial products
Article 36-bis   Supply of financial products issued by banks
Article 36-ter  Parties authorised to act as insurance intermediaries
Article 36-quater  Manner of disclosure
Article 36-quinquies  Insurance companies

Section IV - Portfolio management
 Article 37 Contracts with investors
Article 38 Characteristics of a management account
Article 39 Categories of financial instruments
Article 40 Types of transactions
Article 41 Leverage
Article 42 Benchmarks
Article 43 Supply of the service
Article 44 Financial instruments not traded in regulated markets
Article 45 Conflicts of interest in portfolio management
Article 46 Delegation of management

Section V - Financing
 Article 47 Financing of investors

Title II - Collective asset management services
 Article 48 General rules of conduct
Article 49 Conflicts of interest
Article 50 Investment objectives
Article 51 Churning
Article 52 Dealings between asset management companies
Article 53 Delegation of management
Article 54 Supply of the service
Article 55 Direct placement

Title II- bis - Provisions on ethical or socially responsible financing
 Article 55-bis Disclosure obligations
 Article 55-ter Obligations in the presentation of financial statements

Part III - Internal organization and procedures
 Article 56 Internal procedures
Article 57 Internal controls
Article 58 Internal code of conduct
Article 59 Complaints

Part IV - Confirmation, reporting and recording requirements
 Article 60 Confirmation of orders
Article 61 Information on transactions
Article 62 Periodic reports
Article 63 Recording of orders and transactions

Part V - Stockbrokers
Title I - General provisions
 Article 64 Stockbrokers

Title II - Accounting controls
 Article 65 Accounting controls
Article 66 Appointment and dismissal of auditors
Article 67 Communications to the supervisory authorities

Part VI - EU and non-EU intermediaries
 Article 68 EU and non-EU intermediaries

Part VII - Final and transitional provisions
 Article 69 Conservation of records and documents
 Article 70 Entry into force and transitional provisions

BOOK IV - DISTANCE MARKETING OF INVESTMENT SERVICES AND FINANCIAL PRODUCTS

Article 71 Definitions
 Article 72 Scope
Article 73 Persons
 Article 74 Limits on the use of means of distance communications
Article 75 Performance
 Article 76 Financial salesmen
 Article 77 Entry into force

BOOK V - ACTIVITY OF FINANCIAL SALESMEN

Part I Preliminary provisions
 Article 78 Definitions

Part II Organisation
 Article 79 Keeping the professional register
 Article 80 Supervision of Consob
 Article 81 Information between Consob and the Organisation
Article 82 Treatment of claims against the Organisation’s regulations
 Article 83 Requirements for representation by professional associations of salesmen and authorised parties

Part III Rules governing the register
 Article 84 The register of financial salesmen
 Article 85 Territorial sections
 Article 86 Requirements for registration
 Article 87 Evaluation test
 Article 88 Registration with the professional register
 Article 89 Striking off the professional register
 Article 90 Duties of the salesmen with respect to the Organisation

Part IV Activities of Financial salesmen
 Article 91 Range of activity
Article 92 Incompatibilities
 Article 93 General rules of conduct
 Article 94 Rules of presentation and conduct towards investors
Article 95 Conservation of documents

Part V Disciplinary and preventive measures
 Article 96 Disciplinary measures
Article 97 Preventive measures

Part VI Final and transitional provisions
 Article 98 Final and transitional provisions

ANNEXES

Annex 1 - MODEL PROGRAMME OF INITIAL ACTIVITIES

Annex 2 - DOCUMENTS CONCERNING CORPORATE OFFICERS, HOLDERS OF SIGNIFICANT INTERESTS AND BRANCH MANAGERS

Annex 3 - THE GENERAL RISKS OF INVESTMENTS IN FINANCIAL INSTRUMENTS

PART A - MEASURING THE RISK OF AN INVESTMENT IN FINANCIAL INSTRUMENTS

PART B - THE RISKINESS OF INVESTMENTS IN DERIVATIVE FINANCIAL INSTRUMENTS

PART C - THE RISKINESS OF AN INDIVIDUAL PORTFOLIO MANAGEMENT INVESTMENT STRATEGY

Annex 4 - REPORT ON THE SERVICES OF DEALING AND RECEIVING AND TRANSMITTING ORDERS

Annex 5 - REPORT ON THE SERVICE OF PORTFOLIO MANAGEMENT

Annex 6 - REPORT ON THE SERVICE OF FINANCING

Annex 7 - THE TERRITORIAL COMMISSIONS FOR THE REGISTER OF FINANCIAL SALESMEN

Annex 8 - THE MAIN RULES OF CONDUCT FOR FINANCIAL SALESMEN IN DEALINGS WITH INVESTORS

BOOK I
LEGISLATIVE SOURCES AND DEFINITIONS

Article 1
Legislative Sources

1. This Regulation is adopted under Articles 6.2, 19.3, 23.1, 25- bis.2, 27.3, 27.4, 28.3, 30.2, 30.5, 31.6, 32.2, 117-ter and 201.8 of Legislative Decree 58 of 24 February 1998 2.

Article 2
Definitions

1. In this Regulation:

a) "Consolidated Law" shall mean Legislative Decree 58 of 24 February 1998;

b) "group" shall mean group as determined on a general basis by the Bank of Italy.

BOOK II
AUTHORIZATION OF SIMs AND TAKING UP OF BUSINESS
 IN ITALY BY EU AND NON-EU INVESTMENT FIRMS

PART I
PRELIMINARY PROVISIONS

Article 3
Definitions

1. In this Book:

a) "register" shall mean the register referred to in Article 20.1 of the Consolidated Law;

b) "special section" shall mean the section of the register provided for in Article 60.4 of Legislative Decree 415 of 23 July 1996;

c) "section for non-EU firms" shall mean the section of the register in which non-EU investment firms authorized under Articles 28.1 and 28.2 of the Consolidated Law and operating with or without establishing branches in Italy shall be entered;

d) "list" shall mean the list of EU investment firms annexed to the register instituted in Article 20.1 of the Consolidated Law;

e) "branch" shall mean a place of business which is a part of an investment firm, which has no legal personality and which provides the firm's investment services and non-core services;

f) "EU state" shall mean a state belonging to the European Union;

g) "non-EU state" shall mean a state not belonging to the European Union;

h) "home member state" shall mean an EU state as defined in Article 1.6 of Directive 93/22/EEC of 10 May 1993;

i) "home state" shall mean the non-EU state in which an investment firm has its registered office;

l) "investment services" shall mean the services defined in Article 1.5, of the Consolidated Law;

m) "non-core services" shall mean the services defined in Article 1.6 of the Consolidated Law;

n) "services subject to mutual recognition" shall mean the services defined in Article 1(1s) of the Consolidated Law;

o) "Decree 468/1998" shall mean Decree 468 of 11 November 1998 issued by the Minister of the Treasury and of the Budget and Economic Planning; 3

p) "Decree 469/1998 shall mean Decree 469 of 11 November 1998 issued by the Minister of the Treasury and of the Budget and Economic Planning; 4

q) "qualifying interest" shall mean that determined on a general basis by the Bank of Italy;

r) "significant interest" shall mean that determined by the Minister of the Treasury and of the Budget and Economic Planning.

PART II
REGISTER

Article 4
Register

1. The following shall be entered in the register referred to in Article 20 of the Consolidated Law:

a) SIMs;

b) non-EU investment firms, in the section for non-EU firms;

c) companies referred to in the first sentence of Article 60.4 of Legislative Decree 415 of 23 July 1996, in the special section.

2. A list in which EU investment firms shall be entered shall be annexed to the register.

Article 5
Contents of the register

1. In the register, the following shall be indicated for each SIM that is entered:

a) the serial number of entry;

b) the corporate name;

c) the registered office;

d) the head office;

e) the particulars of the authorization to provide investment services, with a specification of the investment services authorized and any operating limits thereon;

f) the details of the measures adopted pursuant to Articles 53, 56 and 57 of the Consolidated Law; 5

g) the details of the application referred to in Article 11 6.

2. In the section for non-EU investment firms, the following shall be indicated for each non-EU investment firm that is entered:

a) the serial number of entry;

b) the corporate name;

c) the registered office;

d) the head office;

e) the particulars of the authorization to perform investment services and non-core services referred to in Article 28 of the Consolidated Law within the territory of the Republic, with a specification of the services authorized and any operating limits thereon;

f) any branches in Italy;

g) the details of the measures adopted pursuant to Articles 53, 56 and 57 of the Consolidated Law; 7

h) the details of the application referred to in Article 11 8.

3. In the special section, the following shall be indicated for each company referred to in Article 60.4 of Legislative Decree 415 of 23 July 1996 that is entered:

a) the serial number of entry;

b) the corporate name;

c) the registered office;

d) the head office;

e) the particulars of the authorization to supply the service of portfolio management on an individual basis, inter alia by means of fiduciary registration;

f) the details of the measures adopted pursuant to Articles 53, 56 and 57 of the Consolidated Law; 9

g) the details of the application referred to in Article 11 10.

4. In the annexed list, the following shall be indicated for each EU investment firm that is entered:

a) the serial number of entry;

b) the corporate name;

c) the registered office;

d) the head office;

e) the services subject to mutual recognition that the firm may perform in Italy;

f) the particulars of the authorization to provide services not subject to mutual recognition referred to in Article 27.4 of the Consolidated Law in Italy, specifying the services authorized;

g) any branches in Italy.

h) the details of the measures adopted pursuant to Article 57 of the Consolidated Law. 11

Article 6
Publication of the register

1. By 31 March of every year Consob shall publish the register updated to 31 December of the preceding year in a Special Edition of the Bulletin.

PART III
PROCEDURE FOR AUTHORIZATION TO PROVIDE INVESTMENT SERVICES

Article 7
Applications for authorization

1. Applications for authorization to provide investment services, signed by the company's legal representative and complying with the provisions in force on stamp duty, shall be submitted to Consob.

2. ...omissis... . 12

3. Applications shall indicate:

a) the corporate name, the registered office, the head office and the telephone, telex and fax numbers thereof;

b) the investment services for which authorization is sought. Where applications for authorization involve, jointly or severally, the services of:

1) placement, with or without firm commitment underwriting or standby commitments to issuers;

2) portfolio management on an individual basis;

3) reception and transmission of orders and bringing together two or more investors, applications must also specify whether the company is applying for authorization to perform such services without the company holding customers' liquid balances and financial instruments, even temporarily, and without the company assuming risks;

c) the list of documents annexed.

4. Consob shall verify the completeness of applications within 20 days of receipt thereof and shall notify the company of any missing documentation, which must be sent to Consob within 60 days of receipt of the notice, on penalty of the inadmissibility of the application.

5. Applications shall be dated from the day they are submitted, or, in the case of incomplete documentation, from the day the documentation is completed.

Article 8 13
Documentation to be annexed to applications

1. Applications for authorization shall be accompanied by the following documentation:

a) documents concerning the company:

1) authentic copy of the constituent document and bylaws accompanied by certification as to their being in effect, issued by the Office of the company register not more than 90 days prior to the submission of the application;

 2) certificate attesting that the company is entered in the company register, issued not more than 90 days prior to the submission of the application;

 3) statement of the chairman of the board of auditors attesting the amount of paid-in share capital and the amount and composition of shareholders' equity at the time of submission of the application;

 4) for companies that are already operating, a statement of assets and liabilities drawn up in compliance with the rules on the annual accounts with reference to a date not more than 60 days prior to the submission of the application. The statement of assets and liabilities must be accompanied by a report of the board of auditors;

 5) list of names and complete identification data of all the members of the board of directors and the board of auditors, with an indication of their powers, and of the managing directors, if any, general managers and persons who perform functions equivalent to those of general manager;

 6) list of the persons who directly or indirectly hold shares in the company, with an indication of their respective interests in terms of amounts and percentages; for indirect interests, the person through whom the interest is held;

 7) programme of initial operations, drawn up according to the model in Annex 1;

 8) report on the organizational structure of the company, drawn up according to the general rules established by the Bank of Italy for the administrative and accounting procedures and internal controls of securities market intermediaries;

b) documents concerning holders of significant interests and the group: the documentation envisaged by the provisions of the Bank of Italy for the purpose of verifying the suitability of any person intending to acquire a qualifying interest in a SIM or the group of which the SIM is part as regards ensuring the sound and prudent management of the company and not impeding effective supervision. The documentation shall refer to the persons indicated in such provisions. With regard to the integrity requirements, the following documentation shall be submitted:

b1) where the person is a natural person:

1) statement by each holder of a significant interest in the applicant company specifying the size of the direct and indirect interests in the company and the identification data of any nominees, trust companies and subsidiary companies through which the interest in the company is held. A copy of any agreements on the exercise of voting rights must be attached to the statement;

 2) the documentation referred to in Annex 2.

b2) where the person is a legal person or a partnership, the integrity requirements must be fulfilled by all the members of the board of directors or equivalent body and by the general manager or those performing equivalent functions, and the following documentation submitted:

1) statement by each holder of a significant interest in the applicant company specifying the size of the direct and indirect interests in the company and the identification data of any nominees, trust companies and subsidiary companies through which the interest in the company is held. A copy of any agreements on the exercise of voting rights must be attached to the statement;

2) minutes of the meeting of the board of directors or, in the case of a sole director, of the board of auditors -- or equivalent bodies -- of the person holding the significant interest in which the body expressed its opinion on the integrity of the directors, general manager or those performing equivalent functions. The minutes must be accompanied by the documentation referred to in Annex 2 on which such deliberations were based.

Proof that the integrity requirements are fulfilled shall not be required of holders of a significant interest (natural persons or corporate officers of a legal person or partnership) who at the time the application is submitted are a director or general manager, or the equivalent, of an Italian bank, a SIM, a SICAV, an SGR, an EU bank or investment firm, a non-EU bank or investment firm authorized to provide services in Italy, a management company of regulated markets referred to in Article 61 of the Consolidated Law, a central securities depository referred to in Article 80 of the Consolidated Law, or an insurance company referred to in Legislative Decrees 174 and 175 of 17 March 1995. The provisions of this subparagraph b) shall also apply to anyone, regardless of the size of the interest held, who controls the SIM within the meaning of Article 23 of Legislative Decree 385 of 1 September 1993;

c) documents concerning corporate officers;

- minutes of the meeting of the board of directors or, in the case of a sole director, of the board of auditors in which the body expressed its opinion on the experience and integrity of the corporate officers and directors and on the non-existence of impediments to the holding of office or causes of suspension therefrom referred to in Decree 468/1998. The minutes must be accompanied by the documentation referred to in Annex 2 on which such deliberations were based.

2. The documents referred to in paragraph 1 attesting to integrity credentials must be issued not more than ninety days prior to the submission of the application.

3. Where the documentation specified in paragraph 1a) is already in Consob's possession, the applicant company shall be exempted from producing it. The application must indicate this circumstance and the date of transmission of the documentation to Consob.

4. The statements referred to in Annex 2, points 4, 5 and 6, shall be made in conformity with Article 47 of Presidential Decree 445 of 28 December 2000. For foreigners not resident in Italy, the statements referred to in Annex 2, points 5, 6 and 7, shall be made in conformity with the provisions of Law 1253 of 20 December 1966. 14

Article 9
Examination of applications

1. Consob, after receiving applications, shall ascertain that the conditions specified in Article 19.1 of the Consolidated Law for granting the authorization are fulfilled and, after consulting the Bank of Italy, shall decide on applications within a maximum of one hundred and twenty days. Authorization shall be denied where verification of such conditions does not establish that the sound and prudent management of the company is ensured and where the conditions referred to in Article 3.3 of Directive 93/22/EEC of 10 May 1993 are not fulfilled. In the cases referred to in Article 6 of Directive 93/22/EEC, the competent authorities of the member state involved shall be consulted before the decision is made.

2. Any change that occurs during the examination with regard to the corporate officers of the company or holders of significant interests therein or in any other element material to the decision shall be immediately notified to Consob. Within sixty days of the occurrence of the event, the company shall submit the related documentation 15.

3. Consob may request additional information from:

a) the applicant company;

 b) the directors, members of the board of auditors, general managers and members of the applicant company;

c) any other person, whether Italian or foreign.

4. Where one hundred and twenty days elapse without Consob deciding on an application, it shall be deemed to have been accepted.

Article 10
Extension of authorizations

1. SIMs intending to be authorized to perform additional investment services shall send an application to Consob in compliance with Article 7. An analogous application shall be submitted by SIMs already organized to perform the services of:

a) placement, with or without firm commitment underwriting or standby commitments to issuers;

 b) portfolio management on an individual basis;

 c) reception and transmission of orders and bringing together two or more investors, without holding customers' liquid balances and financial instruments, temporarily or otherwise, and without the company assuming risks, where SIMs intend to perform such services holding customers' liquid balances and financial instruments, temporarily or otherwise, or with the company assuming risks.

2. Applications shall be accompanied by the following documentation:

a) programme of initial operations, drawn up according to the model in Annex 1, regarding the services to be authorized;

 b) report on the organizational structure of the company, drawn up according to the general rules established by the Bank of Italy for the administrative and accounting procedures and internal controls of securities market intermediaries;

c) statement of the chairman of the board of auditors attesting to the amount of paid-in share capital and the amount and composition of shareholders' equity at the time of submission of the application;

 d) where it was necessary to amend the constituent document and bylaws, authentic copy of the minutes of the shareholders' meeting with the related decree of validation.

3. Consob shall ascertain that the conditions for granting authorization are fulfilled and, after consulting the Bank of Italy, shall decide on applications within a maximum of one hundred and twenty days. Authorization shall be denied where verification of such conditions does not establish that the sound and prudent management of the company is ensured

4. Articles 7.4 and 7.5 and Articles 9.3 and 9.4 shall apply.


Article 11
Renunciation of authorizations

1. SIMs intending to renounce authorization to provide one or more investment services shall submit an application for revocation to Consob. After consulting the Bank of Italy, Consob shall decide on the application within a maximum of one hundred and twenty days. 16

2. Articles 9.3 and 9.4 shall apply.


Article 12 17
Suspension of the time limits for examinations

1. The time limits established for completion of the examinations referred to in Articles 9, 10 and 11 shall be suspended:

a) where, in preparing the documentation to be attached to the application, the applicant company includes declarations in lieu of instruments drawn up by a notary public pursuant to Article 4 of Law 15/1968 and it is necessary to verify their truthfulness, until Consob receives the documentation from the competent person or governmental authority;

 b) in the cases referred to in Article 6 of Directive 93/22/EEC, for the time necessary to conduct the prior consultation provided for therein;

 c) in the cases referred to in Article 9.2 from the date of receipt of the notification concerning the intervening changes to the date of receipt by Consob of the related documentation;

 d) in the cases referred to in Article 9.3 from the date of transmission of the request for information to the date of receipt by Consob of such information;

 e) in the cases referred to in Articles 10 and 11, where supervisory investigations of the SIM are being conducted, for the time necessary to complete the investigations. 18

2. In the cases referred to in paragraph 1, subparagraphs a), b), c) and e), Consob shall notify the interested parties of the beginning and the end of suspensions of the examination.

Article 13 19
Lapsing of authorizations

1. SIMs shall commence performing each authorized investment service within twelve months of the date of the related authorization, on penalty of lapse of the authorization.

2. SIMs that have interrupted the performance of an authorized investment service shall resume it within six months, on penalty of lapse of the related authorization.

3. The time limits established shall be deferred or interrupted where a SIM is or becomes subject to supervisory investigations. In such cases the original time limits shall be applied again in full when the investigations are completed. 20

4. The lapsing of authorization shall be declared by Consob after consulting the Bank of Italy.

5. Consob may defer the declaration of the lapsing of authorization where a SIM has omitted the notification of the interruption of the performance of authorized investment services provided for in Article 14 and such deferment is necessary to protect the interests referred to in Article 5.1 of the Consolidated Law.

Article 14
Notifications on the performance of investment services

1. SIMs shall immediately notify Consob and the Bank of Italy of the dates of commencement, interruption and resumption of the performance of each authorized investment service.

PART IV
AUTHORIZATION PROCEDURE FOR NON-EU INVESTMENT FIRMS

Article 15 21
Applications for authorization

1. Applications, signed by the legal representative of the firm and complying with the provisions in force on stamp duty, shall be submitted to Consob. The time limits for the examination shall be suspended until the understandings have been amended to permit supervision of the firm's financial stability and procedures for limiting risk and the continued existence of the conditions required at the time authorizations are granted. 22

2. Applications shall indicate:

a) the corporate name, the registered office, the head office and the telephone, telex and fax numbers thereof;

 b) the investment and non-core services for which authorization is sought, with the specification of those that the firm intends to perform through the establishment of branches. Where the applications for authorization involves, jointly or severally, the services of:

1) placement, with or without firm commitment underwriting or standby commitments to issuers;

 2) portfolio management on an individual basis;

 3) reception and transmission of orders and bringing together two or more investors, applications must also specify whether the company is applying for authorization to perform such services without the company holding customers' liquid balances or financial instruments, even temporarily, and without the company assuming risks;

c) the list of documents annexed.

4. Articles 7.4 and 7.5 shall apply.

Article 16
Documentation to be annexed to applications

1. Applications for authorization shall be accompanied by the following documentation regarding the applicant firm:

a) authentic copy of the constituent document and bylaws certified as being in effect by the competent authorities of the home state not more than 90 days prior to the submission of the application;

 b) statement of the chairman of the board of auditors or body, however named, entrusted with equivalent functions attesting to the amount of paid-in share capital and to fact that the firm is not subject to bankruptcy or equivalent proceedings;

 c) list of names and identification data of the members of the board of directors and the board of auditors or bodies, however named, entrusted with equivalent functions, with an indication of the powers attributed to the individual members;

 d) indication of the person who controls the firm, according to the notion of control referred to in Article 23 of Legislative Decree 385 of 1 September 1993;

 e) map of the group giving the geographical location of its components and principal branches of activity;

 f) statement of assets and liabilities referring to a date not more than 60 days prior to that of transmission of the application;

 g) programme of initial operations that the firm intends to perform in Italy, containing in every case a description of the manner in which the services are to be performed and customers solicited, drawn up according to the model in Annex 1;

h) authentic copy of the authorization to perform the services that the firm intends to perform in Italy, issued by the competent authorities of the home state. 23

2. In the event that branches are to be established, without prejudice to the provisions of paragraph 1, applications shall also be accompanied by the following documentation:

a) description of the organizational structure of the branches, drawn up, where compatible, according to the general rules established by the Bank of Italy for the administrative and accounting procedures and internal controls of securities market intermediaries;

b) documents concerning the branch managers:

- minutes of the meeting of the board of directors or, in the case of a sole director, of the board of auditors, or of the equivalent bodies, in which the body expressed its opinion on the experience and integrity of the branch managers and on the non-existence of impediments to the holding of office or causes of suspension therefrom referred to in Decree 468/1998. The minutes must be accompanied by the documentation referred to in Annex 2 on which such deliberations were based; 24

c) statement attesting to the paying in of the endowment fund of the first branch in an amount not smaller than that determined by the Bank of Italy pursuant to Article 19(1d) of the Consolidated Law.

3. Articles 8.2, 8.3 and 8.4 shall apply.

Article 17
Examination of applications

1. Consob shall ascertain that the conditions for granting the authorization specified in Article 28 of the Consolidated Law are fulfilled and, after consulting the Bank of Italy, shall decide on applications within a maximum of one hundred and twenty days. The decision shall be notified to the applicant firm and the authority of the home state.

2. Any change that occurs during the examination with regard to the directors, members of the board of auditors, or persons performing equivalent functions, members exercising control of the investment firm or managers of the branch of the firm, or in any other element material to the decision shall be immediately notified to Consob. Within sixty days of the occurrence of the event, the firm shall submit the related documentation. 25

3. Consob may request additional information from:

a) the applicant firm;

b) the directors, members of the board of auditors and members of the applicant firm;

c) any other person, whether Italian or foreign.

4. Where one hundred and twenty days pass without Consob deciding on an application, it shall be deemed to have been accepted.

Article 18
Language of the acts

1. Applications for authorization referred to in Article 15 and the statements and information to be provided pursuant to Articles 16 and 17 must be produced in Italian. Documents whose originals are in a language other than Italian must be accompanied by an Italian translation.

Article 19
Services that may not be provided without establishing branches

... omissis ... . 26

Article 20
Applicable provisions

1. The provisions of Articles 10, 11, 12.1, subparagraphs a), b), c), d) and e), 12.2, 13 and 14 shall apply. 27

PART V
EU INVESTMENT FIRMS

Article 21
Establishment of branches

1. In order to perform services subject to mutual recognition, EU investment firms may establish branches in Italy. The competent authorities of the home member state shall notify the Bank of Italy and Consob before the establishment of the first branch.

2. The branch may commence business as soon as it receives specific notification from Consob or, if no notification is received, within two months of the last of the notifications referred to in paragraph 1.

3. In the event that a change in the information contained in the notification referred to in paragraph 1 is envisaged, the investment firm shall give written notice of that change to the Bank of Italy and Consob at least one month before proceeding with the change. The competent authorities of the home member state shall notify the Bank of Italy and Consob before the change is carried out.

Article 22
Performance of services without establishment of branches

1. EU investment firms may perform services subject to mutual recognition in Italy without establishing branches, provided that the Bank of Italy and Consob are notified by the authority of the home member state.

2. In the event of a change in the information contained in the notification referred to in paragraph 1, the investment firm shall notify the Bank of Italy and Consob in writing of the change in question before carrying it out.

Article 23
Services not subject to mutual recognition

1. Consob, after consulting the Bank of Italy, shall authorize EU investment firms to perform services in Italy governed by the Consolidated Law that are not subject to mutual recognition.

2. The granting of authorization shall be subject to the following conditions:

a) effective performance in the home member state in accordance with the provisions in force there, of the services which the investment firm intends to perform in Italy;

b) submission of a programme of operations indicating, in particular, the services that the investment firm intends to provide and the related types of operation, and, in every case, whether the services will be provided through a branch.

3. Applications for authorization, signed by the investment firm's legal representative and in compliance with the provisions in force on stamp duty, shall be submitted to Consob. The provisions of Articles 7.4, 7.5, and 18 shall apply.

4. ... omissis ... 28.

5. Applications must indicate:

a) the corporate name, the registered office, the head office and the telephone, telex and fax numbers thereof;
 b) the services which the firm intends to provide;
 c) the list of documents annexed.

6. Applications for authorization shall be accompanied by the following documentation:

a) statement issued by the competent authority of the home member state that the investment firm effectively and regularly performs in that state the services for which authorization is sought, in accordance with the provisions in force in that state;
 b) programme of operations referred to in paragraph 2(b), containing in every case a description of the manner in which the services are to be performed and customers solicited, drawn up according to the model in Annex 1.

7. Consob, after consulting the Bank of Italy, shall decide on applications within a maximum of one hundred and twenty days. The decision shall be notified to the applicant firm and the authority of the home member state.

8. Where one hundred and twenty days pass without Consob deciding on an application, it shall be deemed to have been accepted.

9. Consob and the Bank of Italy shall indicate to the investment firm the conditions, including the rules of conduct, with which, in the interest of the general good, the provision of the services must comply. The provisions of Articles 9.2, 9.3, 10, 11, 12.1, subparagraphs a), b), c), d) and e), 12.2, 13, 14 and 18 shall apply. 29

PART VI
FINAL PROVISIONS

Article 24
Final provisions

1. The provisions of this Book shall enter into force on the day following that of publication in the Gazzetta Ufficiale.

2. The provisions of this Book shall also apply to examinations in course at the date of its entry into force.

3. In the cases referred to in paragraph 2, Consob may request the supplemental documentation necessary for the examination and the time limits for the completion of the examination shall be suspended until the date of receipt by Consob of the complete documentation.

4. Regulation 10418 of 1996 shall be repealed from the date of entry into force of this Book.


BOOK III
PROVISION OF INVESTMENT SERVICES AND COLLECTIVE ASSET MANAGEMENT SERVICES

PART I
PRELIMINARY PR1OVISIONS

Article 25
Definitions

1. In this regulation:

a) "investment services" shall mean the services referred to in Article 1.5 of the Consolidated Law and those referred to in Section A of the table annexed thereto;

b) "non-core services" shall mean the services referred to in Article 1.6 of the Consolidated Law and those referred to in Section C of the table annexed thereto;

b-bis) «insurance financial products»: the policies and operations under the life insurance divisions III and V pursuant to article 2, paragraph 1 of legislative decree of 7 September 2005, no. 209, with exclusion of the individual pension forms pursuant to article 13, paragraph 1, letter b), of legislative decree no. 252 of 5 December 2005 30

c) "stockbrokers" shall mean the persons entered in the register referred to in Article 201.7 of the Consolidated Law;

d) "authorized intermediaries" or "intermediaries" shall mean Italian investment firms (SIMs), including the companies referred to in Article 60.4 of Legislative Decree 415/1996, Italian banks authorized to supply investment services, stockbrokers, financial intermediaries entered in the list referred to in Article 107 of Legislative Decree 385/1993 authorized to supply investment services, asset management companies for the supply of portfolio management services on an individual basis, Poste Italiane S.p.A. authorized to provide investment services pursuant to Presidential Decree 144 of 14 March 2001, and EU and non-EU investment firms and banks authorized to supply investment services in Italy; 31

b-bis) “parties authorised to act as insurance intermediaries”: investment firms and community investment companies, Italian and community banks, financial intermediaries registered with the registry as provided under article 107 of legislative decree no. 385 of 1 September 1993, the Italian Post Office Company – Post Office Bank Service Division, authorised in accordance with article 2 of decree no. 144 of the President of the Republic of 14 March 2001, even when they operate through financial salesmen, employees, collaborators, or other appointees 32

e) "office" or "branch" shall mean an establishment, other than the registered office of the authorized intermediary, consisting of a stable organization of means and persons, open to the public, and possessing technical and decision-making autonomy that, on a continuous basis, provides investment services and, in the case of asset management companies and SICAVs, collective asset management services;

f) "OECD markets" shall mean markets established, organized and regulated by provisions adopted or approved by the competent authorities in accordance with the laws in force in the OECD country in which they are established;

g) "regulated markets" shall mean markets entered in the register referred to in Article 63.2 of the Consolidated Law, including those entered in the section referred to in Article 67.1 thereof, and OECD markets.

h) "warrants" shall mean financial instruments, however designated, that give the right to buy and/or sell, on or by the maturity date, a certain quantity of financial instruments, interest rates, foreign currencies, goods or related indexes (the underlying asset) at a predetermined price or, in the case of contracts providing for settlement in cash, to receive a sum of money determined as the difference between the settlement price of the underlying asset and the exercise price or as the difference between the exercise price and the settlement price of the underlying asset. 33


PART II
REGULATION OF THE PROVISION OF INVESTMENT AND NON-CORE SERVICES
AND OF COLLECTIVE ASSET MANAGEMENT SERVICES

Title I
Investment and non-core services

Chapter I
General provisions

Article 26
General rules of conduct

1. Authorized intermediaries, in the interest of investors and the integrity of the securities market, shall:

a) operate independently and according to the principles and general rules of the Consolidated Law;

b) comply with the rules for the functioning of the markets in which they operate;

c) refrain from any conduct that might benefit one investor at the expense of another;

d) carry out orders given by investors promptly;

e) acquire a knowledge of own and third-party financial instruments, services and products other than investment services they provide that is adequate in relation to the type of service to be performed;

f) operate so as to keep down the costs borne by investors and to obtain the best possible result from each investment service, taking into account the level of risk chosen by the investor.

Article 27
Conflicts of interest

1. Authorized intermediaries shall be on the alert for conflicts of interest.

2. Authorized intermediaries may not carry out transactions with or on behalf of their clients where they have directly or indirectly a conflicting interest, including any such interest arising from intragroup dealings, the joint provision of more than one service or other business dealings of their own or of group companies, unless they have previously informed the investor in writing of the nature and extent of their interest in the transaction and the investor has expressly agreed in writing to the carrying out thereof. Where the transaction is concluded by telephone, compliance with the foregoing information requirements and the issue of the related authorization by the investor must be evidenced by a recording on magnetic tape or an equivalent medium.

3. Where, for the purpose of complying with the requirements referred to in paragraph 2, authorized intermediaries use printed forms, these must indicate in a graphically highlighted manner that the transaction involves a conflict of interest.

Article 28
Communication of information between intermediaries and investors

1. Before concluding contracts for asset management or investment advice services and starting to supply investment services or related non-core services, authorized intermediaries must: 34

a) ask investors for information about their experience in investing in financial instruments, financial situation, investment objectives and propensity to incur risks. In the event of refusal to provide the information requested, this must be stated in the contract referred to in Article 30 or in a declaration signed by the investor;

b) give investors a copy of the document on the general risks of investments in financial instruments referred to in Annex 3.

2. Authorized intermediaries may not carry out or recommend transactions or supply management services until they have provided investors with adequate information on the nature, risks and implications of the transaction or service in question, knowledge of which is needed to make informed investment and disinvestment decisions. 35

3. Authorized intermediaries shall promptly inform investors in writing as soon as transactions in derivative instruments or warrants that they have ordered for purposes other than hedging give rise to an actual or potential loss equal to or exceeding 50% of the means provided for the purpose of carrying out and guaranteeing such transactions. The reference value of such means shall be redetermined at the time of the communication of the loss to the investor and where deposits or withdrawals are made. The new reference value shall be promptly communicated to the investor. Where deposits or withdrawals are made, the result achieved until such time shall be communicated to the investor. 36

4. Authorized intermediaries shall promptly inform investors in writing where the assets entrusted to them for management have diminished in value as a result of actual or potential losses by 30% or more of the total value of the assets under management at the beginning of each year or, if later, at the date on which the relationship began, taking into account any deposits or withdrawals. An analogous communication must be made at the time of every further diminution equal to or exceeding 10% of such value.

5. Authorized intermediaries shall promptly make available documents and recordings in their possession concerning investors who apply for them, against reimbursement of the expenses actually incurred.

Article 29
Unsuitabletransactions

1. Authorized intermediaries shall refrain from carrying out transactions on behalf of investors that are not suitable in terms of type, object, frequency or size.

2. For the purposes of paragraph 1, authorized intermediaries shall take into account the information referred to in Article 28 and any other information available in relation to the services supplied.

3. Where an authorized intermediary receives instructions from an investor relative to an unsuitable transaction, it shall inform the investor of the fact and state the reasons why it is not advisable to carry out the transaction. Where the investor nonetheless intends to proceed with the transaction, the authorized intermediary may carry it out only on the basis of an order given in writing or, in the case of orders given by telephone, recorded on magnetic tape or an equivalent medium in which explicit reference is made to the warning received.

Article 30
Contracts with investors

1. Authorized intermediaries may not supply investment services except on the basis of a contract in writing; a copy of the contract shall be given to the investor.

2. The contract with the investor must:

a) specify the services provided and their characteristics;

b) establish the period of validity of the contract and the procedure for renewing it, and the procedure for modifying the contract;

c) specify the procedures by means of which the investor may give orders and instructions;

d) establish the frequency, type and content of the documentation to be sent to the investor to report on the activity carried out;

e) specify and regulate, with reference to contracts for trading and the reception and transmission of orders, the procedures for providing and replenishing the means for carrying out or guaranteeing the transactions ordered, with the means provided for carrying out transactions involving derivative financial instruments and warrants indicated separately; 37

f) specify any other contractual conditions agreed with the investor for the supply of the service.

3. The provisions of this article shall not apply to the supply of the following services:

a) placement services, including door-to-door selling and distance marketing;

b) non-core services, except for those of financing investors and providing investment advice concerning financial instruments. 38

Article 31
Relationships between intermediaries and special categories of investor

1. Except as provided for by specific statutory provisions and unless agreed otherwise by the parties, in the relationships between authorized intermediaries and professional investors the following provisions shall not apply: Articles 27, 28, 29, 30, paragraph 1, except for management services, and paragraphs 2 and 3, 32, paragraphs 3, 4 and 5, 37, except for paragraph 1(d), 38, 39, 40, 41, 42, 43, paragraph 5(b), paragraph 6, first sentence, and paragraphs 7(b) and 7(c), 44, 45, 47.1, 60, 61 and 62.

2. Professional investors shall mean authorized intermediaries, asset management companies, SICAVs, pension funds, insurance companies, foreign persons who, pursuant to the law in force in their home country, carry on the activities carried on by the foregoing persons, companies and entities that issue financial instruments traded in regulated markets, companies entered in the lists referred to in Articles 106, 107 and 113 of Legislative Decree 385 of 1 September 1993, financial salesmen, natural persons who document their possession of the professional qualifications referred to in the Consolidated Law for persons performing administrative, managerial or control functions in SIMs, banking foundations, and companies or legal persons possessing specific expertise and experience in matters of transactions in financial instruments expressly declared in writing by their legal representative. 39


Chapter II
Rules for the supply of individual services

Section I
Dealing

Article 32
Dealing

1. In performing dealing services, authorized intermediaries shall execute orders according to the time priority of their reception.

2. Refusal to execute an order must be promptly communicated to the investor.

3. Without prejudice to the provisions of the regulation referred to in Article 25.2 of the Consolidated Law, authorized intermediaries shall carry out transactions for own or customer account at the best possible conditions with reference to the time, size and nature of the transactions. In determining the best possible conditions consideration shall be given to the price paid or received and the other costs borne directly or indirectly by the investor.

4. The requirements referred to in paragraph 3 shall be considered satisfied where the transaction is carried out:

- during official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market;

- outside official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market or an organized trading system. 40

5. In supplying the service of dealing for own account, authorized intermediaries shall inform the investor at the time of receiving the order of the price at which they are prepared to buy or sell the financial instruments and execute the trade upon receiving the investor's consent; they may not charge any commission on the price agreed.

6. In supplying the service of dealing for customer account, the price received or paid by the customer shall be exclusively that received or paid by the intermediary, without prejudice to the charging of commissions and expenses.

Section II
Reception and transmission of orders, intermediation

Article 33
Reception and transmission of orders

1. In supplying the service of receiving and transmitting orders, authorized intermediaries shall transmit the orders they receive promptly to other intermediaries authorized to engage in dealing or placement, and to EU and non-EU intermediaries authorized in their home country to supply the service of receiving and transmitting orders.

2. Orders shall be transmitted in the same order as they are received; in no circumstances may orders of the opposite sign be offset nor, except as provided for in paragraph 3, may orders be batched.

3. In the case of orders to buy or sell, authorized intermediaries may, when transmitting them to the dealing intermediary, batch individual orders received from investors where that is compatible with the nature of the orders and the operating procedures of the market in which they are to be executed do not involve the formation of prices for individual trades. In no case may orders issued by intermediaries for own account be batched with those issued by investors.

4. In the case of orders in connection with placements, authorized intermediaries may transmit such orders to the intermediaries handling the placement provided:

a) delivery to the investor of the prescribed information document is ensured;

b) procedures are adopted that ensure observance by the placing intermediary of the allotment criteria established for the offer.

5. Refusal to transmit an order must be immediately communicated to the investor.

6. The provisions of this article shall not apply where the authorized intermediary executes the orders directly.

Article 34
Intermediation

1. In supplying the service of intermediation, authorized intermediaries shall bring together two or more investors for the purpose of concluding transactions involving financial instruments.

2. Without prejudice to the provisions of Article 27, in carrying out the engagement authorized intermediaries shall communicate to each investor the information in their possession concerning the characteristics of the transaction.

3. Authorized intermediaries may be paid a commission by each party, regardless of whether the transaction is actually concluded.


Section III
Placement and door-to-door selling

Article 35
Placement of financial instruments

1. In supplying the service of placement, authorized intermediaries shall observe the instructions given by the offeror or the person who organizes and sets up the placement syndicate in order to ensure the uniformity of the offer and allotment procedures.

Article 36
Door-to-door selling

1. In performing the activity of door-to-door selling of financial instruments, investment services and financial products governed by Article 30 of the Consolidated Law, authorized intermediaries shall use financial salesmen to:

a) obtain and supply information and deliver copies of the documents referred to in Articles 28 and 29.3;

b) deliver to investors before the signing of the document for the purchase or subscription of financial instruments or other financial products a copy of the prospectus or other information documents, where prescribed, or of the contracts for the supply of investment services;

c) explain to investors:

- before they sign an order form for the purchase or subscription of financial instruments or other financial products or a contract for the supply of investment services, the essential elements of the transaction, service or product, with special reference to the related costs and capital risks;

- the right provided for in Article 30.6 of the Consolidated Law;

d) receive from investors:

- order forms for the purchase or subscription of financial instruments or other financial products and contracts they have signed;

- means of payment, financial instruments or other financial products in compliance with the provisions of the regulation referred to in Article 31.6 of the Consolidated Law;

- instructions regarding the services supplied;

- requests to disinvest from the financial instruments or other financial products subscribed or purchased and declarations of withdrawal from contracts;

- requests to transfer or withdraw financial instruments or other financial products or sums of money.

2. The provisions of paragraph 1 shall also apply to the door-to-door selling of non-core services and open pension funds by investment firms;

3. Selling to professional investors referred to in Article 31.2 shall not constitute door-to-door selling. 41

Section III- bis 42
Supply of financial products issued by banks
and insurance financial products

Article 36-bis
(Supply of financial products issued by banks)

1.The banks will observe the provisions pursuant to articles 26, 27, 28, paragraph 1, letter a), and paragraphs 2 and 5, 29, 31, 36, 56, paragraphs 1, 2, 3, 6, 7, 57, 58, 59, 60, 61, paragraphs 3, 63 and 69 of these regulations even when they sell their financial products as they are being issued.

2. Paragraph 1 also applies to sales made through distance selling 43

Article 36-ter
(Parties authorised to act as insurance intermediaries)

1.The parties authorised to act as insurance intermediaries will observe the provisions pursuant to articles 26, 27, 28, paragraph 1, letter a), and paragraphs 2 and 5, 29, 31, 36, 56, paragraphs 1, 2, 3, 6, 7, 57, 58, 59, 60, 63, and 69 of these regulations when they supply insurance financial products, including by way of distance selling.

2. Without prejudice to the provisions of paragraph 1, the parties authorised to act as insurance intermediaries will also provide the following information to the contracting party before finalising the agreement:

a) their name, registered offices, and address;

b) the reference to the insurance intermediary register pursuant to article 109 of legislative decree no. 209 of 7 September 2005 that they are registered in and instructions on how to find out if they are actually registered;

c) the procedures which permit the contracting party to make a complaint against the party authorised to act as an insurance intermediary or the insurance company, or to make a claim to the extrajudicial bodies for the resolution of any disputes;

d) any direct or indirect equity holding of more than 10% in the share capital or voting rights in insurance companies;

e) any direct or indirect equity holding of more than 10% in the share capital or voting rights of the party authorised to act as insurance intermediary held by the insurance companies;

f) with regard to the proposed insurance financial product:


1) if the advice is given on an impartial basis. In this case the parties qualified to act as insurance intermediaries must base their evaluation on a sufficiently broad number of contracts available on the market to advise on a product that can meet the requirements of the contracting party;

2) if, due to a contractual arrangement, the intermediary can only propose contracts with one or more insurance companies, he must name these companies;

3) if the intermediary does not have to propose contracts exclusively with one or more insurance companies, and does not provide consultancy services based on the obligation pursuant to point 1), he must make an impartial analysis; In this case, upon request by the contracting party, the intermediaries must notify the contracting party of the name of the insurance companies with which they have, or could have business dealings, without prejudice to the duty to notify the contracting party of his or her right to request this information.

Prior to finalising any contract for insurance financial products, and as a minimum requirement, the parties authorised to act as insurance intermediaries must clarify the requests and needs of the contracting party and the reasoning behind their recommendations for any determined product in this category, on the basis of the information provided by the contracting party. This reasoning will be set out in accordance with the complexity of the proposed insurance contract.

3. The parties who are qualified to act as insurance intermediaries will comply with the instructions given by the insurance companies they are acting for 44

Article 36-quater
(Manner of disclosure)

1. The disclosure to be made to the contracting parties in compliance with article 36-ter must be communicated:

a) correctly, exhaustively, and in an easily understood manner;

b) in Italian or any other language as agreed between the parties.

2. The disclosure to be made to the contracting parties in compliance with article 36-termust be communicated on paper or by any other durable means that is available and accessible by the contracting party. This disclosure can, however, first be made verbally where there is an immediate need to cover the risk or if the contracting party so requests. In these cases the parties qualified to act as insurance intermediaries will provide the disclosure on paper or by any other durable means immediately after agreeing the contract, and in any case no later than two working days later 45

Article 36-quinquies
(Insurance companies)

1. The provisions pursuant to articles 26, 27, 28, paragraph 1, letter a), and paragraphs 2 and 5, 29, 31, 56, paragraphs 1, 2, 6, 7, 57, 58, 59, 60, 61, paragraph 4, 63 paragraph 5, letter a) and 69 of these regulations will apply to the supply of insurance financial products, including by way of distance selling, carried out by insurance companies.

2. The disclosure to be made to the contracting parties in accordance with paragraph 1 must be communicated:

a) correctly, exhaustively, and in an easily understood manner;

b) in Italian or any other language as agreed between the parties;

c) on paper or by other durable means available and accessible to the contracting party.

This disclosure can, however, first be made verbally where there is an immediate need to cover the risk, or if the contracting party so requests. In these cases the insurance companies will provide the disclosure on paper or by any other durable means immediately after agreeing the contract, and in any case no later than two working days later.

3. The insurance companies will prepare suitable procedures to ensure proper training, continuing professional development, and compliance with the conduct rules pursuant to paragraph 1, even when operating through distribution networks, and will ensure that these are all complied with 46

Section IV
Portfolio management

Article 37
Contracts with investors

1. In addition to what is established in Article 30, contracts with investors must:

a) specify the characteristics of the management account;

b) expressly identify the transactions the intermediary may not carry out without the prior authorization of the investor; where there are no restrictions, expressly state this circumstance;

c) with reference to financial derivative instruments, state whether such instruments may be used for purposes other than that of hedging risks associated with positions under management;

d) state whether the intermediary is authorized to delegate the performance of the mandate received, specifying any limits and conditions to which the authorization is subject and, where such delegation does not concern the entire portfolio, the financial instruments and the sectors or markets for which the authorization is given.

e) specify that the investor may withdraw from the contract at any time or order the transfer or withdrawal of all or part of his or her assets without incurring any penalty. 47

2. Contracts with investors must also state whether and to what extent the intermediary is authorized to make use of leverage in relation to the characteristics of the management account chosen. Where the use of leverage is admitted, the contract must specify the upper limit of losses beyond which the intermediary is required to reduce leverage to one and contain the warning that a leverage greater than one may lead, in the event of negative management results, to losses in excess of the assets entrusted for management and consequently that the investor may end up indebted to the intermediary.

3. From the time of withdrawal from a contract authorized intermediaries may not carry out management transactions involving the assets under management unless they are necessary to conserve such assets. They may also carry out any orders given by the investor and not yet carried out unless such orders have already been revoked.

Article 38
Characteristics of a management account

1. Characteristics of a management account shall mean:

a) the categories of financial instrument in which the assets under management may be invested and any related limits;

b) the types of transactions the intermediary may carry out with reference to such financial instruments;

c) the maximum leverage the intermediary may use;

d) the benchmark against which to compare the return on the management account.

Article 39 48
Categories of financial instruments

1. For the purpose of defining the characteristics of a management account, the following shall be distinct categories of financial instruments:

a) debt securities;

b) equity securities and securities convertible into equity securities;

c) units/shares of collective investment undertakings

d) derivative financial instruments;

e) structured securities.

2. Within the above-mentioned categories, the following shall be general parameters for differentiating financial instruments:

a) currency of denomination;

b) traded on regulated markets;

c) geographical area;

d) category of issuer (sovereign, supranational organization, corporate);

e) industrial sector.

3. The following shall be specific parameters for differentiating financial instruments:

a) with reference to debt securities:

1. the duration;

2. the rating obtained from independent credit rating agencies;

b) with reference to equity securities: the market value of the issuer;

c) with reference to units/shares of collective investment undertakings:

1. the conformity of the undertaking with the provisions of Community law;

2. the volatility;

d) with reference to derivative financial instruments not used for hedging purposes and to structured securities: the payoff."

Article 40
Types of transaction s

1. For the purpose of defining the characteristics of a management account, the following shall be distinct types of transactions:

a) cash purchases and sales;

b) forward purchases and sales;

c) short sales;

d) traditional options (compravendite a premio);

e) stock loans and stock exchange repos (operazioni di riporto);

f) repos.

Article 41
Leverage

1. Where the leverage is greater than one, the intermediary shall enter into obligations on behalf of the investor that exceed the assets under management.

2. For the purpose of defining the characteristics of a management account, leverage shall mean the ratio of the market value of the net positions in financial instruments and the value of the assets entrusted for management, calculated using the methods established for the quarterly reports referred to in Annex 5.

Article 42
Benchmarks

1. For the purpose of defining the characteristics of a management account, the intermediary shall indicate a benchmark to the investor that is consistent with the risks associated with the account against which to compare the results of the account.

2. Such benchmark must be based on financial indicators produced by third parties and in common use.

Article 43
Supply of the service

1. Authorized intermediaries shall formalize and conserve documents containing:

a) the analyses and forecasts underlying the adoption of their general investment strategies;

b) the description of the strategies adopted.

2. Authorized intermediaries shall carry out transactions in accordance with the previously defined general investment strategies taking account of the information in their possession on investors and of any special instructions given by the latter.

3. Authorized intermediaries shall assign orders separately to each investor before transmitting them to the person entrusted with their execution.

4. Authorized intermediaries shall require the transactions they order on behalf of investors to be carried out at the best possible conditions with reference to the time, size and nature of the transactions and monitor that such conditions are effectively achieved. In determining the best possible conditions, consideration shall be given to the price paid or received and the other costs borne directly or indirectly by the investor. The conditions referred to in this paragraph shall be deemed to be satisfied where the transactions are carried out:

- during official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market;

- outside official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market or an organized trading system. 49

5. Authorized intermediaries may carry out transactions involving short sales, traditional option contracts and derivative financial instruments only where:

a) such transactions are concluded with authorized securities intermediaries subject to stability-oriented supervision;

b) the traditional option contracts, derivative financial instruments and financial instruments sold short are traded in regulated markets, unless the contracts are concluded for the purpose of hedging risks associated with positions under management.

6. Authorized intermediaries may invest assets under management by concluding stock exchange repos and stock loans exclusively with reference to financial instruments traded in regulated markets; such transactions shall be concluded with authorized securities intermediaries subject to stability-oriented supervision.

7. Authorized intermediaries may invest assets under management by concluding repo transactions only where:

a) such transactions are concluded with securities intermediaries authorized to engage in this activity and subject to stability-oriented supervision;

b) such transactions involve securities issued or guaranteed by a government of an OECD country or an international organization of a public nature or securities issued by a bank located in an OECD country to raise funds for the purpose of granting credit;

c) the cash leg is carried out at the market price or, in the case of securities not admitted to trading in a regulated market, at a price equal to that resulting from the intermediary's prudent evaluation.

Article 44
Financial instruments not traded in regulated markets

1. Authorized intermediaries may include financial instruments not traded in regulated markets in an individual investor's portfolio up to 25% of the value of the assets under management; the related transactions must be concluded with securities intermediaries authorized to engage in such activity and subject to stability-oriented supervision.

2. The percentage referred to in paragraph 1 may be exceeded provided the investor has granted, in response to a proposal by the intermediary, specific prior authorization in writing for the carrying out of each individual transaction. In requesting such authorization, authorized intermediaries shall communicate to the investor at least the following information, which must be set out in the premises of the authorization:

a) the financial instrument involved in the transaction, stating that it is not traded in any regulated market;

b) the quantity and the price that will presumably be applied and the presumable total value of the transaction;

c) the reasons why they consider the transaction to be desirable or in any case useful for the investor.

3. The individual financial instruments referred to in paragraph 1 may not exceed 10 per cent of the value of the assets managed for the investor.

4. Where the limits referred to in paragraphs 1 and 3 are exceeded for reasons other than purchases made on the basis of the authorizations referred to in paragraph 2, the position must be brought back within the limits as soon as possible taking into account the interests of the investor. 50

5. This article shall not apply to the financial instruments referred to in Article 45.

6. For the purposes of this article, financial instruments being placed for the purpose of admission to trading in regulated markets shall be treated in the same way as financial instruments admitted to trading in such markets. 51

Article 45
Conflicts of interest in portfolio management

1. The provisions of Article 27 shall not apply to transactions involving conflicts of interest arising from intragroup dealings or the joint provision of more than one service where such transactions concern the following financial instruments, provided the nature of each conflict is described in the contract and the investor has expressly authorized the transactions in the contract:

a) debt securities issued or guaranteed by the government of an OECD country;

b) debt securities issued by an international organization of a public nature;

c) debt securities issued by a bank or other issuer located in an OECD country and traded in a market located in an OECD country or having a top rating from independent rating agencies;

d) debt securities issued or guaranteed by the government of a non-OECD country, a bank or other issuer located in a non-OECD country but traded in a market located in an OECD country and having a top rating from independent rating agencies;

e) units or shares of a collective investment undertaking located in an OECD country;

f) debt securities issued or guaranteed by the government of a non-OECD country and traded in a market located in a non-OECD country;

g) debt securities issued by a bank or other issuer located in a non-OECD country, traded in a market located in a non-OECD country and having a top rating from independent rating agencies;

h) shares and other equity securities of issuers located in an OECD country traded in a market located in an OECD country;

i) units or shares of a collective investment undertaking located in a non-OECD country traded in a market located in an OECD country;

2. The financial instruments included in the portfolio of each individual investor as a result of transactions referred to in paragraph 1, subparagraphs f), g), h) and i), may not exceed 50% of the portfolio's value. Transactions that result in such limit being exceeded may be carried out provided each transaction complies with the provisions of Article 27.

3. The provisions of Article 27 shall not apply to transactions involving conflicts of interest arising from intragroup dealings or the joint provision of more than one service where such transactions concern financial instruments other than those referred to in paragraph 1, provided the nature of each conflict is described in the contract and the investor has expressly authorized the transactions in the contract. The financial instruments included in the portfolio of each individual investor as a result of such transactions may not exceed 25% of the portfolio's value. Transactions that result in such limit being exceeded may be carried out, provided each transaction complies with the provisions of Article 27. No financial instrument included in the portfolio of an individual investor pursuant to the provisions of this paragraph may exceed 5% of its value.

4. The provisions of Article 27 shall not apply to transactions involving authorized intermediaries in conflicts of interest arising from business dealings of their own or of group companies, provided the nature of each conflict is described in the contract and the investor has expressly authorized the transactions in the contract.

5. In applying the limits provided for in this article, placements concluded or guaranteed by the intermediary or persons belonging to the same group in the three months preceding the date of the inclusion in investors' portfolios of the financial instruments in question shall be taken into account.

6. In applying the limits provided for in this article, financial instruments being placed for the purpose of admission to trading in markets located in OECD countries shall be treated in the same way as financial instruments admitted to trading in such markets.

Article 46
Delegation of management

1. Without prejudice to the provisions of Article 37, authorized intermediaries may give, by means of a contract in writing, management mandates to third parties authorized to supply asset management services on an individual basis.

2. Mandates may be given to EU intermediaries authorized in their home country to supply portfolio management services on an individual basis; they may also be given to non-EU intermediaries authorized in their home country to supply such services, provided agreements exist between Consob and the competent authorities of the country in which they are located. 52

3. The mandate:

a) shall not exonerate or in any way limit the responsibility of the principal intermediary, which shall remain subject to the provisions of this regulation with reference to the transactions carried out by the agent intermediary;

b) must be for a determinate period and revocable with immediate effect by the principal intermediary;

c) must be in conformity with the indications provided by the investor in the contract;

d) must contain clauses that, where the execution of transactions is not subject to the prior consent of the principal intermediary, require the agent intermediary to observe the investment guidelines laid down from time to time by the principal intermediary;

e) must be formulated so as to ensure compliance with the provisions on conflicts of interest with reference to the principal intermediary and the agent intermediary;

f) must provide for the principal intermediary to receive a continuous flow of information on the transactions carried out by the agent intermediary permitting the exact reconstruction of the assets under management belonging to each investor.

4. Unless specified in the contract and on the occasion of each subsequent change, the authorized intermediary shall promptly notify the investor in writing of the names and addresses of agent intermediaries before the latter start to carry out transactions.


Section V
Financing

Article 47
Financing of investors

1. In addition to what is established in Article 30, contracts with investors must specify the types of financing foreseen, the interest rate and every other price and condition applicable or the objective methods for determining them and any penalties applicable in the event of default; where the interest rate or any other price or condition may be changed to the detriment of the investor, this must be expressly stated in the contract in a clause specifically approved by the investor.

2. The conclusion of repos, stock exchange repos, stock loans and any other similar transactions serving to provide the investor with sums of money or financial instruments in return for payment of interest shall constitute financing:

a) where the proceeds are to be used for the execution of transactions involving financial instruments in which the intermediary intervenes;

b) where the intermediary acquires adequate collateral from the investor in respect of the financing provided; as a rule the financial instruments pledged as security are the same as those involved in the transactions referred to in subparagraph a). The value of the financial instruments acquired as collateral must be commensurate with the amount of financing provided.

Title II
Collective Asset Management Services

Article 48
General rules of conduct

1. In supplying the service of asset management on a collective basis, asset management companies and SICAVs, in the interest of the participants in collective investment undertakings and the integrity of the securities market, shall:

a) operate independently and according to the principles and general rules of the Consolidated Law;

b) operate in conformity with the investment objectives set out in the prospectus of the collective investment undertakings they manage;

c) refrain from any conduct that might benefit one set of managed assets, including those managed in connection with the supply of the service of portfolio management on an individual basis, at the expense of another;

d) acquire adequate knowledge of the financial instruments, goods and other valuables in which the assets under management may be invested;

f) operate so as to keep down the costs borne by the collective investment undertakings they manage and to obtain the best possible result from the service performed, taking into account the investment objectives of the collective investment undertakings.

Article 49
Conflicts of interest

1. Asset management companies and SICAVs shall be on the alert for conflicts of interest. They may carry out transactions where they have directly or indirectly a conflicting interest, including any such interest arising from intragroup dealings or other business dealings of their own or of group companies, provided equal treatment of the collective investment undertakings they manage is ensured, taking into account the costs connected with the transactions to be carried out.

2. Asset management companies and SICAVs shall identify the cases in which the contractual conditions agreed with the persons who supply services to such companies conflict with the interests of the collective investment undertakings they manage and ensure:

a) that the assets of collective investment undertakings are not burdened with otherwise avoidable costs or excluded from the enjoyment of otherwise accruable benefits;

b) that investors are informed in the prospectus of the sources of income or other benefits accruing from the service of collective management to the asset management company or the SICAV that do not derive directly from collective investment undertakings in the form of management commissions.

Article 50
Investment objectives

1. The prospectus shall set out the investment objectives with reference:

a) to the categories of financial instruments, goods and other assets in which the collective investment undertaking normally invests and any related limits;

b) to the types of transactions that are normally carried out in investing the assets of the collective investment undertaking;

c) the characteristics in terms of risk and return upon which the management is normally based.

2. Asset management companies and SICAVs shall also specify a benchmark, based on financial indicators produced by third parties and in common use, that is consistent with the risks associated with the management of the collective investment undertaking against which to compare the results of the undertaking.

Article 51
Churning

1. Asset management companies and SICAVs shall refrain from carrying out transactions on behalf of the collective investment undertakings they manage with a frequency that is not necessary for the purpose of achieving the latter's objectives.

Article 52
Dealings between asset management companies

1. The management of collective investment undertakings may be performed by asset management companies other than the company promoting them. To this end the asset management companies in question shall sign a specific agreement.

2. The agreement:

a) shall not exonerate or in any way limit the responsibility of the signatories. The company promoting the collective investment undertakings and that performing the management shall reciprocally monitor observance of the agreement;

b) must be in conformity with the investment objectives of the collective investment undertakings to which it refers;

c) must be drawn up so as to ensure observance of the provisions concerning conflicts of interest with reference to the company promoting the collective investment undertakings and that performing the management;

d) must provide for a constant flow of information on the transactions carried out by the company performing the management that will allow the company promoting the collective investment undertakings to handle its dealings with the participants punctually.

3. The agreement and its contents shall be described in the prospectus.

Article 53
Delegation of management

1. Asset management companies may entrust, for the collective investment undertakings they manage and by means of a contract in writing, other asset management companies or intermediaries authorized to supply the service of portfolio management on an individual basis with specific investment choices within the framework of asset allocation criteria they define from time to time.

2. Mandates may be given to EU intermediaries authorized in their home country to supply collective asset management services or portfolio management services on an individual basis; they may also be given to non-EU intermediaries authorized in their home country to supply such services provided agreements exist between Consob and the competent authorities of the country in which they are located. 53

3. The mandate:

a) shall not exonerate or in any way limit the responsibility of the principal intermediary, which shall remain subject to the provisions of this regulation with reference to the transactions carried out by the agent intermediary;

b) must be for a determinate period and revocable with immediate effect by the principal intermediary;

c) must be in conformity with the investment objectives of the collective investment undertaking for which it is given;

d) must contain clauses that, where the execution of transactions is not subject to the prior consent of the principal intermediary, require the agent intermediary to observe, in its investment choices, the investment guidelines laid down from time to time by the principal intermediary;

e) must be formulated so as to ensure compliance with the provisions on conflicts of interest with reference to the principal intermediary and the agent intermediary;

f) must provide for a continuous flow of information on the transactions carried out by the intermediary carrying out the transactions permitting the exact reconstruction of the assets of the collective investment undertaking for which it is given.

4. The mandate and its contents shall be described in the prospectus.

5. The provisions of this article shall also apply to SICAVs, without prejudice to Article 43.7 of the Consolidated Law.

Article 54
Supply of the service

1. Asset management companies and SICAVs shall formalize and conserve documents containing for each collective investment undertaking:

a) the analyses and forecasts underlying the adoption of the general investment strategies;

b) the description of the strategies adopted.

2. Asset management companies and SICAVs shall carry out transactions in accordance with the previously defined general investment strategies taking account of the investment objectives of the collective investment undertakings they manage.

3. Asset management companies and SICAVs shall assign orders separately to each collective investment undertaking or sector they manage before transmitting them to the person entrusted with their execution.

4. Asset management companies and SICAVs shall require the transactions they order on behalf of the collective investment undertakings they manage to be carried out at the best possible conditions with reference to the time, size and nature of the transactions and monitor that such conditions are effectively achieved. In determining the best conditions, consideration shall be given to the price paid or received and the other costs borne directly or indirectly by the collective investment undertaking. The conditions referred to in this paragraph shall be deemed to be satisfied where the transactions are carried out in a regulated market.

- during official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market;

- outside official trading hours, as defined in the regulation referred to in Article 25.2 of the Consolidated Law, in a regulated market or an organized trading system. 54

5. The provisions of Article 60.5, 61.4 and 62.4 shall not apply, unless the parties agree otherwise, to dealings asset management companies and SICAVs have with professional investors referred to in Article 31.2. 55

Article 55
Direct placement

1. The provisions of Articles 26.1, subparagraphs a), c), d) and e), 28.1, subparagraph a), 28.2, 28.5, 29, 31 and 36 shall apply to asset management companies that engage in the direct placement, including by door-to-door selling, of units of investment funds that they have set up themselves or manage. They shall also apply to orders received by SICAVs in connection with the direct placement, including by door-to-door selling, of shares they themselves issued. 56

Title II-bis 57
Provisions on ethical or socially responsible financing

Article 55-bis
(Disclosure obligations)

1. Without prejudice to the provisions of prevailing law, the authorised parties and the insurance companies will provide the following information in the disclosure prospectus drawn up in accordance with the forms provided in Attachment 1B of the regulation adopted with resolution no. 11971 of 14 May 1999 as amended and in the contracts pursuant to article 30 of these rules on the products and services described as “ethical” or “socially responsible”:

a) the objectives and the characteristics by which the product or service can be qualified as ethical or socially responsible;

b) the general selection criteria of the financial instruments in virtue of the objectives and characteristics under letter a);

c) any policies or objectives followed in the exercise of the right to vote connected to the financial instruments in the portfolio;

d) any socially or environmentally related allocations to be made from the income generated by the products offered or the services provided and how much;

e) any procedures adopted to ensure pursuit of the objectives under letter a), including any specialised bodies set up within the authorised parties or the insurance companies, and their functions;

f) the compliance with self-regulatory codes as promoted by specialised parties.

2. A summary of the information pursuant to paragraph 1 must be made available on the internet site of the authorised parties and the insurance companies.

Article 55-ter
(Obligations in the presentation of financial statements)

1. Without prejudice to the provisions of prevailing laws, the authorised parties and the insurance companies must provide the following in at least the most recent presentation of financial statements for the year of the products or services defined as “ethical” or “socially responsible” with reference to the preceding twelve months:

a)the description of the management activity in relation to the general selection criteria of the financial instruments identified in accordance with article 55-bis, paragraph 1, letter b);

b) information regarding any exercise of the right to vote connected with the financial instruments held in the portfolio;

c) information on any socially or environmentally related allocations to be made from the income generated by the products offered or the services provided, and how much;

2. The information pursuant to paragraph 1 must be made available in a summarised form on the internet site of the authorised parties and the insurance companies.
 

PART III
INTERNAL ORGANIZATION AND PROCEDURES

Article 56
Internal procedures

1. For the purposes of this regulation, procedure shall mean the set of internal rules and instruments adopted for the supply of services. 58

2. Authorized intermediaries, asset management companies and SICAVs shall establish procedures serving to:

a) ensure the orderly and correct supply of services;

b) reconstruct the times and types of action taken in supplying services;

c) ensure adequate internal monitoring of the activities of the personnel involved and financial salesmen. 59

3. Authorized intermediaries, inter alia in order to minimize the risk of conflicts of interest, shall establish internal procedures aimed at ensuring that exchanges of information do not occur between the sectors of the company that must be kept separate in accordance with the regulation issued by the Bank of Italy pursuant to Article 6(1a) of the Consolidated Law.

4. Intermediaries authorized to supply portfolio management services on an individual basis, asset management companies and SICAVs, inter alia in order to minimize the risk of conflicts of interest, shall establish internal procedures aimed at preventing exchanges of information with other group companies that supply the services of dealing, reception and transmission of orders or placement or the non-core services referred to in Articles 1(6d) and 1(6e) of the Consolidated Law.

5. In the case of transactions involving financial instruments not traded in regulated markets, intermediaries authorized to supply portfolio management services on an individual basis, asset management companies and SICAVs shall establish procedures enabling them to search for the conditions referred to in Articles 43.4 and 54.4 and to document such searches.

6. Authorized intermediaries, asset management companies and SICAVs shall adopt internal procedures for the orderly and prompt handling and filing of correspondence and documents received and sent, inter alia via financial salesmen, in connection with the services supplied.

7. Authorized intermediaries, asset management companies and SICAVs shall communicate in writing to the personnel involved and financial salesmen the procedures for the performance of the activities assigned to them and specify the related tasks, duties and responsibilities.

7- bis. The authorised intermediaries, the savings management companies, the harmonised management companies, and the SICAVs must prepare adequate procedures to ensure the proper training and continuing professional development of financial salesmen. To that end, they should ensure their participation in suitable courses on a regular basis for which they should be awarded attendance certificates 60

Article 57
Internal controls

1. Authorized intermediaries, asset management companies and SICAVs shall establish an internal control function.

2. Responsibility for the internal control function shall be assigned to a person not having hierarchical relationships with the persons responsible for the sectors of activity subject to control. He or she shall perform the activity autonomously and independently and report the results objectively and impartially.

3. The internal control function shall:

a) continuously verify the suitability of internal procedures and ensure compliance with the Consolidated Law and the related implementing regulations;

b) control compliance with internal procedures;

c) control compliance with the internal code of conduct referred to in Article 58;

d) keep the register of complaints referred to in Article 59;

e) provide advisory assistance to the various sectors of the company on problems concerning the supply of services, conflicts of interest and the conduct to be adopted in consequence.

4. In order to carry out the tasks referred to in paragraph 3, the person responsible for the internal control function shall keep a register in which he or she shall promptly record the service, the matters investigated, the duration of such investigations, the period to which they refer, the findings, the proposals made and any decisions taken by the persons responsible for the various sectors of the company or competent company bodies.

5. The person responsible for the internal control function shall report the results of his or her activity to the board of directors and the board of auditors. In the event that serious irregularities are discovered, he or she shall report them immediately to the board of auditors, which shall notify Consob and the Bank of Italy of the irregularities discovered without delay in accordance with Article 8.3 of the Consolidated Law.

6. The person responsible for the internal control function shall transmit to the board of directors and the board of auditors, on an ordinary basis at least once a year on the occasion of the examination of the annual accounts, a report on the investigations carried out during the year. The report shall cover, separately for each service, the matters investigated, the related findings, the proposals made and any decisions taken by the persons responsible for the sectors of the company's organization or the company's competent governing bodies. In addition, the report shall contain, with account also being taken of the complaints received, an overall assessment of the circumstances observed, and the schedule of investigations planned for the subsequent year. Within the scope of their respective authority, the board of directors and the board of auditors shall formalize their comments and decisions concerning the report received. 61

Article 58
Internal code of conduct

1. Authorized intermediaries, asset management companies and SICAVs shall adopt and comply with a self-regulatory code of conduct, inter alia by referring to those of the professional associations connected with the services supplied. Such code, in accordance with the prescriptions of the Consolidated Law, shall establish the rules of conduct for the members of the administrative and control bodies, employees, financial salesmen and collaborators with reference to at least:

a) the obligation to protect data of a confidential nature obtained from investors or which such persons possess in view of their functions;

b) the procedures established for carrying out personal transactions involving financial instruments;

c) the procedures for handling relationships with investors who intend to employ agents or appointees for the purpose of concluding contracts or executing transactions where such persons are directors, members of the board of auditors, employees, collaborators or financial salesmen of the intermediary;

d) the prohibition to receive benefits from third parties that could lead to conduct contrary to the interests of investors or of the person on whose behalf they act.

2. Authorized intermediaries, asset management companies and SICAVs shall comply with the self-regulatory codes adopted by the professional associations to which they belong.

3. Authorized intermediaries, asset management companies and SICAVs shall refrain from behaving and shall control that their employees, collaborators and financial salesmen do not behave in a way that endangers, is deemed to endanger or is indicative of a situation that endangers the savings of the public or the market.

Article 59
Complaints

1. Authorized intermediaries, asset management companies and SICAVs shall establish and keep an electronic register in which the essential elements of complaints made in writing by investors shall be promptly recorded.

2. The register of complaints, kept by the person responsible for the internal control function, must contain at least the following information:

a) the identity of the investor who lodged the complaint and that of the service to which the complaint refers;

b) the identity of the employee, collaborator or financial salesman to whom the investor was assigned for the supply of the service, and the organizational unit to which such person belongs and the head thereof;

c) the dates on which the complaint was lodged and received;

d) the reasons for the complaint;

e) the sums of money and the value of the financial instruments belonging to the investor held in total by the intermediary;

f) the economic injury alleged by the investor or estimated on the basis of the contents of the complaint;

g) the dates of any correspondence with the investor prior to the outcome of the complaint;

h) a summary appraisal of the complaint and its outcome;

i) the date of the notification of the outcome of the complaint.

3. Authorized intermediaries, asset management companies and SICAVs shall deal with complaints promptly. The final outcome of a complaint, containing the intermediary's decisions, shall be notified in writing to the investor, as a rule within 90 days of its receipt.

4. Within forty days from the end of each half-year the person responsible for the internal control function shall transmit to the board of directors and the board of auditors a report describing, for each service supplied, the overall situation with regard to the complaints received. Where the analysis and appraisal of the complaints received in the half-year show that overall they were due to organizational and/or procedural shortcomings, the person responsible for the internal control function shall describe the shortcomings and proposals for remedying them in a special section of the report. Within the scope of their respective authority, the board of directors and the board of auditors shall formalize their comments and decisions concerning the report received. 62

PART IV
CONFIRMATION, REPORTING AND RECORDING REQUIREMENTS

Article 60
Confirmation of orders

1. In supplying their services, authorized intermediaries shall give investors at the moment orders are received at the head office or a branch office a paper-based confirmation notice stating:

a) the name of the investor;

b) the time, where this is relevant in relation to the manner of execution, and date of reception of the order;

c) the essential elements of the order and any accessory instructions.

2. Authorized intermediaries shall record orders given by investors by telephone on magnetic tape or an equivalent medium.

3. Financial salesmen appointed by authorized intermediaries to take orders by way of door-to-door selling shall give investors, at the moment orders are taken, a paper-based confirmation notice containing the information referred to in paragraph 1. Where orders are taken by telephone, financial salesmen are required to record them in the manner referred to in paragraph 2.

4. The provisions of paragraphs 1, 2 and 3 shall also apply to the revocation of orders by investors.

5. The provisions of this article shall also apply to orders received by asset management companies in connection with the direct placement, including by door-to-door selling, of units of investment funds that they have set up themselves or manage. They shall also apply to orders received by SICAVs in connection with the direct placement, including by door-to-door selling, of shares they themselves issued.

Article 61
Information on transactions

1. In supplying dealing services, authorized intermediaries shall send to investors' domiciles, for each transaction carried out and within seven working days from the execution date, a transaction confirmation notice showing separately the following information:

a) the time, where this is relevant in relation to the manner of execution, and date of execution of the transaction;

b) the type of transaction;

c) the regulated market in which the transaction was carried out or the fact that it was carried out off-market;

d) the financial instrument and the quantities involved in the transaction;

e) the unit price applied and the total consideration;

f) whether the investor's counterparty was the intermediary itself;

g) the commissions and expenses charged;

h) any tax implications;

i) the time limit and procedure for the settlement of the transaction.

2. In supplying the service of receiving and transmitting orders, authorized intermediaries shall send the notice referred to in paragraph 1 within seven working days from that on which execution of the order transmitted was confirmed. This provision shall not apply to orders relative to placements.

3. Except as provided for in paragraph 4, in supplying the service of placement, including the offer of financial instruments on a door-to-door basis, authorized intermediaries shall send the notice referred to in paragraph 1 within seven working days from that on which the placement was concluded. Where the conditions arise for a scaling down of applications resulting in a partial execution of the order received, the notice must explicitly state the fact.

4. In supplying the service of asset management on a collective basis, asset management companies and SICAVs shall send the notice referred to in paragraph 1 within seven working days from that of the execution of subscriptions and redemptions ordered by investors. The notice shall contain information on the date of receipt of the subscription application and the means of payment, the gross amount paid and the net amount invested, the value date attributed to the means of payment, the number of shares or units allotted, the unit price at which they were subscribed and the day to which such value refers; where the subscription occurs under an accumulation plan, a summary notice may be sent every three or six months. Analogous information shall be contained in the notice referring to redemptions.

Article 62
Periodic reports

1. Contracts for the supply of dealing services or the service of receiving and transmitting orders may provide for investors to be sent a monthly report drawn up according to the model in Annex 4 instead of the transaction confirmation notices referred to in Article 61. Such reports shall be sent within fifteen working days from the closing date of the reference period.

2. In supplying the service of portfolio management on an individual basis, authorized intermediaries shall send to customers' domiciles, at least once every three months, a report covering the reference period drawn up according to the model in Annex 5. Such reports shall be sent within fifteen working days from the closing date of the reference period.

3. In supplying the non-core service of financing provided for in Article 1(6c) of the Consolidated Law, authorized intermediaries shall send to customers' domiciles a report on the financing provided drawn up according to the model in Annex 6. The intervals and time limits for sending such reports shall be determined in relation to the investment service supplied in accordance with the provisions of paragraphs 1 and 2.

4. In supplying the service of asset management on a collective basis, asset management companies and SICAVs shall:

a) make available to investors, in the places and in the manner indicated in the prospectus, the periodic reports of the collective investment undertaking and the data on its percentage rate of return in the reference period. The availability of such periodic reports shall be announced in at least one national daily newspaper; the announcement shall contain the data on the percentage rate of return of the collective investment undertaking in the reference period;

b) at six-month intervals, at the request of investors who have not withdrawn their certificates, send to such investors' domiciles a summary statement showing the number of units or shares of collective investment vehicles belonging to them and their value at the beginning and end of the reference period, as well as subscriptions and redemptions.

5. The data on the percentage rate of return of the collective investment undertaking disseminated in any way by asset management companies and SICAVs must always be compared with those of the benchmark.

Article 63
Recording of orders and transactions

1. Authorized intermediaries shall electronically record, not later than the day after that of reception, the essential elements of orders sent by investors. In the case of the service of portfolio management on an individual basis, intermediaries shall electronically record, at the moment of their transmission, the essential elements of orders issued on behalf of investors. Intermediaries shall also record, in the same manner and with the same time limits, instructions revoking previously imparted orders.

2. Authorized intermediaries shall electronically record the essential elements of transactions, including those carried out for own account, not later than the day after that of execution.

3. Intermediaries shall record in an analogous manner the orders they give and the transactions they carry out for the purpose of dealing with errors in recording, transmitting or executing orders.

4. The recording procedures must allow searches and retrievals to be made at any time by financial instrument, type of transaction, investor, counterparty, financial salesman, employee, date and time, market of execution and investment service.

5. Asset management companies and SICAVs shall electronically record:

a) not later than the day after that of reception, the essential elements of subscription and redemption orders received from investors and, not later than the day after that of execution, the conditions at which such orders were executed. The recording procedures must allow searches and retrievals to be made at any time by individual collective investment undertaking or sector, type of transaction, investor, intermediary that transmitted the order, financial salesman, and date and time.

b) at the moment of transmission, the essential elements of orders issued on behalf of the collective investment undertakings managed and, not later than the day after that of execution, the essential elements of the transactions carried out. The recording procedures must allow searches and retrievals to be made at any time by individual collective investment undertaking or sector, type of transaction, investor, intermediary that transmitted the order, financial salesman, and date and time.

6. The procedures must ensure that records cannot be altered; corrections must be appropriately evidenced.

PART V
STOCKBROKERS

Title I
General Provisions

Article 64
Stockbrokers

1. Stockbrokers shall observe this regulation.

2. As regards internal organization and procedures, stockbrokers shall adopt, in conformity with the general principles established in Part III, procedures that take account of the activities they engage in, their volume of business, and the number of their employees and collaborators.

Title II
Accounting Controls

Article 65
Accounting controls

1. Stockbrokers shall be subject to the provisions concerning issuers of Part IV, Title III, Chapter II, Section VI, of the Consolidated Law, except for Articles 156.5, 157, 158, 159 and 165, and to Article 145 of the regulation implementing Legislative Decree 58 of 24 February 1998 insofar as such provisions are compatible.

2. The firm of auditors, in addition to what is provided for in Article 155.1 of the Consolidated Law, shall verify;

a) that the internal organization and procedures ensure compliance with the requirements regarding the confirmation, reporting and recording of orders and transactions carried out on behalf of clients;

b) at least once every three months, the positions of clients and the separation of their assets from those belonging to the stockbroker, inter alia on the basis of the account statements issued by subdepositaries.

Article 66
Appointment and dismissal of auditors

1. The appointment by the stockbroker shall last for three fiscal years and may not be renewed more than twice.

2. The stockbroker shall dismiss the firm of auditors where there is good cause, simultaneously appointing another firm. The firm of auditors that has been dismissed shall continue to perform accounting controls until the new appointment becomes effective.

3. Consob shall appoint a firm of auditors on its own authority and establish its fees where, after sixty days have elapsed from the expiry of the appointment or from the communication provided for in Article 163.5 of the Consolidated Law, the stockbroker has not made a new appointment. Consob shall resolve within the forty-five days subsequent to the expiry of such time limit.

Article 67
Communications to the supervisory authorities

1. Stockbrokers shall inform Consob and the Bank of Italy of the engagement and the content of the agreement as well as the reasons for its revocation where appropriate.

2. The firm of auditors shall, without delay:

a) transmit its report on the annual accounts to Consob and the Bank of Italy;

b) notify the same authorities of any irregularities discovered during the verifications provided for in Article 65.2.

PART VI
EU AND NON-EU INTERMEDIARIES

Article 68
EU and non-EU intermediaries

1. The provisions of Article 63 shall not apply to the Italian branches of EU or non-EU investment firms or banks provided that analogous registrations are required under the rules issued by the competent authorities of their home country.

2. The provisions of Part III of this Book and Article 63 shall not apply to EU or non-EU investment firms or banks operating in Italy without establishing a branch.

PART VII
FINAL AND TRANSITIONAL PROVISIONS

Article 69
Conservation of records and documents

1. Without prejudice to statutory provisions on the conservation of books and documents:

a) the records referred to in this regulation shall be conserved for at least eight years;

b) the confirmation notices and magnetic recordings of orders and authorizations given by telephone referred to in this regulation shall be conserved for at least two years;

c) the contracts, correspondence and documents referred to in this regulation shall be conserved for at least five years from the date of the termination of the relationships with the investors involved.

2. The contracts, correspondence and documents referred to in this regulation may be conserved using magnetic media, microfilm, optical or digital media or in other technically equivalent forms.

Article 70
Entry into force and transitional provisions

1. This Book, except as provided for in paragraphs 2, 3, 4 and 5, shall enter into force on the fifteenth day following that of its publication in the Gazzetta Ufficiale.

2. The provisions of Part II, Title II, of this Book, except for Article 51, shall enter into force on the one hundred and eightieth day following that of its publication in the Gazzetta Ufficiale.

3. In providing collective asset management services, asset management companies and SICAVs shall comply with the provisions of Part III and Part IV of this Book by the one hundred and eightieth day following that of its publication in the Gazzetta Ufficiale.

4. The provisions of Part V, Title II, of this Book shall enter into force on 1 January 1999.

5. From the date of entry into force of this Book Consob Regulation 10943 of 1997 and Title III of Consob Regulation 8850 of 1994 shall be repealed. Until the one hundred and eightieth day following that of the entry into force of this Book SIMs, including companies referred to in Article 60.4 of Legislative Decree 415/1996, Italian banks authorized to supply investment services, stockbrokers, financial intermediaries entered in the register provided for in Article 107 of Legislative Decree 385/1993 authorized to supply investment services and EU and non-EU investment firms and banks authorized to supply investment services in Italy may continue to apply the provisions of Consob Regulation 10943.

BOOK IV
DISTANCE MARKETING OF INVESTMENT SERVICES AND FINANCIAL PRODUCTS

Article 71
Definitions

1. In this Book:

a) "investment services" shall mean services referred to in Article 1.5 of the Consolidated Law and those referred to in Section A of the table annexed thereto;

b) "authorized intermediaries" shall mean investment firms, banks and Poste Italiane S.p.A. authorized to supply the service referred to in Article 1(5c) of the Consolidated Law and, in the circumstances and subject to the conditions established pursuant to Article 18.3 thereof, financial intermediaries entered in the list referred to in Article 107 of Legislative Decree 385/1993 authorized to supply the same service; 63

c) "authorized persons" shall mean SIMs, including companies referred to in Article 60.4 of Legislative Decree 415 of 23 July 1996, Italian banks authorized to supply investment services, financial intermediaries entered in the list referred to in Article 107 of Legislative Decree 385/1993 authorized to supply the service referred to in Article 1(5a) of the Consolidated Law, only in respect of derivative financial instruments, in the circumstances and subject to the conditions established pursuant to Article 18.3 of the Consolidated Law, asset management companies, SICAVs, stockbrokers, Poste Italiane S.p.A., EU and non-EU investment firms and banks authorized in any capacity to provide investment services in Italy. 64

Article 72
Scope

1. This Book shall govern the marketing of investment services, financial instruments and other financial products by authorized persons based on means of distance communications permitting a contact to be established with individual investors:

a) with the possibility of dialogue or other forms of rapid interaction;

b) with or without the possibility of rapid interaction where the documents or messages have a contractual content. 65

2. This Book shall not apply to the distance marketing of products specified in Article 100(1f) of the Consolidated Law.

3. This Book shall also apply to the distance marketing referred to in Article 73.3.

4. Marketing at a distance targeted at professional investors as defined in Article 31.2 shall not constitute distance marketing.

Article 73
Persons

1. Distance marketing of financial products referred to in Article 72 may be carried out by:

a) authorized intermediaries;

b) asset management companies, only in respect of units of investment funds that they have set up themselves or manage;

c) SICAVs, only in respect of shares they have issued themselves.

2. Authorized persons may market their own investment services at a distance. Authorized intermediaries may market investment services provided by other intermediaries at a distance.

3. Investment firms may market products at a distance that they also offer door-to-door pursuant to the provisions of Article 36.

Article 74
Limits on the use of means of distance communications

1. Distance marketing may not be performed and, where already initiated, must be immediately discontinued vis-à-vis investors who explicitly declare their objection to the initiation or continuation thereof.

Article 75
Performance

1. In performing distance marketing, authorized persons must comply with the provisions of Book III.

2. The information and clarifications to be given to investors must be provided in a clear and comprehensible way by means of procedures appropriate to the characteristics of the means of distance communication employed.

3. The documents that Book III requires to be delivered to or by investors may be transmitted using means of distance communications provided the latter's characteristics are compatible with their transmission and permit the addressee of the documents to store them on a permanent medium.

Article 76
Financial salesmen

1. In distance marketing based on means of distance communications that permit individualized communication and immediate interaction with investors, authorized persons must use financial salesmen.

2. The obligation to use financial salesmen shall not apply where the activity referred to in paragraph 1 is performed at the initiative of investors, provided such initiative has not been solicited with messages addressed to them personally.

Article 77
Entry into force

1. This Book shall enter into force on the fifteenth day following that of its publication in the Gazzetta Ufficiale.

BOOK V
REGISTER AND ACTIVITY OF FINANCIAL SALESMEN 66

Part I
Preliminary provisions

Article 78
Definitions

1. The following definitions are used in this Book:

a) “ministerial regulations”: the regulations adopted by the Minister for the Economy and Finance in accordance with article 31, paragraph 5 of the Consolidating Act;

b) “Organisation”: the Organisation defined under article 31, paragraph 4 of the Consolidating Act;

c) “professional register”: the only professional register for financial salesmen pursuant to article 31, paragraph 4 of the Consolidating Act;

d) “salesman”: the financial salesman registered with the professional register pursuant to article 31, paragraph 4 of the Consolidating Act;

e) “territorial sections”: the sections of the professional register indicated in article 85;

f) “authorised parties”: the parties who can avail of the services of financial salesmen in accordance with part II, title II, item IV of the Consolidating Act and the provisions issued in accordance with the Act;

g) “group”: the group defined by the Bank of Italy in accordance with article 11, paragraph 1, letter a) of the Consolidating Act;

h) “evaluation tests”: the evaluation tests defined under article 31, paragraph 5 of the Consolidating Act;

i) “supervision fee”: the fee provided by the implementation provisions of article 40 of law no. 724 of 23 December 1994;

l) “fee due to the Organisation”: the fee provided under article 31, paragraph 4 of the Consolidating Act.

Part II
Organisation

Article 79
(Keeping the professional register)

1. When keeping the professional register, the Organisation:

a) must make the registrations, subject to verification that the required provisions are met, and must deny registration if these requirements are not met or remove the registration from the professional register, communicating this to the interested parties and also communicating any changes in the registered data;

b) issue the certificates of registration or striking off the professional register;

c) carry out any other activity needed to make the registrations in the professional register, including the announcement and organisation of any evaluation tests;

d) prepare and publish the procedures adopted to ensure the effective exercise of the functions carried out, and indicating, among other things, the procedures that it carries out;

e) promptly update the professional register on the basis of the provisions adopted with respect to the salesmen of the legal authorities, Consob, and the Organisation;

f) verify the term of the requirements provided for registration with the professional register.

Article 80
(Supervision of Consob)

1.Consob may request the Organisation to provide it with notice, including regular notification, of information and updates and to send records or documents in the manner and within the terms that it establishes.

2. In the event that it cannot function, or there is continued inactivity and in compliance with statutory provisions, Consob can temporarily replace the Organism bodies with an external administrator. The external administrator will be paid in accordance with what Consob decides and the Organism will pay all monies due.

Article 81
(Information between Consob and the Organisation)

1. Consob and the Organisation will exchange information in order to facilitate their respective functions.

2. In order to ensure the fast and effective exchange of information, Consob and the Organisation will use a single information system to carry out their respective duties. The manner of use and access to the information in this system will be established by Consob in compliance with the provisions of article 4, paragraph 10 of the Consolidating Act, using an operating manual.

3. If the Organisation becomes aware of circumstances or events which relate to the supervision of the salesmen, it will immediately notify Consob. In the event that the provisions of article 55, paragraph 2 of the Consolidating Act should apply, the Organisation will first check the information that it has with the competent legal authorities, and acquire any necessary documentation which it will promptly send to Consob.

Article 82
(Treatment of claims against the Organisation’s regulations)

1. The interested party may make a claim to Consob against the regulations adopted by the Organisation within thirty days from when communication is made. Consob will form an opinion on the matter within sixty days from receiving the claim. Any claims without foundation will be barred from further proceedings.

2. Where the basis of the claim is not unfounded, Consob will communicate the initiation of an enquiry into the circumstances surrounding the claim to the interested party. Following on the preliminary enquiry and subject to the consideration of any comments made by the Organisation regarding the substance of the claim, Consob will notify the interested party of its conclusions.

Article 83
(Requirements for representation by professional associations
of salesmen and authorised parties)

1. The requirements that the professional associations of salesmen and authorised parties must comply with pursuant to article 31, paragraph 4 of the Consolidating Act are as follows:

2. Salesmen associations:

a) must be established by public deed or certified contract, be in operation for at least three years, and the main purpose must be to protect the professional interests of the associates;

b) its associates may only comprise salesmen who are registered with the professional register;

c) the number of associates must not be less than ten per cent of the number of salesmen registered with the professional register at 31 December of the reference year and must be present in at least ten Regions in the country. Independent Provinces will be considered as Regions for this purpose.

3. Authorised party associations:

a) must be established by public deed or certified contract, be in operation for at least three years and the main purpose must be to protect the professional interests of the associates;

b) the number of authorised party associates as a whole who avail of the services of financial salesmen must not be less than ten percent of the number of salesmen registered with the professional register on 31 December of the reference year.

Part III
Rules governing the register

Article 84
The register of financial salesmen

1. Physical persons satisfying the requirements referred to in Article 86 shall be entered in the register.

2. The register shall contain the following information for each financial salesman:

a) surname and first name;

b) place and date of birth;

c) municipality of residence and related address or, if resident abroad, domicile in Italy and place of residence abroad and related addresses;

d) date of entry in the register;

e) name of the authorized intermediary on whose behalf the financial salesman works;

f) any suspension in force in the form of a precautionary measure or an existing sanction against the salesman or any other regulation which could affect the exercise of his work.

3. The registrar shall make the updated register permanently available for consultation by the public in a manner ensuring its maximum diffusion, including through Internet.

4. Consob will promptly send the Organisation notice of the measures taken for which it is responsible and communicated to the salesmen.

Article 85
(Territorial sections)

1. The professional register is divided into territorial sections that correspond to the territorial sections of the Organisation.

2. There will be not less than three territorial sections of the professional register and will be identified by the Organisation and they will respect the principle of substantial uniformity regarding the number and geographical distribution of the members.

Article 86
(Requirements for registration)

1. In order to register with the professional register, it is necessary to:

a) possess the integrity requirements provided by the ministerial regulations and not be in a position which could compromise these requirements;

b) possess the educational level as required by the ministerial regulation;

c) have passed the evaluation test pursuant to article 87 of these regulations or possess those professional requirements established by the Organisation on the basis of evaluation criteria identified by the ministerial regulation.

Article 87
(Evaluation test)

1. The evaluation test will be theoretical and practical and will be held at least once a year by the Organisation with the instructions published in the Gazzetta Ufficiale della Repubblica and in Consob’s Bollettino. The evaluation test must be capable of assessing whether the candidate possesses the ability needed to carry out his salesman activities.

2. The evaluation test will test for the following subjects at least: financial market law, regulations regarding salesman activities, elements of financial mathematics and financial market economic principles, elements of private law and tax law with respect to the financial market.

3.The test will be organised and evaluated by the Organisation who will use an examination commission comprising parties with adequate professional backgrounds and who comply with all requirements laid down by the Organisation. Each examining commission will comprise at least five members. In any case the majority of the members of the commission must be composed of parties who are not registered with the professional register of salesmen, nor be representatives or employees of authorised parties.

4.The Organisation will set the date, examination centres, and the manner in which the tests will be held and will publish these elements and any other information pertinent to the evaluation test.

5. The candidate must have the educational qualifications prescribed by the ministerial regulations in order to take the evaluation test.

Article 88
( Registration with the professional register)

1. Subject to verification that the applicant possesses all the necessary requirements, the Organisation will register him with the professional register and note the elements as provided under article 84, paragraph 2.

2. The Organisation will make a decision within a reasonable time from receiving the application. If no measures have been taken within this time frame, the application for registration will be understood to be accepted.

3. The application will be dated at the date of making the application, or, if it is incomplete or incorrect, the date that the application is completed or corrected.

Article 89
(Striking off the professional register)

1.The Organisation will strike the salesman off the professional register if:

a) requested by the interested party;

b) one of the requirements for registering with the professional register as set out in article 86, letter a) is no longer valid;

c) the supervision fee is not paid;

d) the fee due to the Organisation is not paid;

e) Consob decides to strike him off the professional register.

2. The Organisation will strike him off the register pursuant to paragraph 1, letters a), b) or d), upon verification of the circumstances. The Organisation will strike him off the register pursuant to paragraph 1, letters c) or e) , upon receipt of the request by Consob.

3. The circumstances described under paragraph 1, letters c) and d)will run from forty-five days following expiry of the term established for payment of the fee.

4. The salesmen who are struck off the professional register under paragraph 1 may be registered again by making application, if:

a) in the cases provided under paragraph 1, letters b), c) and d) , they are in compliance with the requirements under article 86, letter a), or they have made the payments due;

b) in the case provided under paragraph 1, letter e) , five years have passed since the decision to strike the person off.

Article 90
(Duties of the salesmen with respect to the Organisation)

1. The salesmen must promptly notify the Organisation:

a) of where the documentation pursuant to article 95 is kept;

b)of all variations to the elements of information provided under the previous letter and article 84, paragraph 2, letter c).

2. The salesmen must notify the Organisation if the requirements for registration with the professional register are no longer valid within five days from when the event occurs or from the moment it has notice of the event.

3. In the exercise of its duties, the Organisation may request the salesmen to notify it of the information and updates and to send the records and documents.

Part IV
Activities of Financial Salesmen

Article 91
(Range of activity)

1. The salesmen will carry out their tasks and duties as required in accordance with the provisions regulating the activities of authorised parties on the basis, and within the limits of the tasks assigned to them.

Article 92
Incompatibilities

1. The activity of salesman shall be incompatible:

a) with performing the consulting activity referred to in Article 1.6f) of the Consolidated Law, except where such activity is performed on behalf of the authorized intermediary for whom the salesman works or another company belonging to the same group;

b) with the position of member of the board of auditors or collaborator of a member of the board of auditors as defined in Article 2403- bisof the Civil Code, or head or member of the internal control unit at authorized intermediaries;

c) with the position of director, employee or collaborator of an authorized intermediary not belonging to the same group as the authorized intermediary on whose behalf the salesman works;

d) with the position of partner, director, member of the board of auditors or employee of the auditing firm engaged to audit the annual accounts of the authorized intermediary on whose behalf the salesman works;

e) with entry in the single register of stockbrokers;

f) with every other engagement or activity that seriously conflicts with the orderly performance of the activity of salesman.

Article 93
General rules of conduct

1. Salesmen must act diligently, correctly and transparently. They must observe the legislative and regulatory provisions and self-regulatory codes regarding their activity and that of the category of the authorized intermediary on whose behalf they work. They must also respect the internal procedures and rules of conduct of the authorized intermediary that has engaged them.

2. Salesmen are required to treat the information they acquire from investors or otherwise by virtue of their activity as confidential except vis-à-vis the authorized intermediary on whose behalf they work and the intermediary whose services, financial instruments or products are supplied and in the cases referred to in Article 31.7 of the Consolidated Law and Article and in every other case where the legal system requires or permits it to be disclosed. The use of the aforementioned information for other than strictly professional purposes is prohibited.

Article 94
Rules of presentation and conduct towards investors

1. On the occasion of the first contact, salesmen shall:

a) give investors a copy of a declaration drawn up by the authorized intermediary setting out its identification data, the details of its entry in the register and the personal identification data of the salesman, and the address to which the declaration of withdrawal referred to in Article 30.6 of the Consolidated Law is to be sent;

b) give investors a copy of a document conforming to the model in Annex 8.

2. Salesmen shall also give investors a copy of the declaration referred to in paragraph 1a) where there is a change in the information it contains.

3. Salesmen shall fulfil the obligations to inform investors clearly and completely and verify that they have understood the essential features of the proposed transaction with regard not only to the related costs and capital risks but also to its suitability in relation to their situation.

4. In distance marketing:

a) the information and clarifications that salesmen must provide to the investor or acquire from the latter shall be provided or acquired in a clear and comprehensible way using procedures appropriate to the characteristics of the means of distance communication employed;

b) the documents that salesmen must deliver to or acquire from investors may be transmitted using means of distance communication, provided the latter' s characteristics are compatible with such transmission and allow the addressee to store the documents on a permanent medium.

5. Salesman shall verify the identity of investors before taking their subscriptions or orders. Salesmen shall give investors a copy of the contracts, orders and every other document they sign.

6. Salesmen may receive from investors, for consequent immediate transmission, exclusively:

a) bank cheques and banker's drafts made out or endorsed to the authorized intermediary on whose behalf they act or to the intermediary whose services, financial instruments or financial products they supply and marked not transferable;

b) transfer orders and similar documents whose beneficiary is one of the parties indicated under the previous letter;

c) registered and endorsable financial instruments made out or endorsed to the intermediary performing the service supplied.

7. Salesmen may not receive any form of compensation or loans from investors.

8. The salesman may not use the secret electronic access code to the investor dealings or in any case connected to them.

Article 95
Conservation of documents

1. Salesmen are required to conserve in orderly fashion for at least five years a copy of the following documents in the places notified pursuant to Article 90.

a) contracts concluded by means of their services;

b) other documents signed by investors;

c) correspondence with the intermediaries on whose behalf they have worked over time.

2. Article 69.2 shall apply.

3. Salesmen must conserve in orderly fashion for two years a copy of the recordings on magnetic tape or an equivalent medium that they are required to make in performing their activity.

Part V
Disciplinary and preventive measures

Article 96
(Disciplinary measures)

1. The disciplinary measures under article 196, paragraph 1, letters a), b), c) and d) of the Consolidation Act are imposed by Consob in accordance with the seriousness of the violation and considering any recidivism for any breach of the Consolidating Act rules, these rules, or any other general or special regulations made by Consob.

2. Without prejudice to the provisions of paragraph 1, Consob:

a) will strike the party off if:

1) the provisions of article 31, paragraph 2, second period of the Consolidating Act are breached;

2) out of office offers or promotions or distance placings on behalf of non authorised parties are made;

3) the signature of the investor is forged on the contracts or other documentation regarding the operations that he set up;

4) the money or securities owned by the investor are acquired, including temporarily;

5) Consob or the investor are notified or sent untruthful information or documents;

6) offers for investments are made in breach of the provisions covered by part IV, title II, item I of the Consolidating Act and the relative implementation provisions;

7) operations are concluded which were not authorised by the investor regarding the investor’s dealings or in any case connected with the investor.

b) arrange the striking off the professional register under article 196, paragraph 1, letter c) of the Consolidating Act if:

1) the notification obligations provided by the provisions under article 91 are not carried out;

2) activities are carried out or undertaken which are incompatible with the provisions of article 92;

3) the provisions of article 93, paragraph 2 are breached;

4) the provisions of article 94, paragraph 3 are breached;

5) the provisions of article 94, paragraph 5 are breached;

6) means of payment, financial instruments or securities with characteristics which do not comply with the provisions of article 94, paragraph 6 are accepted from the investor;

7) fees or financing are collected in breach of article 94, paragraph 7;

8) the duty to keep the documentation pursuant to article 95 is not complied with;
 

c) fines will be imposed pursuant to article 196, paragraph 1, letter b) if:

1) the duties under article 90 are not complied with;

2) the provisions of article 94, paragraphs 1 or 2 are breached;

3.Consob may arrange for the disciplinary measures to be immediately greater or lesser than the established disciplinary measures for each of the breaches identified under paragraph 2 in accordance with the circumstances and considering all the elements available.

Article 97
(Preventive measures)

1.For the purposes of adopting the preventive measures under article 55, paragraph 1, of the Consolidation Act, Consob will assess the seriousness of the elements that it has available, and give special importance to the breach of provisions for which the disciplinary measures recommend striking off the professional register, the manner in which the unlawful conduct was carried out, and whether the breach was effected on more than one occasion.

2. For the purposes of adopting the preventive measures under article 55, paragraph 2 of the Consolidation Act, Consob will assess the circumstances under which the salesman was subject to the personal preventive measures under book IV, title I, item II of the criminal procedure code, or the reasons for which he was faced with accusation for one of the crimes indicated in the above mentioned regulation, and especially, considering the kind of crime and the extent to which the above mentioned circumstances could prejudice the specific interests involved in carrying out his activity as a financial salesman, within the limits of its power as provided by law.

Part VI
Final and transitional provisions

Article 98
(Final and transitional provisions)

1. The date that the Organisation will come into operation will be resolved and published in the Gazzetta Ufficiale in addition to the provisions under parts II and III of this Book.

2. The provisions under Items II and II of the regulations approved by resolution no. 10629 of 8 April 1997 as amended will apply until the provisions under paragraph 1 above come into effect. The Regional and Provincial commissions for the professional register of financial salesmen will continue to operate until the Organisation begins operations.

3. The disciplinary measure of striking off the register will be applied in the event of the communication or sending of untruthful information or documents to the Regional or Provincial commissions of the professional register of financial salesmen until the provisions under paragraph 1 above come into effect, and the fine provided under article 196, paragraph 1, letter b), of the Consolidation Act will apply for the breach of article 11 of the regulation approved by resolution no. 10629 of 8 April 1997. Consob may apply the disciplinary measures which are immediately greater or lesser than the established disciplinary measures for the breaches identified under this paragraph in accordance with the circumstances and all the elements available.
 

Footnotes:
 

1 Resolution 11522 and the attached Regulation are published in the Ordinary Supplement no. 125 of Gazzetta Ufficiale della Repubblica italiana, no. 165 of 17 July 1998 and CONSOB, Bollettino mensile no. 7, July 1998. Resolution 11745 of 9 December 1998 is published in Gazzetta Ufficiale, no. 297 of 21 December 1998 and in Consob, Bollettino mensile no. 12, December 1998. Consob Resolution 12409 of 1 March 2000 is published in Gazzetta Ufficiale, no. 58 of 10 March 2000 and in CONSOB, Bollettino mensile no. 3, March 2000. Consob Resolution 12498 of 20 April 2000 is published in Gazzetta Ufficiale, no. 100 of 2 May 2000 and in CONSOB, Bollettino mensile no. 4, April 2000. Consob Resolution 13082 of 18 April 2001 is published in Gazzetta Ufficiale, no. 137 of 15 June 2001 and in CONSOB, Bollettino quindicinale no. 4.2, April 2001. Consob Resolution 13710 of 6 August 2002 is published in Gazzetta Ufficiale, no. 192 of 7 August 2002 and in CONSOB, Bollettino quindicinale no. 8.1, August 2002. Resolution no. 15961 of 30.5.2007 is published in the G.U. n. 134 of 12 June 2007 and in CONSOB, Bollettino quindicinale no. 5.2, May 2007; It will come into effect the day after its publication in the G.U., unless otherwise provided in the transitional provisions.

2 Article amended in this manner with resolution no. 15961 of 30.5.2007 where the following wording was added: “25-bis, paragraph 2,”, “117-ter” and the following wording was removed: “letters d),f), g) and h),”.

3 Subparagraph amended by Consob Resolution 12409 of 1 March 2000.

4 Subparagraph amended by Consob Resolution 12409 of 1 March 2000.

5 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

6 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

7 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

8 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

9 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

10 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

11 Subparagraph added by Consob Resolution 13710 of 6 August 2002.

12 Paragraph repealed by Consob Resolution 13710 of 6 August 2002.

13 Article first amended by Consob Resolution 12409 of 1 March 2000 and then as indicated in the following footnote.

14 Paragraph amended by Consob Resolution 13710 of 6 August 2002.

15 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

16 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

17 Article first amended by Consob Resolution 12409 of 1 March 2000 and then as indicated in the following footnote

18 Subparagraph amended by Consob Resolution 13710 of 6 August 2002.

19 Article first amended by Consob Resolution 12409 of 1 March 2000 and then as indicated in the following footnotes.

20 Paragraph amended by Consob Resolution 13710 of 6 August 2002.

21 Article first amended by Consob Resolution 12409 of 1 March 2000 and then as indicated in the following footnotes.

22 Paragraph amended by Consob Resolution 13710 of 6 August 2002.

23 Subparagraph amended by Consob Resolution 12409 of 1 March 2000.

24 Subparagraph amended by Consob Resolution 12409 of 1 March 2000.

25 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

26 Article repealed by Consob Resolution 13710 of 6 August 2002.

27 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

28 Paragraph repealed by Consob Resolution 13710 of 6 Autust 2002.

29 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

30 Subparagraph added by Consob Resolution 15961 of 30 May 2007.

31 Subparagraph amended by Consob Resolutions 12409 of 1 March 2000 and 13710 of 6 August 2002.

32 Subparagraph added by Consob Resolution 15961 of 30 May 2007.

33 Subparagraph added by Consob Resolution 12409 of 1 March 2000.

34 Period amended in this manner by resolution no. 12409 of 1.3.2000.

35 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

36 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

37 Subparagraph amended by Consob Resolution12409 of 1 March 2000.

38 Subparagraph amended by Consob Resolution12409 of 1 March 2000.

39 Article amended by Consob Resolution 13710 of 6 August 2002.

40 Paragraph amended by Consob Resolution 12498 of 20 April 2000.

41 Article amended by Consob Resolution 12409 of 1 March 2000.

42 Section added by resolution no. 15961 of 30.5.2007. The resolution no. 15961 of 30.5.2007 provided that articles 36-bis, 36-ter, 36- quater and 36-quinquies will come into effect on 1 July 2007.

43 See editor’s note in Section III-bis.

44 See editor’s note in Section III-bis.

45 See editor’s note in Section III-bis.

46 See editor’s note in Section III-bis.

47 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

48 Article amended, with effect from 1 July 2003, by Consob Resolution 13710 of 6 August 2002.

49 Paragraph amended by Consob Resolution 12498 of 20 April 2000.

50 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

51 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

52 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

53 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

54 Paragraph amended by Consob Resolution 12498 of 20 April 2000.

55 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

56 Paragraph amended by Consob Resolution 12409 of 1 March 2000.

57 Title entered by resolution no. 15961 of 30.05.2007.

58 Paragraph amended in this manner by resolution no. 13710 of 6.8.2002.

59 Comma così sostituito con delibera n. 13710 del 6.8.2002.

60 Paragraph entered by resolution no. 15961 of 30.5.2007. This paragraph will come into effect sixty days following the publication of resolution no. 15961 of 30.5.2007 in the Gazzetta Ufficiale.

61 Paragraph amended by Consob Resolution 13710 of 6 August 2002.

62 Paragraph amended by Consob Resolution 13710 of 6 August 2002.

63 Subparagraph amended by Consob Resolution 13710 of 6 August 2002.

64 Subparagraph amended by Consob Resolution 13710 of 6 August 2002.

65 Subparagraph amended by Consob Resolution 13710 of 6 August 2002.

66 Book substituted first by resolution no. 11745 of 9 December 1998, then by resolution no. 15961 of 30 May 2007.

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