Regulation containing implementation rules of legislative decree no. 58 of 24 February 1998 and legislative decree no. 213 of 24 June 1998 on markets (Adopted by Consob with resolution no. 11768 of 23 December 1998 and amended by resolution no. 12497 of 20 April 2000, no. 13085 of 18 April 2001, no. 13659 of 10 July 2002, no. 13858 of 4 December 2002, no. 14003 of 27 March 2003,
no. 14146 of 25 June 2003, no. 14339 of 5 December 2003, no. 14955 of 23 March 2005, no. 15233 of 29 November 2005, no. 15539 of 8 August 2006, and no. 15911 of 2 May 2007)
The amendments made by resolution no. 15911 of 2 May 2007 are highlighted in bold in the article.
CONTENTS
TITLE I - Legal basis and definitions
Article 1 Legal basis
Article 2 Definitions
TITLE II - Rules governing regulated markets
Chapter I - Minimum capital and related and instrumental activities of market operating companies
Article 3 Definitions
Article 4 Minimum capital
Article 5 Related and instrumental activities
Chapter II - Requirement to execute trades in regulated markets
Article 6 Definitions
Article 7 Requirement to execute trades in regulated markets
Article 8 Exemptions from requirement to execute trades in regulated markets
Article 9 Non-applicability of the requirement to execute trades in regulated markets
Chapter III - Requirements to record and report transactions carried out in regulated markets
Article 10 Recording requirements for regulated markets
Article 11 Reporting requirements for transactions involving financial instruments admitted to trading in a regulated market concluded outside such market
Article 12 Disclosure to the market of information concerning transactions involving financial instruments admitted to trading concluded outside such market
Article 13 Transitional provisions
Chapter IV - Liquidation of market insolvencies
Article 14 Definitions
Article 15 Causes of market insolvency
Article 16 Verification of market insolvency
Article 17 Procedure for the liquidation of market insolvencies
Article 18 Notifications to Consob
Chapter V - Establishment of electronic links with foreign markets
Article 18-bis Notifications to Consob
Chapter V-bis - Conditions for listing certain companies
Article 18-ter Conditions for listing shares of companies that control companies established and regulated by the laws of Countries outside the European Union
Article 18-quarter Conditions that prevent the listing of shares of subsidiary companies subject to the management and control of other companies
Article 18-quinquies Conditions for the listing of shares of companies whose assets exclusively comprise shareholdings
Art. 18-sexies Final and transitional provisions
TITLE III - Rules governing securities depositories
Chapter I - Definitions
Article 19 Definitions
Chapter II - Minimum capital and related and instrumental activities of central securities depositories
Article 20 Minimum capital
Article 21 Related and instrumental activities
Chapter III - Central administration of financial instruments
Section I - Financial instruments and persons admitted to a central depository system
Article 22 Financial instruments admitted to the system
Article 23 Financial instruments handled by the system on a dematerialized basis
Article 24 Persons admitted to the system
Article 25 Suspension and exclusion of custodians from the system
Section II - Minimum and essential contents of contracts
Article 26 Minimum and essential contents of contracts with central depositories
Article 27 Agreements entered into by central depositories
Chapter IV - Provisions governing central depository services
Section I - General provisions
Article 28 Entry of financial instruments into a system
Article 29 Endorsements for the transfer of financial instruments to central depositories
Article 30 Reports by central depositories to issuers
Article 31 Right to initiate amortization procedures
Article 32 Safeguards and guarantees for investors
Article 33 Applications for certifications and notifications for attendance at shareholders' meetings
Article 34 Issue of certifications
Article 34-bis Notification s for attendance at shareholders’ meeting
Article 35 Custodians' reports to issuers
Article 36 Notations in issuers' shareholders' registers
Article 37 Shares and other equity securities issued by banche popolari
Section II - Accounts and registrations
Article 38 Accounts kept by central depositories
Article 39 Financial instruments owned by central depositories
Article 40 Accounts kept by custodians
Article 41 Registration of book-entry transfers
Article 42 Balancing of central depositories' accounts
Article 43 Balancing of custodians' accounts
Article 44 Manner of sending notifications
Section III - Establishment of liens
Article 45 Establishment of liens on financial instruments
Article 46 Accounts permitting the establishment of liens on all the financial instruments entered therein
Chapter V - Dematerialization of financial instruments
Article 47 Dematerialization of financial instruments under central management
Article 48 Dematerialization of financial instruments not under central management
Article 49 Dematerialization of newly issued financial instruments
Article 50 Cessation of the conditions for dematerialization
Chapter VI - Transitional and final provisions
Article 51 Start of mandatory dematerialization
Article 52 Financial instruments that have matured and coupons presented for payment
Article 53 Activity of Monte Titoli S.p.A.
Article 54 Central management of government securities
Article 55 Transitional provisions
Title IV - Redenomination of private-sector financial instruments
Article 56 Redenomination procedure
Article 57 Redenomination calendar
Article 58 Information requirements
Title V - Market integrity
Chapter I – Accepted market practices
Article 59 Factors to be taken into account when accepting market practices
Article 60 Procedures for accepting market practices
Chapter II – Market practices on derivative markets
Article 61 Inside information in relation to derivatives on commodities
Chapter III – Market manipulation
Article 62 Elements and circumstances to be taken into account when detecting market manipulation
Chapter IV – Suspicious transactions
Article 63 Persons subject to the notification obligation
Article 64 identification of suspicious transactions
Article 65 Time limits for notifications
Article 66 Content of notifications
Article 67 Means of notification
Article 68 Confidentiality obligations and professional secrecy
Article 69 Transactions involving foreign markets
Title VI - Transitional and final provisions
Article 70 Entry into force
ANNEXES
Annex 1 - Form for the notification of electronic links by market operating companies and organizers of alternative trading systems
Annex 2 - Form for the notification of electronic links by intermediaries
Annex 3 - Certification of participation in the central depository system
Annex 4 - Examples of market manipulation
TITLE I
LEGAL BASIS AND DEFINITIONS
Article 1
(Legal basis)
1. This regulation is adopted in accordance with article 25, paragraph 2, of article 61, paragraph 2, article 65, article 72, paragraph 2, article 80, paragraph 3, article 81, paragraph 1, and article 214, paragraph 3, of legislative decree no. 58 of 24 February 1998, and article 12, paragraph 2 and article 36 of Legislative Decree no. 213 of 24 June 1998.
Article 2
(Definitions)
1. In this Regulation:
a) "Consolidated Law" shall mean Legislative Decree 58 of 24 February 1998;
b) "Euro Decree" shall mean Legislative Decree 213 of 24 June 1998.
TITLE II
Rules governing regulated markets
Chapter I
Minimum capital and related and instrumental activities
of market operating companies
Article 3
(Definitions)
1. In this Chapter:
a) "operating companies" shall mean companies referred to in Article 61.1 of the Consolidated Law;
b) "operating companies' minimum capital" shall mean the minimum amount of operating companies' paid-up and existing share capital;
c) "intermediaries" shall mean stockbrokers, investment firms and banks authorized to provide the following investment services in Italy:
- dealing for own account and for customer account;
- reception and transmission of orders and bringing together two or more investors.
Article 4
(Minimum capital)
1. Operating companies' minimum capital is hereby set at euros 5 million.
Article 5
(Related and instrumental activities)
1. Market operating companies may carry on the following activities related and instrumental to those of the organization and operation of markets:
a) preparation, operation, maintenance and marketing of software, hardware and electronic networks for trading, order transmission and data transmission systems;
b) processing, distribution and marketing of data concerning financial instruments traded in the markets they operate and data relating to the markets;
c) creation and operation of systems for the checking and correction of trades involving financial instruments for transmission of the related balances to the clearing and settlement service referred to in Article 69.1 of the Consolidated Law;
d) promotion of the market's image, inter alia by disseminating information on the market and issuers and engaging in any other activity aimed at the development of the market;
e) creation and operation of systems to guarantee transactions carried out in markets, inter alia by establishing guarantee funds in conformity with Article 68 of the Consolidated Law and the related implementing provisions;
f) creation and operation of alternative trading systems in conformity with Article 78 of the Consolidated Law and the related implementing provisions;
g) creation and operation of alternative trading systems for interbank funds in conformity with Article 79 of the Consolidated Law and the related implementing provisions;
h) installation, operation and maintenance of electronic circuits for the display, and entry by intermediaries, of the conditions for trading financial instruments that do not permit contracts to be concluded via the circuit itself.
2. Operating companies may acquire shareholdings in companies that engage exclusively or principally in activities referred to in paragraph 1. They may also acquire shareholdings in the company referred to in Article 69.1 of the Consolidated Law, entities referred to in Article 70 of the Consolidated Law, central depositories referred to in Article 80 of the Consolidated Law, and in market
operating companies, both those referred to in Articles 63.2, 67.1 and 67.2 of the Consolidated Law and others.
Chapter II
Requirement to execute trades in regulated markets
Article 6
(Definitions)
1. In this Chapter:
a) "authorized intermediaries" shall mean stockbrokers, investment firms and banks authorized to provide the following services in Italy:
 dealing in financial instruments for own account or for customer account;
 reception and transmission of orders and bringing together two or more investors with reference to financial instruments;
 management on a client-by-client basis of investment portfolios;
b) "financial instruments shall mean financial instruments specified in Article 1.2 of the Consolidated Law that are traded on Italian regulated markets;
c) "regulated markets" shall mean markets entered in the register provided for in Article 63.2 of the Consolidated Law or the special section of the same register, as provided for in Article 67.1 of the Consolidated Law;
d) "block" shall mean an order involving a quantity of:
1) bonds or other debt securities whose value is not less than 200,000 euros;
2) shares or other equity securities whose value is not less than:
- 150,000 euros, where the average daily value of the total turnover in the last six months in the same financial instruments on Italian regulated markets is less than euros 1.5 million;
- 250,000 euros, where the average daily value of the total turnover in the last six months in the same financial instruments on Italian regulated markets is between euros 1.5 million and euros 3 million;
- 500,000 euros, where the average daily value of the total turnover in the last six months in the same financial instruments on Italian regulated markets is between euros 3 million and euros 10 million;
- 1.5 million euros, where average daily value of the total turnover in the last six months in the same financial instruments on Italian regulated markets exceeds euros 10 million.
The definition of "block" shall not apply to financial derivatives specified in Article 1.3 of the Consolidated Law;
e) "odd lot" shall mean an order involving a quantity of financial instruments smaller than the minimum lot as defined in the rules of the market in which the financial instrument is admitted to trading;
f) "trading hours of the regulated markets" shall mean, for each financial instrument, the period of time during which at least one of the regulated markets on which the instrument is traded is open;
g) "daily operating hours" shall mean the hours during which authorized intermediaries can establish a connection with the trading system of a regulated market.
Article 7
(Requirement to execute trades in regulated markets)
1. Authorized intermediaries shall execute trades in financial instruments, other than traditional options contracts and every other derivative financial instrument, or have them executed only in regulated markets, except as expressly provided for in Articles 8 and 9 .
Article 8
(Exemptions from requirement to execute trades in regulated markets)
1. Authorized intermediaries may execute trades in financial instruments or have them executed outside regulated markets provided that:
a) the customer has authorized the intermediary in advance to execute trades or have them executed outside regulated markets;
b) execution of trades outside regulated markets allows a better price to be obtained for the customer.
1-bis. Paragraph 1.b) shall not apply to sale and purchase transactions concluded off regulated markets at the client's request at a price equal to the weighted average of the prices of orders carried out on the regulated market by the intermediary for own account or, in the case of orders given by qualified investors, at a price determined using methods specified at the
time the order was given.
1-ter. Withstanding what has been envisaged by Article 32, Clause 3 of the Consob regulation No. 11522 in the matter of intermediaries, the conditions for which letters a) and b) of Clause 1 of the present Article do not apply to the transactions having as subject matter shares already traded on other regulated community markets and admitted to trading on an Italian
regulated market according to Article 57, Clause 1, letter h) of the Consob regulation No. 11971 on the matter of issuers.
2. In the case of orders transmitted by telephone, the authorization referred to in paragraph 1a) may be given orally provided the intermediary retains suitable proof thereof as part of its procedures.
3. The authorization referred to in paragraph 1 a) must be given for individual transactions.
4. Authorized intermediaries may execute trades in financial instruments or have them executed on alternative trading systems referred to in Article 78 of the Consolidated Law outside trading hours of the regulated markets even in the absence of the conditions referred to in paragraphs 1, 2 and 3.
Article 9
(Non-applicability of the requirement to execute trades in regulated markets)
1. The requirement to execute trades in financial instruments only in regulated markets shall not apply to:
a) trades ordered by non-resident investors or investors not having an establishment in Italy;
b) trades in Italian government or government-guaranteed securities or securities issued by international organizations in which governments participate;
c) trades of blocks of financial instruments;
d) trades of odd lots except where market rules provide for trading of such lots.
2. Each operating company of an Italian regulated market on which financial instruments are traded shall send Consob, including by electronic means, by 15 April and 15 October of each year, the list of such financial instruments with an indication of the corresponding turnover on the regulated market it operates in the six months starting respectively on 1 October and 1 April, together with
the average daily turnover.
3. Within 20 days of receiving the notifications referred to in paragraph 2 shall announce the average daily turnover of each financial instrument on all the Italian regulated markets.
Chapter III
Requirements to record and report transactions carried out in regulated markets
Article 10
(Recording requirements for regulated markets)
1. Operating companies shall establish electronic procedures for each of the markets they operate to record the transactions carried out therein.
2. The records, to be preserved for a period of not less than eight years, shall make it possible to establish:
a) the identity of the intermediaries concerned;
b) for markets that use electronic trading systems, the individual orders entered into the systems, including those modified, deleted or unfilled, and the date and time at which they were entered, modified or deleted;
c) the type of transaction;
d) the object of the transaction;
e) the quantity;
f) the unit price;
g) the date and time of execution of the transaction.
3. The information referred to in paragraphs 2a) and 2b) shall be available for inspection only by the operating company and Consob.
4. The electronic recording procedures shall allow Consob to carry out research at any time on each individual financial instrument, type of transaction and intermediary participating in the market.
5. Where extraordinary corporate operations occur that are likely to cause a break in the prices of the financial instruments traded, operating companies shall announce the adjustment coefficients applied.
Article 11
(Reporting requirements for transactions involving financial instruments
admitted to trading in a regulated market concluded outside such market)
1. For each individual trade, including placements made exclusively with institutional investors, involving financial instruments admitted to trading in a regulated market concluded outside such market, intermediaries authorized to provide trading services shall disclose the following information:
a) the financial instrument involved;
b) the date and time of execution;
c) the type of transaction;
d) the unit price net of any commissions;
e) the quantity;
f) the counterparty;
g) whether the transaction was concluded for own account or for customer account.
2. Where the transaction was concluded between intermediaries authorized to provide the service of trading, the reporting requirements shall be fulfilled by the seller alone.
2-bis. The disclosure shall be made within 15 minutes of the time each trade was concluded. For trades involving bonds other than convertible bonds, the disclosure shall be made:
a) not later than 13:00 for trades concluded up to 12:30;
b) not later than the subsequent start of the daily operating hours of the markets, or of the operating hours of the market to which the intermediary is admitted, for trades concluded after 12:30.
For transactions having as subject matter shares already traded on other regulated community markets and admitted to trading on an Italian regulated market according to Article 57, Clause 1, letter h) of the Consob regulation No. 11971 in the matter of issuers, the communication is carried out by the start of the following working day on a working market day, or rather of the working
day of the market into which the intermediary is admitted.
The disclosure shall be made to the operating company of one of the Italian regulated markets on which the financial instrument is traded.
2-ter. In the case of a placement in which the intermediary acquires a risk position or carries out an accelerated procedure for the collection of acceptances, the disclosure of the information referred to in paragraph 1 shall be made upon completion of the placement. If the intermediary does not complete the placement within five days of acquiring the risk position, it shall
disclose the transactions concluded up to that time; subsequent transactions shall be disclosed in accordance with the time limits referred to in paragraph 2-bis.
3. The disclosure referred to in paragraph 1 shall be made to the operating company of one of the Italian regulated markets on which the financial instrument is traded. For transactions concluded outside the daily operating hours of the regulated markets, the disclosure requirements shall be fulfilled by the intermediaries before the subsequent start of the daily operating hours of the
markets in question.
4. Intermediaries admitted to trading on one of the markets referred to in paragraph 3 shall make the disclosure to the operating company of the market to which they are admitted. For transactions concluded outside the daily operating hours of that market, the disclosure requirements shall be fulfilled by the intermediaries admitted to trading before the subsequent start of the daily
operating hours of the market in question.
5. Disclosures shall be made using the means and technical procedures established by operating companies in the rules referred to in Article 62 of the Consolidated Law.
6. This article shall apply to foreign intermediaries authorized to provide trading services in Italy exclusively with respect to trades concluded with or on behalf of investors resident in Italy.
7. This article shall not apply to trades involving:
- Italian or foreign government or government-guaranteed securities
- securities issued by international organizations in which governments participate;
- odd lots.
- traditional options contracts or any other derivative financial instrument.
Article 12
(Disclosure to the market of information concerning transactions involving
financial instruments admitted to trading concluded outside such market)
1. Operating companies shall disclose the following information to the market in the manner established in the rules referred to in Article 62 of the Consolidated Law for each individual trade concluded outside the market that is reported to them:
a) the financial instrument involved;
b) the quantity traded.
c) the unit price net of any commissions;
d) the date and time of execution.
2. The information referred to in paragraph 1 shall be disclosed to the market within 45 minutes of the time of the disclosure made to the market operating company pursuant to Article 11.
2-bis. For the transactions referred to in Article 11, paragraph 2-ter, market operating companies shall disclose the following information to the market within the time limits referred to in paragraph 2:
a) the quantity of shares allotted;
b) the allotment price or the average allotment price;
c) the number of institutional investors receiving shares.
3. Information concerning transactions concluded after the daily operating hours or for which the time limit referred to in paragraph 2 expires after the daily operating hours shall be disclosed to the market before the subsequent opening of trading.
Article 13
(Transitional provisions)
1. Until the date of entry into force of Article 11.5, the reports provided for therein shall be made:
a) by intermediaries admitted to trading, using the trading-support information systems prepared by the operating company concerned;
b) by intermediaries not admitted to trading, by fax.
2. Until 1 June 2000, the information referred to in Article 12.1 shall also be disclosed to the market 60 minutes after the time of execution of the transaction for transactions not involving blocks that are executed outside official trading hours on alternative trading systems referred to in Article 78 of the Consolidated Law.
Chapter IV
Liquidation of market insolvencies
Article 14
(Definitions)
1. In this Chapter:
a) "trader" shall mean an intermediary admitted to trading in Italian regulated markets;
b) "settlement agent" shall mean an intermediary participating in the clearing and settlement service for transactions involving financial instruments other than derivatives referred to in Article 69 of the Consolidated Law;
c) "member" shall mean a member of the guarantee systems based on a central counterparty referred to in Article 1.n) of the rules on guarantee systems;
d) "central counterparty" shall mean the entity that in the operation of a clearing and guarantee system for financial instruments is interposed between the general members of the system and acts as the exclusive counterparty for their transfer orders;
e) "liquidator" shall mean the liquidator or the liquidators appointed by Consob under Article 72.3 of the Consolidated Law;
f) "executive procedures" shall mean the procedures governed by the rules of the market or the guarantee systems or agreed by market intermediaries, whose subject is the execution of transactions concluded on regulated markets that have not been settled within the prescribed time limits owing to failure to deliver financial instruments or cash;
g) "RRG systems" shall mean the daily trade-checking services that provide the exclusive channel for the acquisition of instructions by settlement services;
h) "providers of market services" shall mean operating companies of regulated markets referred to in Article 61 of the Consolidated Law, operators of RRG systems, operators of contract guarantee systems, operators of settlement services, central counterparties and central depositories of financial instruments referred to in Part III, Title II, of the Consolidated Law;
i) "blocks" shall mean orders involving quantities of financial instruments specified in Article 6.1d);
j) "settlement services" shall mean the clearing and settlement and the gross settlement of transactions involving financial instruments other than derivatives referred to in Article 69.1 of the Consolidated Law;
k) "rules for guarantee systems" shall mean the rules issued pursuant to Articles 68, 69.2 and 70 of the Consolidated Law for systems ensuring the performance of transactions involving financial instruments;
l) "contract guarantee funds" shall mean the funds referred to in Article 68 of the Consolidated Law ensuring the performance of transactions involving financial instruments other than derivatives.
m) "guarantee systems" shall mean contract guarantee funds and guarantee systems based on a central counterparty referred to in Article 1 of the rules on guarantee systems;
n) "final transactions" shall mean transactions that are binding and enforceable against third parties pursuant to Article 2 of Legislative Decree 210/2001.
Article 15
(Causes of market insolvency)
1. Market insolvency shall be caused by serious failures to perform or by other external circumstances that demonstrate the inability of the trader, settlement agent or member to meet market obligations.
2. Insolvency shall be presumed in the event of:
a) failure to pay, within the time limits and in the manner prescribed, the amount due resulting from the completion of executive procedures;
b) failure on the part of a member to make margin payments or the additional deposits referred to in Article 5.3j) of the rules on guarantee systems or to settle the differentials arising from positions in derivative financial instruments within the time limits and in the manner prescribed.
Article 16
(Verification of market insolvency)
1. Operating companies of regulated markets, central counterparties and liquidators shall, each within the scope of its authority, notify Consob without delay of serious failures to perform and other external circumstances referred to in Article 15.1 of which they have knowledge.
2. For the purposes of the verification and declaration of market insolvency by Consob:
a) in the case referred to in Article 15.2a), the operating company of the regulated markets or the central counterparties shall notify Consob of the failure, specifying the measures adopted in accordance with their rules;
b) in the case referred to in Article 15.2, the central counterparties shall inform Consob of the failure, specifying the measures adopted to transfer or close the contractual positions on the accounts of the defaulter in accordance with the rules on guarantee systems.
3. The resolution in which the market insolvency is declared shall be promptly notified by fax to the providers of market services. In the same resolution Consob may issue instructions to the providers of market services concerning any emergency measures to be taken with regard to the settlement procedure of the insolvency.
Article 17
(Procedure for the liquidation of market insolvencies)
1. The procedure for the liquidation of market insolvencies shall be applied exclusively with reference to the phases referred to in paragraphs 3a) and 3b) and paragraph 4a), in the following cases:
a) transactions concluded off the regulated markets with a settlement period longer than that established on the reference Italian regulated markets;
b) block trades concluded at prices that differ by more than 10% from the minimum and maximum prices on the reference Italian regulated markets on the day of the transactions;
c) transactions, other than block trades, concluded off the regulated markets at prices not included between the minimum and maximum prices on the reference Italian regulated markets on the day of the transactions;
d) settlements, forward contracts and traditional options contracts concluded off the regulated markets;
e) transactions involving financial instruments not listed on an Italian regulated market.
2. The procedure for the liquidation of market insolvencies shall be applied to transactions guaranteed by guarantee systems based on a central counterparty exclusively with reference to the phases referred to in paragraphs 4a), 4d), 4e), 4f) and 4g).
3. Following the declaration of a market insolvency and pending the instructions of the liquidator:
a) the managers of the settlement services shall exclude, in accordance with the operating rules of such services, the transactions entered by the insolvent that cannot be settled for lack of the necessary cash or financial instruments;
b) without prejudice to paragraph 5 with regard to items pertaining to the traders who use the insolvent settlement agent, the managers of the RRG systems shall exclude the non-final transactions concluded by the insolvent;
c) the counterparties of the insolvent, taking care not to upset orderly trading, may buy or sell on regulated markets the uncleared financial instruments that they should have received from or delivered to the insolvent, consistently with what is provided for in paragraph 4b).
4. Without prejudice to Article 16.1b), liquidators appointed under Article 72.3 of the Consolidated Law shall liquidate market insolvencies by means of the following procedure:
a) they shall acquire the data and documents necessary for liquidation at the offices of the insolvent, its settlement agent, if any, its counterparties and the providers of market services, verifying their accuracy and completeness;
b) with regard to transactions whose exclusion from the RRG systems and the settlement services has been ordered, they shall calculate each counterparty' s net position in cash and individual financial instruments, distinguishing between guaranteed transactions, divided by individual guarantee system, and those not guaranteed, including the debit differentials resulting from the
performance of the executive procedures;
c) after consulting the market operating companies, they shall indicate, in relation to the value of the individual net positions in financial instruments referred to in subparagraph b), the time limits and procedures in compliance with which the counterparties of the insolvent must buy or sell on regulated markets the uncleared financial instruments that they should have received
from or delivered to the insolvent; before the expiration of the above-mentioned time limits, the counterparties of the insolvent may also opt, wholly or partly, for a differential settlement on the basis of a settlement price calculated as the weighted average of the transactions concluded on the regulated markets or, at the discretion of the liquidator, of the official prices recorded by
the operating companies of such markets on the expiration day of such time limits;
d) they shall ascertain the correctness, completeness and outcomes of the transactions carried out by the central counterparties and the counterparties of the insolvent; where they find the transactions carried out by the counterparties of the insolvent are incomplete, they shall calculate the differences receivable and payable using the settlement price referred to in subparagraph c);
e) in cases of differential settlement by the central counterparty, they shall verify the objective impossibility of finding the financial instruments and the adequacy of the settlement price used;
f) they shall issue credit certificates:
1) to the benefit of the counterparties of the insolvent for an amount equal to the differences in cash payable to them for each net position, plus the ancillary expenses incurred as a result of the insolvency;
2) to the benefit of the central counterparties for an amount equal to the differences in cash payable to them, less the margin payments and the additional deposits referred to in Article 5.3j) of the rules on guarantee systems made by the insolvent, plus the ancillary expenses incurred as a result of the insolvency;
g) they shall acquire any differences payable to the insolvent, crediting them to a bank current account held in the name of the insolvency.
5. In the case of insolvencies of settlement agents that participate in the service on behalf of traders, in order to permit the transactions pertaining to the traders to be settled, the liquidator shall verify the possibility of transferring such transactions and the stocks of securities and cash they had deposited with the insolvent to a different settlement agent.
Article 18
(Notifications to Consob)
1. Liquidators shall notify the names of the persons who do not comply with the orders they give in the performance of their duties to Consob for the measures within the scope of its authority. They shall also inform Consob of the outcome of the liquidation of the insolvency, including by means of a final report.
Chapter V
Establishment of electronic links with foreign markets
Article 18-bis
(Notifications to Consob)
1. Operating companies and organizers of alternative trading systems referred to in Article 78 of the Consolidated Law shall notify Consob of the establishment of electronic links with foreign markets and send the notice shown in Annex 1 within five days of the opening of such links.
2. Italian investment firms and branches of EU and non-EU investment firms established in Italy, financial intermediaries entered in the list provided for in Article 107 of the Banking Law, and Italian banks and branches of EU and non-EU banks established in Italy shall notify Consob of the establishment of electronic links with foreign markets and send the notice shown in Annex 2 within
five days of the opening of such links.
3. The closing of electronic links with foreign markets and any other change in the information previously notified shall be notified to Consob in the manner and within the time limits specified in paragraphs 1 and 2.
4. For the purposes of this article, "electronic links" shall mean computerized connections of any kind that permit the direct entry of orders in a foreign market.
5. "Foreign markets" shall mean markets recognized by Consob pursuant to Articles 67.1 and 67.2 of the Consolidated Law and any other system for trading financial instruments operated by entities having their registered office abroad that are organized on the basis of rules and structures permitting the continuous or periodic collection and diffusion of orders for the trading of
financial instruments and the execution of such orders in the manner provided for by the system.
6. Electronic links already in service at the date of entry into force of these provisions shall be notified to Consob in the manner specified in the preceding paragraphs within thirty days of their publication in the Gazzetta Ufficiale.
Title V-bis
Conditions for listing certain companies
Article 18-ter
(Conditions for listing the shares of companies that control
other companies established and regulated by the laws of Countries outside the European Union)
1.The shares of companies that control other companies established and regulated by the laws of Countries outside the European Union may be admitted to trading in an Italian regulated market if the subsidiary companies:
a) draw up financial statements or consolidated financial statements and make it available to the shareholders of the parent company in accordance with the provisions of article 2429, paragraph 4 of the Civil Code;
b) submit the financial statements under letter a) to an audit in accordance with standards that are equivalent to those prevailing in the European Union;
c) publish their articles of association, the composition, and the powers of the corporate bodies in accordance with the law that applies to them or voluntarily;
d) provide the auditor of the parent company with the information necessary for the auditor to audit the annual and interim accounts of the parent company;
e) put an internal control system in place which is suitable to the size and complexity of the business carried out and which can regularly supply the necessary information on the management and economic, asset, and financial information to the management, the control body, and the auditor of the parent company. The suitability of the control system will be certified by the control body
of the parent company at least once a year.
Article 18-quater
(Conditions that prevent the listing of shares of subsidiary companies
subject to the management and control of another company)
1. The shares of subsidiary companies subject to the management and control of another company cannot be admitted to trading in an Italian regulated market if those companies:
a) have not complied with the advertising obligations provided under article 2497-bis of the civil code;
b) do not have independent trading capacity in their dealings with customers and suppliers;
c) have a centralised treasury with the company that exercises centralised control or with another company in the group that they are administered by which is not in the company interests. The correspondence with company interests will be certified by the management body with a reasoned and certified declaration by the control body;
d) they do not have enough independent directors to guarantee that their opinions would have a significant weight in making of board decisions. In order to evaluate the independence and the adequacy of the number of the aforesaid directors, reference is made to general standards established by the management companies in regulated markets, considering the best procedures regulated by the
code of conduct drawn up by the company or by companies in the sector.
2. The subsidiary companies with listed shares that do not consider that they have to comply with the advertising obligations provided under paragraph 1, lettera) will provide reasons for why they believe that they should not be subject to the management and control of the parent company in the management report required under article 2428 of the Civil Code.
Article 18-quinquies
(Conditions for listing the shares of companies
whose assets exclusively comprise shareholdings)
1.Shares of finance companies whose assets exclusively comprise shareholdings may be admitted for trading in an Italian regulated market if those companies:
a) provide the public with the qualitative and quantitative information on their investment policies, specifying their policies on investment management and risk diversification. The information must allow the investor to evaluate the investment opportunities and identify the manner with which the risk distribution objective is achieved;
b) invest and manage their businesses in compliance with published investment policies.
2.The companies under paragraph 1 will give timely communication to the public of variations in their investment policies in the manner described under article 66, paragraphs 2 and 3 of Consob regulation no. 11971 on issuers.
3. Once they are listed, the companies provided for under paragraph 1 will provide the following information in their management reports and interim reports:
a) information on how investments are made in their business in compliance with the investment policies adopted, with special reference to the risk diversification, providing a quantitative analysis for that purpose, and
b) a complete and significant analysis of the investment portfolio.
Article 18-sexies
(Final and transitional provisions)
1.The provisions under this Title apply to companies that apply for admission to trading their shares on an Italian regulated market starting from 1 January 2008.
2. The companies with listed shares as provided under articles 18-ter and 18-quaterwill bring themselves into line with the provisions contained therein within eighteen months from when they come into effect. They will promptly send Consob their adjustment plan and their estimated timetable and will publish the essential elements in the manner provided under article 66, paragraphs 2 and
3 of the rules adopted by Consob with decision no. 11971 of 1999 as amended. The accounting document provided under article 82 of said regulation will contain the details regarding implementation of the plan. The companies with listed shares under article 18-quinquies will bring themselves into line with the provisions contained therein within the date of approval of the closed financial
statements or still running at 31.12.2007.
3.The companies with listed shares that acquire control of foreign companies under paragraph 1 of article 18-ter will bring themselves into line with the provisions contained therein within six months from completing the acquisition. The companies with listed shares that are subject to the management and control of another company will bring themselves into line with the provisions
contained under article 18-quater within eighteen months from the occurrence of this condition.
4. Companies falling under the provisions of paragraph 3 will inform Consob and the public in the manner provided under paragraph 2.
TITLE III
Rules governing central securities depositories
Chapter I
Definitions
Article 19
(Definitions)
1. In this Title:
a) "central depositories" shall mean central depositories referred to in Article 80.1 of the Consolidated Law;
b) "minimum capital" of a central depository shall mean the minimum amount of its paid-up and existing share capital;
c) "system" shall mean a central depository system provided for in the Consolidated Law;
d) "issuers" shall mean companies and entities that issue financial instruments admitted to a central depository system;
e) "custodians" shall mean intermediaries that can hold accounts with a central depository and by means of which it is possible to transfer financial instruments deposited with the central depository and exercise the ownership rights attaching thereto;
f) "certifications" shall mean the certifications referred to in Article 85.4 of the Consolidated Law and Article 31.1b) of the Euro Decree attesting participation in the central depository system;
g) "notifications for attendance at shareholders' meetings" shall mean the notifications custodians send to issuers pursuant to Article 2370, paragraph 2, of the Civil Code.
Chapter II
Minimum capital and related and instrumental activities
of central securities depositories
Article 20
(Minimum capital)
1. The minimum capital of central depositories is hereby set at 5 million euros.
2. The minimum capital of central depositories that also carry on the activities referred to in Article 21.2 is hereby set at 12.5 million euros.
Article 21
(Related and instrumental activities)
1. Central depositories may carry on the following activities related and instrumental to that of central depository for financial instruments:
a) preparation, operation, maintenance and marketing of software, hardware and electronic networks for data transmission systems;
b) processing, distribution and marketing of data concerning financial instruments or their system;
c) promotion of their image and that of their system and any other activity aimed at developing the latter;
d) securities lending;
e) collateral management services for financial instruments handled by their system.
2. Central depositories may also provide clearing and settlement and gross settlement services for transactions involving financial instruments other than derivatives, subject to the conditions and in the manner provided for in the regulations issued under Article 69 of the Consolidated Law. In this case, in addition to the activities referred to in paragraph 1, central depositories may
perform the activities accessory to the settlement activity specified in the regulations implementing Article 69 of the Consolidated Law.
3. Central depositories may acquire shareholdings in:
a) companies that engage exclusively or principally in activities referred to in the preceding paragraphs;
b) Italian or foreign central depositories;
c) companies that engage exclusively or principally in the operation of clearing and guarantee systems for transactions involving financial derivatives in accordance with Article 70 of the Consolidated Law and the related implementing provisions.
Chapter III
Central administration of financial instruments
Section I
Financial instruments and persons admitted to a central depository system
Article 22
(Financial instruments admitted to the system)
1. The following financial instruments shall be admitted to the system provided they are freely transferable:
a) shares and other equity securities negotiable in the capital market;
b) bonds and other debt securities negotiable in the capital market;
c) investment fund units;
d) securities normally traded in the money market;
e) any other normally traded security permitting the acquisition of securities specified in the foregoing subparagraphs, government securities and related indices;
2. Financial instruments referred to in paragraph 1a) issued by banche popolari shall be admitted to the system with the effects provided for in Article 37.
Article 23
(Financial instruments handled by the system on a dematerialized basis)
1. Financial instruments referred to in Article 22 traded or to be traded in Italian regulated markets shall be handled by the system on a dematerialized basis pursuant to Article 28.1 of the Euro Decree.
2. Financial instruments referred to in Articles 22.1a), 22.1b), 22.1e) and 22.2 not having the characteristics referred to in paragraph 1 shall be handled by the system on a dematerialized basis pursuant to Article 28.2 of the Euro Decree where at least one of the following conditions obtains:
a) the issuer has other financial instruments listed in Italian regulated markets;
b) exclusively for financial instruments referred to in Article 22.1b), the issue exceeds euros 150 million;
c) the issuer is included in Section A of the list published pursuant to Article 108.2 of the regulation adopted with Consob Resolution 11971 of 14 May 1999.
The provisions of this paragraph shall not apply to issues of financial instruments referred to in Article 100.1f) of the Consolidated Law that do not exceed euros 150 million.
3. Issuers of financial instruments referred to in Article 22 with features different from those specified in paragraphs 1 and 2 may enter them into the system on a dematerialized basis.
4. Without prejudice to paragraph 3, paragraph 2 shall not apply to financial instruments that mature within two years of the time that the conditions provided for therein obtain.
Article 24
(Persons admitted to the system)
1. The following custodians shall be admitted to the system:
a) Italian banks and EU and non-EU banks referred to in Article 1 of Legislative Decree 385 of 1 September 1993;
b) investment firms referred to in Article 1.1h) of the Consolidated Law;
c) asset management companies referred to in Article 1.1o) of the Consolidated Law, exclusively for the activity of management on a client-by-client basis of investment portfolios;
d) stockbrokers on the single national roll referred to in Article 201 of the Consolidated Law;
e) issuer companies or entities not included in the preceding subparagraphs, exclusively for financial instruments issued by them or by companies in which they hold a controlling interest;
f) the Bank of Italy;
g) EU and non-EU undertakings that act as central depositories;
h) persons who administer systems referred to in Articles 69.2 and 70 of the Consolidated Law, exclusively for the activities specified therein;
i) financial intermediaries entered in the register referred to in Article 107 of Legislative Decree 385 of 1 September 1993, exclusively for the activity referred to in Article 1.5c) of the Consolidated Law;
j) Poste Italiane S.p.A.;
l) Cassa Depositi e Prestiti;
m) the Ministry of the Treasury, the Budget and Economic Planning;
n) the managers of foreign clearing, settlement and guarantee systems for financial instruments, provided they are subject to supervision equivalent to that provided for by Italian law.
2. Central depositories shall notify Consob and the Bank of Italy without delay of the admission of persons referred to in subparagraph n) of paragraph 1.
3. The custodians referred to in subparagraphs a), b), e), f), i), j), l) and m) of paragraph 1 may also open proprietary accounts with the central depository. Proprietary accounts must be distinct from third-party accounts.
Article 25
(Suspension and exclusion of custodians from the system)
1. For the protection of investors Consob, in agreement with the Bank of Italy, may suspend or exclude custodians from the system with an order to be notified immediately to the central depository for the formalities for which it is responsible and published in the Gazzetta Ufficiale. Consob, in agreement with the Bank of Italy, shall issue the necessary instructions for the
day-to-day management of the positions held by the suspended or excluded custodian.
2. Central depositories shall exclude from the system:
a) investment firms deleted from the register provided for in Article 20 of the Consolidated Law or from the list annexed to the register;
b) asset management companies deleted from the register provided for in Article 35 of the Consolidated Law;
c) banks deleted from the register provided for in Article 13 of the Banking Law (Legislative Decree 385 of 1 September 1993) or that have definitively stopped providing securities investment services under the freedom to provide services;
d) stockbrokers deleted from the single national roll:
e) financial intermediaries deleted from the register provided for in Article 107 of the Banking Law (Legislative Decree 385 of 1 September 1993).
3. Central depositories may adopt the necessary measures for the day-to-day management of the positions held by custodians excluded from the system under paragraph 2.
Section II
Minimum and essential contents of contracts
Article 26
(Minimum and essential contents of contracts with central depositories)
1. Contracts governing the relationships between central depositories and respectively issuers and custodians must:
a) make explicit reference to Legislative Decrees 58 of 24 February 1998 and 213 of 24 June 1998 and to this Regulation;
b) contain a statement by the issuer or the custodian declaring that it knows the provisions referred to in the preceding subparagraph and accepts the service rules prepared by the central depository and any implementing circulars or service orders;
c) state the period for which the contract is valid and the manner of its renewal;
d) set out the procedure and time limits for withdrawal from the contract.
Article 27
(Agreements entered into by central depositories)
1. Central depositories may enter into agreements with EU and non-EU entities that perform similar functions for the purpose of regulating the procedures for the central administration of financial instruments. Such agreements may refer to standard agreements generally recognized by such entities.
2. For the central management of financial instruments subject to drawing or issued by companies or entities established under foreign law, central depositories shall, where necessary, enter into special agreements with the issuer to govern the entry and withdrawal of such financial instruments and the procedures for exercising the rights attaching thereto.
3. Agreements referred to in the preceding paragraphs must be promptly notified to Consob and the Bank of Italy; custodians shall be informed of them.
Chapter IV
Provisions governing central depository services
Section I
General provisions
Article 28
(Entry of financial instruments into a system)
1. Financial instruments handled by a system must:
a) be fully paid-up;
b) be consignable. Financial instruments shall be deemed consignable where they are:
- complete with the current coupon and subsequent coupons;
- complete with stamps where they do not have detachable coupons;
- received by the central depository prior to the date fixed for repayment;
c) not be subject to measures that limit their circulation;
d) not be subject to amortization procedures or the like;
e) in the case of registered financial instruments, be endorsed to the central depository with the formula provided for in Article 29.1 or, if consigned directly by the issuer, be in the name of the central depository.
2. Financial instruments not satisfying the requirements of paragraph 1 shall nonetheless be handled by a system. Until the requirements are satisfied, such financial instruments shall be recorded separately in the accounts of the central depository and the custodian, without prejudice to the provisions of Article 38.3a).
Article 29
(Endorsements for the transfer of financial instruments to central depositories)
1. Registered financial instruments shall be endorsed to central depositories as follows: "Alla società di gestione accentrata[name of central depository] ex decreto legislativo 24 febbraio 1998, n. 58".
2. Where financial instruments on which encumbrances have been noted are transferred to a central depository, the following formula shall be used: " Ai sensi dell'art. 87 del decreto legislativo 24 febbraio 1998 n. 58, l'annotazione del/i vincolo/i si intende non apposta".
3. The provisions of Article 28 of Royal Decree 239 of 29 March 1942 shall apply to authentication of endorsers' signatures by central depositories pursuant to Article 88.3 of the Consolidated Law.
Article 30
(Reports by central depositories to issuers)
1. Central depositories shall report to issuers, pursuant to Article 80.1 of the Consolidated Law, the identification numbers of registered financial instruments endorsed to them; they shall also report the identification numbers of registered financial instruments made available for withdrawal by custodians or consignment to the clearing house.
2. Reports shall be made monthly, by the fifth business day of the month, and cover the movement of all financial instruments up to the last day of the preceding month.
Article 31
(Right to initiate amortization procedures)
1. Pursuant to Article 85.3 of the Consolidated Law, central depositories may request the amortization of financial instruments in its custody and lodge objections in procedures initiated by others.
Article 32
(Safeguards and guarantees for investors)
1. Central depositories are required to take out policies with one or more insurance companies to indemnify investors for losses incurred as a consequence of malice or negligence in the performance of their activity. Special guarantee funds shall be established for the same purpose. Such funds, distinct from the legal reserve, shall consist of provisions not earmarked for a specific use,
including the share premium account. Such provisions, which may also be used to purchase buildings, shall be made until the fund is equal to half the share capital.
2. In respect of the risks of injury resulting from theft, robbery, fire, destruction or loss of financial instruments occurring on the premises of the central depository or during transport from its premises, central depositories shall:
a) request issuers to issue large-denomination certificates bearing specific wording that prevents their circulation outside their systems and, in the event of destruction, theft or loss of such certificates, to replace them;
b) conclude agreements with issuers for the replacement of bearer financial instruments that are destroyed and for the timely payment of the related amounts due;
c) take out policies with one or more insurance companies;
d) possibly acquire other guarantees;
e) establish logical data security and fail-safe processing systems.
3. Central depositories shall inform Consob and the Bank of Italy annually of the safeguards and guarantees put in place pursuant to the preceding paragraph and any others created to supplement the coverage.
Article 33
(Applications for certifications and notifications for attendance at shareholders'meetings)
1. For the purposes of the issue of certifications, persons having entitlement must submit an application to the custodian containing:
a) the name of the applicant;
b) the quantity of financial instruments for which the certification is required;
c) an indication of the right to be exercised;
d) the termination of the certification's effectiveness;
e) the place and date of the application;
f) the signature or some other indication permitting the identification of the applicant.
2. Without prejudice to the provisions of the following paragraphs, the person having entitlement to apply for a certification or a notification for attendance at shareholders' meetings shall be the owner of the financial instruments handled by the system.
3. In the case of pledge, usufruct or repurchase agreements, and in that provided for in Article 40.3 of the Consolidated Law, the person having entitlement to apply for the purpose of exercising the rights referred to in Articles 2351, 2372, 2376 and 2415 of the Civil Code and Article 146 of the Consolidated Law shall, unless agreed otherwise, be respectively the pledgee, the usufructuary,
the seller or the manager. Where the custodian is unaware of the existence of such an agreement, it shall be exonerated from any related liability.
4. In the case of sequestration, the person having entitlement to apply for the purpose of exercising the rights referred to in paragraph 3 and Articles 2367, 2377, 2379, 2395, 2408, 2409, 2416, 2419, 2422 and 2437 of the Civil Code shall be the receiver.
5. With reference to the rights referred to in Articles 2367, 2377, 2395, 2408, 2409, 2416, 2419 and 2422 of the Civil Code, the entitlement to apply for and obtain certifications shall pertain, in the case of pledge, usufruct or repurchase agreements, to the shareholder or bondholder and to the beneficiary of the lien, who shall use the certification in question to exercise their
respective rights. Where both parties having entitlement apply, the custodian shall note on each of the certifications issued the existence of the other.
6. When the right to be exercised is the right to attend shareholders'meetings, certifications shall not be issued and the custodian shall send notifications for attendance at shareholders' meetings.
7. Applications for notifications for attendance at shareholders'meetings must contain the information specified in Article 1 for certifications and specify the date and type of shareholders' meeting.
Article 34
(Issue of certifications)
1. Within two working days of the date of receipt of an application pursuant to Article 33 and after checking the regularity of the application itself, custodians shall issue, in conformity with their accounting records, certifications and make the corresponding quantities of financial instruments unavailable until the certifications are returned or cease to be effective.
2. Certifications shall be drawn up in conformity with Annex 3.
3. Where the loss, destruction or theft of certifications has been reported, custodians shall, at the request of the persons having entitlement to apply for certifications, to deliver a copy marked " duplicato" and inform the issuer without delay of the issue of the duplicate.
4. Custodians shall preserve copies, numbered progressively by year of issue, of certifications, together with any duplicates issued pursuant to paragraph 3.
Article 34-bis
(Notifications for attendance at shareholders' meeting)
1. Custodians shall send notifications for attendance at shareholders'meetings in conformity with their accounting records resulting from entries made pursuant to Article 41.2 or from the recording of transfers between accounts kept by the same custodian.
2. Notifications for attendance at shareholders' meetings shall contain the information specified in Annex 3. They shall produce the same effects as the deposit of shares, if this is provided for in the bylaws, or the presentation of certifications for attendance at shareholders' meetings and shall fulfil the obligations referred to in Article 89.1 of the Consolidated Law and
Article 31.1c) of the Euro Decree.
3. Notifications for attendance at shareholders' meetings shall be sent by custodians within two working days of the date of receipt of applications made pursuant to Article 33 or within the longer period between such application and the day established by the issuer's bylaws for the prior deposit of the shares pursuant to Article 2370, paragraph 2, of the Civil Code or, if the
bylaws do not provide for such prior deposit, the time established for the start of the shareholders' meeting. Copies of notifications shall be made available to applicants at the time they are sent.
4. Where the issuer's bylaws do not prohibit the withdrawal of shares, or the related certifications, before shareholders' meetings are held, the custodians that sent notifications to the issuer pursuant to paragraph 1 shall inform the latter without delay of any transfers, in whole or in part, of the corresponding financial instruments before the shareholders' meeting is held,
specifying the annual progressive number of the notification for attendance at shareholders' meetings previously sent.
5. Custodians shall preserve copies, numbered progressively by year of issue, of notifications for attendance at shareholders' meetings.
6. As of 1 January 2006, the notifications referred to in this article shall be sent to issuers using electronic links.
Article 35
(Custodians' reports to issuers)
1. Without prejudice to Article 34-bis, the reports to issuers referred to in Article 89.1 of the Consolidated Law and Article 31.1c) of the Euro Decree shall be sent within three business days of custodians completing the related formalities. Within three days of the start of payment of dividends, custodians shall send issuers the names of the holders of accounts in which bearer
financial instruments are registered and the quantities held. Custodians shall also send issuers the names of holders of bearer shares handled by the system following the exercise of rights to buy or conversion or allotment rights. The names of holders of financial instruments handled by the system must always be sent where they are different from the applicants for certifications or
notifications for attendance at shareholders' meetings.
2. For bearer financial instruments custodians shall send issuers particulars of entries made in the accounts referred to in Articles 45 and 46 within three business days of the date of entry.
3. In the event of withdrawal from the system of financial instruments subject to liens, custodians shall notify the identification numbers and denominations of the certificates on which the notations were made pursuant to Article 87.3 of the Consolidated Law.
Article 36
(Notations in issuers' shareholders' registers)
1. In accordance with Articles 87 and 89 of the Consolidated Law and Article 31.1c) of the Euro Decree issuers are required to update the shareholders' register in conformity with notifications sent by custodians and central depositories pursuant to Articles 30 and 35.
2. On the basis of the notifications sent by central depositories, issuers shall note the identification numbers and related quantities of certificates handled by the system in the name of the central depository in the shareholders' register with the specification "ai sensi del decreto legislativo 24 febbraio 1998, n. 58 ".
3. Where financial instruments are withdrawn from the system or consigned to the clearing house, issuers shall note the identification numbers and related quantities in the shareholders'register with the specification that the instruments in question had already been endorsed or made out to the central depository.
4. Where financial instruments subject to liens are taken out of the system, issuers shall update the shareholders' register, indicating the names of the holders and the liens noted by the custodian.
5. On the basis of the notifications sent by custodians pursuant to Article 35, issuers shall keep, as part of the shareholders'register, records containing the names of the holders of financial instruments for which certifications have been issued or notifications for attendance at shareholders' meetings pursuant to article 33 sent and of the persons to whom dividends have been
paid or who have exercised purchase, pre-emption, assignment or conversion rights, specifying the related quantities of financial instruments.
6. Issuers shall also keep, as part of the shareholders' register, records of the notifications sent to them by custodians pursuant to Article 87 of the Consolidated Law and Article 34 of the Euro Decree, containing, in particular, the names of the holders of the financial instruments and of the beneficiaries of the liens, the nature of such liens, the number of financial instruments
subject thereto and the dates on which they were established, modified and extinguished.
7. In all the cases provided for by law or in measures adopted by the regulatory authorities, issuers shall also consider the registrations and notations provided for in this article when collecting data on holders of financial instruments.
Article 37
(Shares and other equity securities issued by banche popolari)
1. Where financial instruments referred to in Article 22.1a) of this Regulation issued by banche popolari are handled by the system, the exercise of rights other than property rights shall be reserved to the holders of the financial instruments insofar as they have entitlement.
2. The exhibition of certifications or the sending of notifications for attendance at shareholders' meetings is a prerequisite for entry in the shareholders' register and the exercise of the rights specified in the certifications/notifications, in accordance with the provisions of law and the bylaws governing the organization and activity of banche popolari.
3. Notations in the shareholders' register subsequent to notifications under Article 35 shall be made pursuant to the provisions of law and the bylaws governing the organization and activity of banche popolari.
Section II
Accounts and registrations
Article 38
(Accounts kept by central depositories)
1. Central depositories shall open an account for each issuer whose financial instruments are handled by the system. Each issue shall be shown separately in the records with all the information provided by the issuer needed to identify the features of the issue and at least the type of financial instrument, the identification number, the quantity issued, the total value of the issue, the
unit value and any related rights.
2. Without prejudice to Article 24.2, central depositories shall open separate accounts for each custodian for its own and its customers'financial instruments. In these accounts each type of financial instrument shall be registered separately. They may not show debit balances.
3. Central depositories shall:
a) where dividends or coupons are paid on financial instruments handled by the system, keep separate records of the related financial instruments until receipt of payment instructions or until the ordinary statute of limitation has run out;
b) where transactions are effected involving the company's capital, register the related rights separately from the financial instruments;
c) where bonds are subject to drawing, make arrangements, in order to ensure bondholders benefit from drawings, for such bonds to be administered using procedures that also handle their identification numbers;
d) unless provided for otherwise by the judicial authority, transfer sequestered financial instruments to a special account in the name of the judicial authority.
Article 39
(Financial instruments owned by central depositories)
1. Central depositories shall open a special account for financial instruments they own that are not entrusted to custodians.
2. Such financial instruments must be kept separate from those managed centrally by the central depositories and entered in a special register kept in accordance with Articles 2215, 2216 and 2219 of the Civil Code. For each class of financial instrument the register shall contain:
a) the code number and denomination of the financial instruments and the quantity or total face value thereof;
b) the date of purchase and sale and the corresponding dates on which the transactions were booked.
Article 40
(Accounts kept by custodians)
1. Custodians shall open accounts in which to enter the financial instruments belonging to each account-holder, specifying the ID information of account-holders, including their tax codes and any restrictions on the transferability of financial instruments.
2. For financial instruments they own, custodians shall open special accounts separate from those in the names of their customers.
Article 41
(Registration of book-entry transfers)
1. At the end of the securities settlement process, or subsequent to transfers ordered by custodians, central depositories shall notify custodians of the registration of the transfers.
2. As soon as they receive the notifications referred to in paragraph 1, custodians shall make the necessary entries in their accounts, specifying at least the following information:
a) the effective settlement date;
b) the code number and denomination of the financial instruments;
c) the quantity or face value of the financial instruments;
d) the sign of the transaction.
Article 42
(Balancing of central depositories' accounts)
1. When all the transactions carried out in each business day have been processed, central depositories shall check, for each class of financial instrument handled by the system, that the sum of the balances of custodians' own and customer accounts and, where applicable, that of the account referred to in Article 39 coincides with the balance of each issue. When they have completed this
check, central depositories shall send custodians the opening and closing balance with an indication of any quantities of financial instruments that are not freely transferable and any transfers made during the day where these have not already been notified.
Article 43
(Balancing of custodians' accounts)
1. Within one day of the date of registration, custodians shall check for each class of financial instrument, that the balance of the account of their own holding at the central depository coincides with the balance of the account they keep and that the balance of the account of their customers' holdings at the central depository coincides with the sum of the balances of the customer
accounts they keep.
Article 44
(Manner of s notifications)
1. The notifications provided for in this section must be sent exclusively over electronic networks, within the time limits and in the manner specified by the central depository.
Section III
Establishment of liens
Article 45
(Establishment of liens on financial instruments)
1. Custodians shall open special accounts to register, for each account-holder, the financial instruments owned that are subject to liens. Such accounts must contain the following information:
a) the date of the entry;
b) the class of financial instrument;
c) the nature of the lien and any additional information;
d) the reason for the entry and the date of the transaction to which the entry refers;
e) the date the lien was established and the identification numbers of the certificates if such date is earlier than that of the entry of the financial instruments into the system;
f) the quantity of financial instruments;
g) the name of the owner of the financial instruments;
h) the beneficiary of the lien and an indication of the existence, where notified, of an agreement between the parties for the exercise of the related rights;
i) the date the lien expires, if any.
2. The accounting documents issued by custodians shall indicate the existence of any liens on financial instruments.
3. The effects of the notation of liens established before the entry of financial instruments into the system shall backdate to the time the lien was established.
Article 46
(Accounts permitting the establishment of liens on all the financial instruments entered therein)
1. In accordance with and for the purposes of Article 34.2 of the Euro Decree, custodians may open accounts permitting the establishment of liens on the value of all the financial instruments entered therein. Such accounts must contain the following information:
a) the date the account was opened;
b) the nature of the lien and any additional information;
c) the date of each deposit and withdrawal with an indication of the class, quantity and value of the financial instruments present in the account;
d) the date the lien on the financial instruments was established;
e) the owner of the financial instruments;
f) the beneficiary of the lien and an indication of the existence, where notified, of an agreement between the parties for the exercise of the related rights;
g) the date the lien expires, if any.
For financial instruments entered in an account to replace or supplement other financial instruments entered in the account, where the value is the same, the date the lien was established shall be the same as that for the financial instruments replaced or supplemented.
2. At the same time as the lien is established the account-holder shall give the custodian written instructions conforming with the agreement with the beneficiary of the lien concerning the manner of maintaining the value of the lien and the exercise of the rights attaching to the financial instruments entered in the account.
3. Where transactions are ordered by an intermediary authorized under the Consolidated Law other than by the custodian at which the account is held, the execution of such transactions shall be subject to the latter's consent.
4. Repealed.
Chapter V
Dematerialization of financial instruments
Article 47
(Dematerialization of financial instruments under central management)
1. In order to dematerialize financial instruments already under central management, at the date agreed with the issuer, central depositories shall:
a) cancel the financial instruments;
b) register the financial instruments under central management in the accounts provided for in Articles 38.1 and 38.2 and notify the issuer and custodians of the registration. Upon receipt of such notifications, each custodian shall register the corresponding rights in its own accounts and in its customers' accounts:
c) send the financial instruments to the issuer.
2. Financial instruments under central management that are held for custody at the issuer shall be cancelled and kept by the issuer, which shall notify the central depository for it to register them in its accounts.
Article 48
(Dematerialization of financial instruments not under central management)
1. In order to enter financial instruments not under central management into the system, at the date referred to in Article 47.1, custodians shall:
a) check that the conditions referred to in Article 28.1 are satisfied, proceeding, where possible, on the instructions of the customer, to restore the required conditions;
b) register, for each account-holder, the rights attaching to their financial instruments;
c) cancel the financial instruments, send them to the issuer to check their authenticity, informing the central depository that they have been sent, and note in the accounts referred to in subparagraph b) that they are not available until their authenticity has been checked.
2. After promptly checking the authenticity of the financial instruments, the issuer shall inform the central depository of their authenticity and, if necessary, provide it with the information referred to in Article 38.1 for the opening of the account. The central depository shall register the corresponding quantity of rights on the accounts of the custodians and on the account
of the issuer and inform them accordingly.
3. Exclusively for entry into the system in dematerialized form of units or shares of collective investment undertakings represented by the cumulative certificate held on deposit free of charge at the depository bank, with effect from the date agreed by the issuer and the central depository:
a) custodians to which participants in a collective investment undertaking have applied for the registration of units or shares on accounts in their names shall request the issuer to check the rights attaching to the units or shares to be registered, transmitting all the data requested by the latter in order to make the checks;
b) after making the checks referred to in subparagraph a), the issuer shall inform the central depository and the depository bank accordingly. The central depository shall register the corresponding quantity of rights on the accounts of the custodians and on the account of the issuer and inform them accordingly. The custodians shall register the rights attaching to the units or shares of
the participants on their accounts. The depository bank shall cancel the cumulative certificate and simultaneously prepare a new cumulative certificate representing the units or shares not yet dematerialized, if any.
Article 49
(Dematerialization of newly issued financial instruments)
1. For the entry of new financial instruments issued on a dematerialized basis, issuers must notify the central depository of the total planned amount of the issue and the dates set for placement and related settlement. At the end of the placement period, the issuer shall transmit the information provided for in Article 38.1 for the opening of the account and indicate the custodians to
which the financial instruments issued are to be credited.
2. Exclusively for entry into the system in dematerialized form of units or shares of open-end collective investment undertakings, before the start of an offering the issuer shall notify the starting date of the offering and the procedure for the settlement of sales and redemptions to the central depository. The issuer shall inform the central depository of the quantity of financial
instruments issued each day amount and the custodians to which they are to be credited; at the start of the issue, for the purpose of opening the account, the issuer shall also transmit the characteristics of the financial instruments to be issued, their code number and any rights attaching thereto.
Article 50
(Cessation of the conditions for dematerialization)
1. Where the conditions referred to in Articles 23.1 and 23.2 cease to exist and in the case referred to in Article 23.3, the issuer may decide not to have its financial instruments managed on a dematerialized basis.
2. Central depositories shall promptly inform custodians holding accounts with it of the issuer's decision not to have its financial instruments managed on a dematerialized basis.
Chapter VI
Transitional and final provisions
Article 51
(Start of mandatory dematerialization)
1. For issues under way on 5 October 1998, central depositories shall perform the actions provided for in Articles 47.1a) and 47.1b) as soon as the issue closes.
2. The entry into a central depository system on a dematerialized basis of financial instruments referred to in Article 23.2 not already under central management shall start on 1 January 1999.
3. As of 1 January 1999, the exercise of rights attaching to financial instruments not under central management shall be subject to their consignment to a custodian for their entry into a central depository system on a dematerialized basis.
Article 52
(Financial instruments that have matured and coupons presented for payment)
1. Where, after 31 December 1998, financial instruments that have matured or coupons of financial instruments that have matured are presented, the principal shall be redeemed or the interest paid by the issuer or a custodian appointed by the issuer for that purpose.
2. After the date specified in paragraph 1, the payment of matured coupons of financial instruments that have not matured that are presented separately from the instruments in question shall be subject to the issue of a declaration by the holder, under its own responsibility, attesting that it does not hold the instrument.
Article 53
(Activity of Monte Titoli S.p.A.)
1. In the period provided for in Article 214.3 of the Consolidated Law, the provisions of this Regulation shall apply to Monte Titoli S.p.A. pursuant to Article 10 of Law 289 of 19 June 1986.
Article 54
(Central management of government securities)
1. The provisions of Article 24 and Article 26 concerning dealings with custodians and those of Articles 38, 39.1, 40, 41, 42, 43, 44, 45 and 46 shall also be the manner of applying the provisions referred to in Article 39.1 of the Euro Decree.
2. The balancing of accounts referred to in Article 42 for financial instruments involved in coupon stripping in accordance with the Decree issued by the Minister of the Treasury, the Budget and Economic Planning on 15 July 1998 shall be carried out exclusively with reference to custodians.
Article 55
(Transitional provisions)
1. Until 31 December 1999 the check provided for in Article 43 shall be carried out within 3 days of the date of registration.
TITLE IV
Redenomination of private-sector financial instruments
Article 56
(Redenomination procedure)
1. During the transitional period provided for in Article 1g) of the Euro Decree, private-sector issuers may redenominate financial instruments referred to in Article 12.1 of such decree in euros in the manner provided for in Articles 7.1 and 7.6 of such decree.
2. Interest on redenominated financial instruments shall be paid by applying the, fixed or variable, interest rate of each loan to the nominal unit value thereof in euros and multiplying the result obtained, rounded to not less than eight decimal places, by the number of times such unit value is contained in the total nominal value of the loan in euros.
Article 57
(Redenomination calendar)
1. Issuers may redenominate their financial instruments only on the first Monday that is a business day in the months of January, April, July and October and in the transitional period provided for in Article 1g) of the Euro Decree.
Article 58
(Information requirements)
1. At least thirty days before the date on which the effects of the redenomination come into force, issuers shall give written notice of the decision to redenominate their financial instruments to Consob, the Bank of Italy and the Italian Foreign Exchange Office (UIC).
2. Where the services of trading in a regulated market, clearing and settlement or central management are used for financial instruments to be redenominated, the notification referred to in paragraph 1 shall also be sent, within the same time limit, to the companies providing such services.
3. Within the time limit referred to in paragraph 1, issuers are required to inform the public of the decision to redenominate their financial instruments in at least one daily newspaper having national circulation.
TITLE V
Market integrity
Chapter I
Accepted market practices
Article 59
(Factors to be taken into account when accepting market practices)
1. For the purpose of applying Articles 181.2 and 187-ter, paragraph 4, of the Consolidated Law, Consob shall take account of the following factors when assessing the acceptability of market practices referred to in Article 180.1c) of the Consolidated Law:
a) the level of transparency of the relevant market practice to the whole market;
b) the need to safeguard the operation of market forces and the proper interplay of the forces of supply and demand.;
c) the degree to which the relevant market practice has an impact on market liquidity and efficiency;
d) the degree to which the relevant practice takes into account the trading mechanisms of the relevant markets and enables market participants to react properly and in a timely manner to the new market situation created by that practice;
e) the risk inherent in the relevant practice for the integrity of, directly or indirectly, related markets, whether regulated or not, in the relevant financial instrument within the whole Community;
f) the outcome of any investigation of the relevant market practice by any competent authority or other authority mentioned in Article 12.1 of Directive 2003/6/EC, in particular whether the relevant market practice breached rules or regulations designed to prevent market abuse, or codes of conduct, be it on the market in question or on directly or indirectly related markets within the
Community;
g) the structural characteristics of the relevant market including whether it is regulated or not, the types of financial instruments traded and the type of market participants, including the extent of retail investors participation in the relevant market.
2. When considering the factor referred to in paragraph 1b), Consob shall in particular analyze the impact of the relevant market practice against the main market parameters, such as the specific market conditions before carrying out the relevant market practice, the formation of the weighted average price of a single session or of the daily closing price.
3. Market practice will not be considered inadmissible, especially as regards new and emerging procedures, just because they have not yet been admitted.
4. Consob shall regularly review the market practices it has accepted, in particular taking into account significant changes to the relevant market environment, such as changes to trading rules or to market infrastructure.
Article 60
(Procedures for accepting market practices)
1. For the purposes of accepting a market practice or assessing the review of the acceptability of a previously accepted practice, Consob shall launch, on the basis of a report by the interested parties or at its own initiative, an consultation procedure to obtain the views of :
a) relevant bodies such as representatives of issuers, authorized intermediaries, consumers, other authorities and market operating companies;
b) foreign competent authorities when there exist comparable markets, e.g. in terms of structure, volume and type of transactions.
2. Consob shall publicly disclose the decisions adopted, together with an appropriate description of the market practice in question. The disclosure shall include a description of the factors taken into account in reaching the decision, in particular where different conclusions have been reached from those of other Member States.
3. Consob shall promptly transmit its decisions to the Committee of European Securities Regulators (CESR).
4. Consob shall publish, specifying the relevant market, an updated list of the market practices accepted in Italy pursuant to Article 180.1c) of the Consolidated Law and of the practices accepted in other Member States, identified on the basis of the list published by the Committee of European Securities Regulators (CESR). The list published by Consob shall also contain a section with the
market practices that Consob has deemed not to be acceptable.
5. When investigations of possible violations of the provisions of Part V, Title I-bis, of the Consolidated Law concerning the practice in question have already started, the consultation procedure set out in this paragraph may be delayed until the end of such investigations and possible related sanctions.
6. A market practice which was accepted following the consultation procedure set out in this article may only be changed using the same consultation procedure.
Chapter II
Market practices on derivative markets
Article 61
(Inside information in relation to derivatives on commodities)
1. Except as provided for in Articles 59 and 60, for the purposes of applying Article 181.2 of the Consolidated Law, information relating, directly or indirectly, to one or more derivatives on commodities that participants on the markets on which such derivatives are traded expect to receive in accordance with the market practices accepted on such markets is information which:
a) is routinely made available to the users of those markets, or
b) is required to be disclosed in accordance with legal or regulatory provisions, market rules, contracts or customs on such markets or on the underlying commodity markets.
Chapter III
Market manipulation
Article 62
(Elements and circumstances to be taken into account in detecting market manipulation)
1. In order to assess whether conduct is likely to constitute market manipulation pursuant to Article 187-ter, paragraphs 3a) and 3b), of the Consolidated Law, the following elements and circumstances shall be taken into consideration:
a) the extent to which orders to trade given or transactions undertaken represent a significant proportion of the daily volume of transactions in the relevant financial instrument on the regulated market concerned, in particular when such orders or transactions lead to a significant change in the price of the financial instrument;
b) the extent to which orders to trade given or transactions undertaken by persons with a significant buying or selling position in a financial instrument lead to significant changes in the price of the financial instrument or related derivative or underlying asset admitted to trading on a regulated market;
c) whether transactions undertaken lead to no change in the ownership or no actual transfer of ownership of a financial instrument admitted to trading on a regulated market;
d) the extent to which orders to trade given or transactions undertaken include reversals of buy or sell positions in a short period and represent a significant proportion of the daily volume of transactions in the relevant financial instrument on the regulated market concerned, and might be associated with significant changes in the price of a financial instrument admitted to trading on a
regulated market;
e) the extent to which orders to trade given or transactions undertaken are concentrated within a short time span in the trading session and lead to a price change which is subsequently reversed;
f) the extent to which orders to trade given change the representation of the best bid or offer prices in a financial instrument admitted to trading on a regulated market, or more generally the representation of the order book available to market participants, and are removed before they are executed;
g) the extent to which orders to trade are given or transactions are undertaken at or around specific times when opening and closing auction prices, control prices, reference prices, settlement prices and valuations are calculated, leading to changes in such prices.
2. In order to assess whether conduct is likely to constitute market manipulation pursuant to Article 187-ter, paragraph 3c), of the Consolidated Law, the following elements and circumstances shall be taken into consideration:
a) whether orders to trade given or transactions undertaken are preceded or followed by dissemination of false or misleading information by the persons who gave the orders or undertook the transactions or by persons linked to them;
b) whether orders to trade are given or transactions are undertaken by persons before or after the same persons or persons linked to them produce or disseminate research or investment recommendations which are erroneous or biased or demonstrably influenced by material interest.
3. The elements and circumstances referred to in paragraphs 1 and 2 are non-exhaustive and do not in themselves necessarily constitute market manipulation pursuant to Article 187-ter, paragraph 3, of the Consolidated Law
4. The examples referred to in Article 1 of Directive 2003/6/EC and contained in Annex 4, Section I, shall constitute conduct likely to constitute market manipulation.
5. The assessment of conduct likely to constitute market manipulation shall be carried out with consideration also given to the examples prepared at Community level.
Chapter IV
Suspicious transactions
Article 63
(Persons subject to the notification obligation)
1. Persons specified in Article 187- nonies of the Consolidated Law shall make the notifications provided for therein for suspicious transactions undertaken by them or concluded on regulated markets, alternative trading systems or other trading platforms they operate involving financial instruments referred to in Articles 180.1a) and 180.1b) of the Consolidated Law. Notifications
shall contain information on transactions and unexecuted orders.
2. The obligations referred to in paragraph 1 shall not apply to EU investment firms or banks or harmonized management companies operating in Italy or under the freedom to provide services.
Article 64
(Identification of suspicious transactions)
1. The assessment of conduct likely to constitute suspicious transactions shall be made on a case-by-case basis, taking into consideration:
a) the elements constituting market abuse referred to in Part V, Title I- bis, of the Consolidated Law;
b) the definition and public disclosure of inside information as provided for in Article 114 of the Consolidated Law and the related implementing regulations;
c) the definition and public disclosure of information specified in Article 181.2 of the Consolidated Law and Article 61;
d) the elements and circumstances referred to in Article 62;
e) the examples of market manipulation given in Annex 4 and the additional examples prepared at Community level;
f) the examples indicating the presence of suspicious transactions prepared by Consob, with reference also to those prepared at Community level.
2. Authorized intermediaries subject to the notification obligation and stockbrokers shall adopt the provisions and measures needed to identify and notify suspicious transactions without delay.
3. Authorized intermediaries and market operating companies that organize alternative trading systems or other trading platforms shall adopt the provisions and measures needed to prevent market abuse and to identify and notify suspicious transactions without delay.
Article 65
(Time limits for notifications)
1. The assessment referred to in Article 64 shall be made with account also taken of circumstances, information or facts intervening subsequent to the transaction.
2. Persons referred to in Article 63.1 shall make a notification without delay when they become aware of a fact or information that gives reasonable ground for suspicion concerning the relevant transaction.
Article 66
(Content of notifications)
1. Notifications shall contain the following information:
a) a description of the transactions, including the characteristics of the orders and the markets they were executed on;
b) the reasons for suspicion that the transactions might constitute market abuse;
c) the means for identifying the persons involved in the transactions;
d) capacity in which the person subject to the notification obligation operates (such as for own account or on behalf of third parties);
e) any information which may have significance in reviewing the suspicious transactions.
2. Where information referred to in the preceding paragraph is not available at the time of notification, the notification shall include at least the reasons why the transaction is held to be suspicious. All the other information shall be provided as soon as it becomes available.
Article 67
(Means of notification)
1. Notifications may be made to Consob by mail, electronic mail, fax or telephone, provided that in the latter case confirmation is notified by any written form upon request by Consob. Notifications must be made in accordance with the instructions issued by Consob.
Article 68
(Confidentiality obligations and professional secrecy)
1. In implementation of Community law:
 persons who make notifications under Article 187-nonies of the Consolidated Law shall not inform any other person of the notification, including the persons on whose behalf the transactions were carried out;
 Consob shall not disclose to any person the identity of persons who make notifications.
2. Reports to the judicial authorities referred to in Article 187-decies of the Consolidated Law shall be exempt, as shall cases provided for by law in connection with investigations of offences carrying a penal punishment.
Article 69
(Transactions involving foreign markets)
1. Consob shall immediately transmit notifications received involving regulated markets located in other Member States to the competent foreign authorities.
TITLE VI
Transitional and final provisions
Article 70
(Entry into force)
1. This Regulation shall enter into force on the day following that of its publication in the Gazzetta Ufficiale. As of that date the regulations adopted in Consob Resolutions 5552 of 14 November 1991, 10358 of 10 December 1996 as amended, 11521 of 1 July 1998, 11600 of 15 September 1998, 11714 of 24 November 1998 and 11723 of 1 December 1998 shall be repealed.
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