Regulation containing implementation rules of Italian Legislative Decree no. 58 of 24 February 1998 on intermediaries (adopted by Consob with Resolution no. 16190 of 29 October 2007 and later amended by resolutions no. 16736 of 18 December 2008 and no. 17581 of 3 December 2010)
The amendments made by Resolution no. 17581 of 3 December 2010 are highlighted in bold in the text.
INDEX
BOOK I
LEGISLATIVE SOURCES AND DEFINITIONS
Article 1
(Legislative sources)
1. This Regulation is adopted pursuant to articles 6.2, 6.2-quater, 6.2-quinquies, 19.3, 23.1, 25-bis.2, 27.3, 27.4, 28.3, 30.2, 30.5, 31.6, 32.2, 33.2 paragraph e-bis, 117-ter and 201.8 of Italian Legislative Decree no. 58 of 24 February 1998.
Article 2
(Definitions)
1. In this Regulation:
a) "Consolidated Law" shall mean Legislative Decree 58 of 24 February 1998;
b) "group" shall mean a group of persons defined in accordance with article 11, subsection 1 of the Consolidated Law;
c) "investment services and activities" shall mean the services referred to in article 1, subsection 5 of the Consolidated Law and those referred to in Section A of the table annexed thereto;
D) "accessory service" shall mean the services referred to in article 1, subsection 6 of the Consolidated Law and those referred to in Section B of the table annexed thereto;
e) "execution venue" shall mean a regulated market, multilateral trading facility (MTF), systematic internaliser, market maker or other dealer acting on his own behalf, or an equivalent venue in a non-EU country;
f) "hard copy" shall mean any instrument that allows the customer to keep information addressed to him directly, so that such information may be easily retrieved for an adequate period of time, and which permits unchanged reproduction of the information;
g) "office" or "branch" shall mean an establishment, other than the registered office of the authorised intermediary, consisting of a permanent establishment of means and persons, open to the public, and possessing technical and decision-making autonomy that provides investment services on a continuous basis.
BOOK II
AUTHORISATION OF INVESTMENT FIRMS AND ENTRY INTO ITALY OF EU AND NON-EU INVESTMENT FIRMS
PART I
PRELIMINARY PROVISIONS
Article 3
(Definitions)
1. In this Book:
a) "register" shall be the register defined under article 20, subsection 1 of the Consolidated Law;
b) "special section" shall mean the section of register defined by article 60, subsection 4 of Italian Legislative Decree 415 of 23 July 1996;
c) "non-EU firms section" shall mean the section of the register including non-EU investment firms authorised pursuant to article 28, subsections 1 and 2 of the Consolidated Law, operating with or without permanent establishment of branches in Italy;
a) "list" shall be the list of EU investment firms annexed to the register established pursuant to article 20, subsection 1 of the Consolidated Law;
e) "branch" shall mean an office without legal character that forms part of an investment firm and which provides investment services and/or activities and accessory services for said investment firm;
f) "EU country": shall mean a country that is a member state of the European Union;
f) "non-EU country": shall mean a country that is not a member state of the European Union;
h) "home member state" shall mean an EU country as defined in article 4, subsection 1, no. 20 of the Directive 2004/39/EC of 21 April 2004;
i) "home state" shall mean the non-EU country in which the investment firm has its registered office;
l) "investment services and activities" shall mean the services and activities defined in article 1, subsection 5 of the Consolidated Law;
m) "accessory services" shall mean the services defined in article 1, subsection 6 of the Consolidated Law;
n) "services subject to mutual recognition" shall mean the services defined in article 1, subsection 1, paragraph s) of the Consolidated Law;
o) "qualifying interest" shall mean that generally defined by the Bank of Italy pursuant to article 15, subsection 5 of the Consolidated Law;
p) "significant equity investment" shall mean that adopted by the Minister for the Economy and Finance in accordance with article 14, subsection 2 of the Consolidated Law;
PART II
REGISTER
Article 4
(Register)
1. The following shall be entered in the register referred to in Article 20 of the Consolidated Law:
a) Investment firms (SIM);
b) in the non-EU section, the non-EU investment firms;
c) in the special section, the companies referred to in Article 60, subsection 4 of Legislative Decree 415 of 23 July 1996.
2. A list in which EU investment firms are entered is annexed to the register.
Article 5
(Register content)
1. In the register, the following shall be indicated for each investment firm entered:
a) the serial number of entry;
b) the company name;
c) the registered office;
d) the head office;
e) details of the authorisation measures for the provision of investment services and activities, with an indication of the investment services and activities authorised, together with related operating restrictions if any;
f) details of the measures adopted pursuant to articles 53 and 56 of the Consolidated Law;
g) the countries in which the investment firm operates, with or without permanent branch establishments, and specification of the investment services and activities concerned.
2. In the section for non-EU investment firms, the following shall be indicated for each non-EU investment firm entered:
a) the serial number of entry;
b) the company name;
c) the registered office;
d) the head office;
e) details of the authorisation measures for the provision of investment services, activities and accessory services in Italy, pursuant to article 28 of the Consolidated Law, with an indication of the investment services and activities authorised, together with related operating restrictions if any;
f) any branches operating in Italy;
f) details of the measures adopted pursuant to articles 53 and 56 of the Consolidated Law.
3. In the special section, the following shall be indicated for each company entered as referred to in article 60, subsection 4 of Italian Legislative Decree 415 of 23 July 1996:
a) the serial number of entry;
b) the company name;
c) the registered office;
d) the head office;
e) details of the authorisation measures;
f) details of the measures adopted pursuant to articles 53 and 56 of the Consolidated Law.
4. In the annexed list, the following shall be indicated for each EU investment firm entered:
a) the serial number of entry;
b) the company name;
c) the registered office;
d) the head office;
e) the services and activities admitted for mutual recognition that the company may provide in Italy;
f) details of the authorisation measures for the provision of services not admitted for mutual recognition in Italy, pursuant to article 27, subsection 4 of the Consolidated Law, with an indication of the services and activities authorised;
g) any branch established in Italy, identified in accordance with article 4, subsection 1, no. 26 of Directive 2004/39/EC.
Article 6
(Advertising of the register)
1. The register is published in the "Registers and Lists" section of the Bollettino, included in electronic format in the relevant section of the Consob web site.
PART III
AUTHORISATION PROCEDURE FOR THE PROVISION OF INVESTMENT SERVICES AND ACTIVITIES
Article 7
(Application for authorisation)
1. The application for authorisation to provide investment services, signed by the company's legal representative and complying with current regulations on stamp duty, shall be submitted to Consob.
2. The application shall indicate:
a) the company name, registered office, head office and related telephone and fax numbers;
b) investment services and activities for which authorisation is required;
c) the list of annexed documents.
3. Where the application for authorisation involves, jointly or severally, the following services:
a) placement without firm or standby commitment to issuers;
b) portfolio management;
c) receipt and transmission of orders;
d) investment consultancy,
the company must also specify whether authorisation is required to provide such services without the company holding customers' liquid balances and financial instruments, even temporarily, and without the company assuming risks;
4. Consob shall verify the completeness of applications within 10 days of receipt and shall notify the company of any missing documentation, which must be sent to Consob within 90 days of receipt of the notice, on penalty of inadmissibility of the application.
5. Applications shall be dated from the date of submission, or, in the case of incomplete documentation, from the date documentation is completed.
Article 8
(Documentation on the applicant company to be attached to the application)
1. The application for authorisation shall be accompanied by the following documentation regarding the applicant company:
a) authenticated copy of the instrument of incorporation and the articles of association, together with related certification issued by the Register of Companies Office no more than 90 days prior to submission of the application, or a special self-certification declaration submitted pursuant to Italian Presidential Decree 445 of 28 December 2000;
b) authenticated copy of registration of the company in the Register of Companies issued no more than 90 days prior to submission of the application, or a special self-certification declaration submitted pursuant to Italian Presidential Decree 445 of 28 December 2000;
c) statement from the company’s auditor confirming the extent of paid-up share capital and the total and composition of shareholders’ equity at the time of submission of the application;
d) for companies already in operation, a report on the financial position drafted in accordance with financial statements regulations, issued no more than 60 days prior to submission of the application. A report by the company's auditor shall be annexed to the report on the financial position;
e) list of names and personal details of all members of the administrative and control bodies, an indication of related powers and any appointment to office, and the general managers and persons performing duties equivalent to that of a managing director;
f) copy of the minutes of the board of directors or, in the case of a sole director, of the board of statutory auditors of the company, providing confirmation of the professional, integrity and independence requirements according to article 10 below;
g) list of persons with a direct or indirect equity investment in company share capital, with an indication of their related shareholdings in absolute value and percentage terms. For indirect equity investments the name of the person through whom the investment is held shall be specified;
h) documentation relating to the credentials of shareholders according to article 9 below;
i) programme relating to initial operations, including an illustration of the type of operations planned, the procedures adopted and the type of accessory services to be provided, drafted according to the model in Annex 1 attached;
l) report on the organisational structure of the company, drafted according to provisions issued pursuant to article 6, subsection 2-bis of the Consolidated Law. The report shall also illustrate any outsourcing of operations to third parties;
m) documentation confirming the company’s membership of a recognised investor protection compensation system pursuant to article 59 of the Consolidated Law.
2. Where the documentation specified in subsection 1 is already in Consob's possession, the applicant company shall be exempted from such submission. The application must indicate this circumstance and the date of submission of the documentation to Consob.
Article 9
(Documentation on applicant company shareholders)
1. The application for authorisation shall be accompanied by the documentation envisaged in provisions of the Bank of Italy for the purpose of verifying the suitability of any person intending to acquire a qualifying interest in an investment firm or the group of which the investment firm is a member to ensure the sound and prudent management of the company and without impediment to
effective supervision.
2. Where the holder of a significant equity investment is a natural person the following additional documentation, relating to integrity requirements pursuant to art. 14 of the Consolidated Law, shall be submitted:
a) statement specifying the size of the direct and indirect equity investments in the company and the identification data of any nominees, trust companies and subsidiaries through which the investment is held. A copy of any agreements on the exercise of voting rights must be attached to the statement;
b) the documentation referred to in Annex 2.
3. Where the holder of a significant equity investment is not a natural person, the integrity requirements pursuant to art. 14 of the Consolidated Law shall be possessed by all members of the board of directors and the general manager, or any other person performing equivalent duties. The board of directors or, in the case of a sole director, of the board of auditors of said person shall
verify the integrity requirements.
4. Where subsection 3 applies, the following additional documentation shall be submitted:
a) statement specifying the size of the direct and indirect equity investments in the company and the identification data of any nominees, trust companies and subsidiaries through which the investment is held. A copy of any agreements on the exercise of voting rights must be attached to the statement;
b) authenticated copy of the minutes of the board of directors meeting or, in the case of a sole director, of the board of statutory auditors meeting of the company in which the person holds the significant equity investment, during which the integrity requirements were verified. The related resolution shall indicate the assumptions on which the verification was based. Verification shall be
performed separately for each interested party and their respective abstention, which shall be mentioned in the minutes of the competent body.
The originals of all documentation on which the assessment was based shall be attached to the minutes.
Annex 2, Section II specifies the minimum documentation to be obtained by the company for verification purposes, and the formal credentials are indicated therein.
Italian Ministries shall not be obliged to submit the documentation referred to under this subsection.
5. Proof of the existence of integrity requirements shall not be compulsory for persons who, at the time of submission of the application, hold administration and management office in:
a) Italian banks, e-money institutions, investment firms, SICAVs, asset management companies, companies operating regulated markets pursuant to article 61 of the Consolidated Law, central financial instrument depositories pursuant to article 80 of the Consolidated Law, financial intermediaries pursuant to articles 106 and 107 of Italian Legislative Decree 385 of 1 September 1993 and
insurance companies pursuant to Italian Legislative Decree 209 of 7 September 2005;
b) EU banks, e-money institutions, investment firms and harmonised management companies;
c) non-EU banks and investment companies in any event authorised to provide their services in Italy;
d) public authorities, also of an economic nature.
6. The provisions of this article shall also apply to whomsoever, regardless of the size of the equity investment held, controls an investment firm pursuant to article 23 of Italian Legislative Decree 385 of 1 September 1993.
Article 10
(Verification of the requirements of applicant company members)
1. Pursuant to article 13 of the Consolidated Law, the responsibility for verification of the requirements of integrity, professionalism and independence of company members, including alternate auditors, lies with the board of directors or, in the case of a sole director, with the company auditors. The minutes of the resolution by which the verification of credentials acknowledges the
grounds on which the assessments were based. Verification shall be performed separately for each interested party and their respective abstention, which shall be mentioned in the minutes of the competent body. Documentation obtained for this purpose shall be held by the company for a period of five years from the date of the resolution for which it was used.
2. The minutes indicated in subsection 1 shall indicate the activities performed by each person and related duration, assessed in order to confirm professionalism requirements.
3. With reference to each interested party, the minutes indicated in subsection 1 shall contain a precise indication of the documents taken into consideration to confirm integrity requirements. The minutes shall also mention any proceedings against company members for offences that could have an impact on said requirements.
4. For the purpose of verifying possession of the necessary requirements, the interested parties shall submit documented proof of said requirements to the board of directors. Annex 2, Section I specifies the minimum documentation to be obtained for verification purposes, and the formal requirements are indicated therein. Consob’s right to request sight of the documented proof of
possession of said requirements remains implicit.
5. Member who at any time find themselves in a situation that could lead to the lapse or suspension from office or against whom criminal proceedings have been instigated for offences that could have an impact on integrity requirements, must report said circumstances immediately to the board of directors.
Article 11
(Application investigations)
1. On receipt of the application, Consob shall ascertain that the terms indicated in articles 19.1 and 59.1 of the Consolidated Law for release of the authorisation are met and, after consulting the Bank of Italy, shall resolve upon the application within a maximum one hundred and twenty days. Authorisation shall be denied where verification of the aforementioned terms shows that sound and
prudent company management and the capacity of the company to properly provide investment services and activities is not guaranteed. In cases pursuant to article 60, subsections 1 and 2 of Directive 2004/39/CE, the resolution shall be preceded by consultation between the supervisory authorities of the member states concerned.
2. Any change in company members and holders of significant equity investments in the company, and any other change to elements important for decision-making purposes, that may arise at investigation stage shall immediately be brought to Consob’s attention. The company shall arrange submission of the related documentation within sixty days of the event.
3. Consob may request further information with regard to:
a) the applicant company;
b) persons performing administrative or control duties, general managers or applicant company shareholders;
c) any other person, also abroad.
4. Should Consob fail to resolve upon the application by the deadline of one hundred and twenty days, the application shall be considered accepted.
Article 12
(Extension of authorisation)
1. Investment firms that wish to be authorised to provide additional investment services or activities shall submit application to Consob pursuant to article 7 above. A similar application shall be submitted by the investment firms already authorised to provide the following services and activities:
a) placement without firm or standby commitment to issuers;
b) portfolio management;
c) receipt and transmission of orders;
d) investment consultancy,
without holding, even on a temporary basis, cash and cash equivalents or financial instruments of customers and without the assumption of risk by the company, where investment firms intend to perform the same activities but with the holding, even on a temporary basis, of cash and cash equivalents or financial instruments of customers without the assumption of risk by the company.
2. The application shall be accompanied by the following documentation:
a) programme relating to initial operations, including an illustration of the type of operations planned, the procedures adopted and the type of accessory services to be provided, drafted according to the model in Annex 1 attached;
b) report on subsequent changes to the organisational structure of the company, drafted according to provisions issued pursuant to article 6, subsection 2-bis of the Consolidated Law. The report shall also illustrate any outsourcing of operations to third parties;
c) statement of the person responsible for company audit confirming the amount of paid-up share capital and the total and composition of shareholders’ equity at the time of submission of the application, where the additional investment services and activities pursuant to subsection 1 above lead to a change in the equity requirements established by the Bank of Italy
d) where amendment has proved necessary to the instrument of incorporation and related articles of association, an authenticated copy of the shareholders’ meeting minutes and documented proof of the related entry in the register of companies.
3. Consob shall ascertain that the conditions for the release of authorisation are met and, after consulting the Bank of Italy, shall resolve on the application within a maximum one hundred and twenty days. Authorisation shall be denied where verification of the aforementioned terms shows that sound and prudent company management and the capacity of the company to properly provide
investment services and activities is not guaranteed.
4. Articles 7.4, 7.5, 11.3 and 11.4 shall apply.
Article 13
(Waiver of authorisation)
1. Investments firms that intend to cease the provision of one or more investment services or activities shall submit a specific statement of waiver to Consob. Consob, after consulting the Bank of Italy, shall resolve upon the application within a maximum one hundred and twenty days.
2. Articles 11.3 and 11.4 shall apply.
Article 14
(Suspension of investigation deadlines)
1. The deadlines established for completion of investigations under articles 11, 12 and 13 shall be suspended:
a) where the applicant company, for documentation preparation purposes, has opted to submit self-certification with the application under the terms of annex 2, and it should prove necessary to perform verification, until the date of receipt by Consob of the related documentation from the person or competent administrative body.
b) where article 60, subsections 1 and 2 of Directive 2004/39/CE shall apply, for the period necessary to complete consultation as required;
c) where article 11, subsection 2 shall apply, from the date of receipt of the statement of changes until the date of receipt by Consob of the related documentation;
d) where article 11, subsection 3 shall apply, from the date of request for information until the date of receipt by Consob of the related elements;
e) where articles 12 and 13 shall apply, and supervisory inquiries are in progress against the investment firm for investigation purposes, until said inquiries are completed.
2. Where subsection 1 shall apply, Consob shall inform the interested parties of the launch and suspension of investigations.
3. Where subsection 1d) shall apply, the authorisation shall be considered waived if the applicant company should fail to submit the requested information within four months of receipt of the request for said information from Consob.
Article 15
(Lapse of authorisation)
1. The investment firms shall commence the provision of every investment service and activity authorised within twelve months of the date of authorisation, on penalty of lapse of said authorisation.
2. Investment firms that have suspended the provision of an authorised investment service or activity, shall resume the provision of said service or activity within six months, on penalty of lapse of the related authorisation.
3. The deadlines indicated in subsections 1 and 2 shall not apply or be interrupted where supervisory investigations against the investment firm are in progress or have been launched. In such cases, the entire period shall commence from the date of completion of said investigations.
4. Any lapse shall be declared by Consob, after consulting the Bank of Italy.
5. Consob may defer the declaration of lapse should the investment firm fail to report interruption of authorised investment services or activities as specified in article 16, and such deferral is necessary to protect the interested parties pursuant to article 5, subsection 1 of the Consolidated Law.
Article 16
(Notification of the provision of investment services and activities)
1. The investment firms shall immediately inform Consob and the Bank of Italy of the launch date, any suspension and relaunch of all and any authorised investment service or activity.
PART IV
AUTHORISATION PROCEDURES FOR NON-EU INVESTMENT FIRMS
Article 17
(Application for authorisation)
1. The application, signed by the legal representative of the firm and in compliance with current provisions relating to stamp duty, shall be submitted to Consob. The investigation deadlines shall be suspended until the agreements specified in article 28, subsection 1, paragraph d) of the Consolidated Law are integrated, so as to allow supervision of asset stability, risk containment and
the continued existence of conditions that must subsist at the time of authorisation.
2. The application shall indicate:
a) the company name, registered office, head office and related telephone and fax numbers;
b) the investment services, activities and accessory service for which authorisation is required, specifying those that the firm intends shall be performed through branches;
c) the list of annexed documents.
3. Where the application for authorisation involves, jointly or severally, the following services and activities:
a) placement without firm or standby commitment to issuers;
b) portfolio management;
c) receipt and transmission of orders;
d) investment consultancy,
the application must also specify whether authorisation is required by the company to provide such services without the company holding customers' liquid balances and financial instruments, even temporarily, and without the company assuming risks;
4. Articles 7.4 and 7.5 shall apply.
Article 18
(Documentation to be attached to the application)
1. The application for authorisation shall be accompanied by the following documentation regarding the applicant company:
a) authenticated copy of the instrument of incorporation and articles of associated confirmed as current by the competent authority in the home state and dated no more than 90 days prior to submission of the application;
b) statement of the person responsible for company audit or the body, with whatever title, that performs equivalent duties, to confirm the amount of paid-up share capital and the inexistence of bankruptcy or equivalent proceedings against the company;
c) list of names and personal details of all members of the administrative and control bodies, an indication of related powers and any appointment to office, and the general managers and persons performing duties equivalent to that of a managing director;
d) an indication of the person with control over the company, in compliance with the concept of control pursuant to article 23 of Italian Legislative Decree 385 of 1 September 1993;
e) group organisation chart with an indication of the territorial location of its members and main business branches;
f) a financial statement in relation to a date no more than 60 days prior to submission of the application;
g) a programme of initial operations that the company intends to implement in Italy, in all cases containing a description of the types of operation concerned, the procedures adopted, including an illustration of the customer procurement methods, drafted in accordance with the model in Annex 1 attached;
h) authenticated copy of the authorisation to provide services and activities that the company intends to provide in Italy, as released by the competent authority of the home state.
2. Where branches are established, without prejudice to the provisions of subsection 1 above, the application shall also be accompanied by the following documentation:
a) description of the organisational structure of the branches drafted, where possible, according to general provisions established by the Bank of Italy on administrative, accounting and internal audit organisation of securities market intermediaries, in all cases containing the description of any operations outsourced to third parties;
b) documents regarding the branch managers:
minutes of the meeting of the board of directors or, in the case of a sole director, of the company auditors, during which opinion was expressed on the professionalism and integrity requirements of the branch managers, and the inexistence of impediments or causes for suspension from office pursuant to article 13 of the Consolidated Law. The documentation based on which the assessment was
performed, as indicated in Annex 2, shall be attached to the minutes. The formal requirements of such documentation are indicated in Annex 2;
c) confirmation statement of payment of the fund for the first branch of a sum not less than that established by the Bank of Italy pursuant to article 19, subsection 1, paragraph d) of the Consolidated Law.
3. Article 8.2 shall apply.
Article 19
(Application investigations)
1. Consob shall ascertain that the conditions, pursuant to article 28 of the Consolidated Law, for the release of authorisation are met and, after consulting the Bank of Italy, shall resolve on the application within a maximum one hundred and twenty days. The applicant company and home state authority shall be informed of the resolution.
2. Any change in members of the company holding administrative or control office, shareholders with control over the investment company, company branch managers and any other change to elements important for decision-making purposes, that may arise at investigation stage, shall immediately be brought to the attention of Consob. The company shall arrange submission of the related
documentation within sixty days of the event.
3. Consob may request further information with regard to:
a) the applicant company;
b) persons performing administrative or control duties or applicant company shareholders;
c) any other person, also abroad.
4. Should Consob fail to resolve upon the application by the deadline of one hundred and twenty days, the application shall be considered accepted.
Article 20
(Documentation language)
1. The application for authorisation as specified under article 17 together with declarations and information to be provided under articles 18 and 19 shall be in Italian or in the language common to the financial sector. Without prejudice to the provisions of Italian Presidential Decree 445 of 28 December 2000, documents for which the originals are in a different language must be
accompanied by a specific translation in Italian.
Article 21
(Applicable provisions)
1. The provisions of articles 12, 13, 14, 15 and 16 shall apply.
Part V
EU investment firms
Article 22
(Establishment of branch offices)
1. For the provision of services admitted for mutual recognition, EU investment firms may establish branches in Italy. The establishment of the first branch must first be reported to Consob by the competent authority of the home member state
2. The branch may commence activities from the time of receipt of a special notice from Consob, or if no such notice is received, after two months from the date of the notice indicated in subsection 1 above.
3. For any change to the content of the notice pursuant to subsection 1 above, Consob must first receive a specific report from the competent authority of the home member state.
Article 23
(Provision of services without branch offices)
1. EU investment firms may provide services admitted to mutual recognition in Italy without establishing branches provided that Consob has been informed by the authority of the home member state.
2. For any change to the content of the notice pursuant to subsection 1 above, Consob must first receive a specific report from the competent authority of the home member state.
Article 24
(Services not admitted for mutual recognition)
1. Consob, after consulting the Bank of Italy, shall authorise the provision in Italy of services pursuant to art. 18, subsection 5 of the Consolidated Law, that are not admitted to mutual recognition, by EU investment firms.
2. Release of the authorisation shall be subject to the following terms:
a) actual provision in the home member state, based on current regulations in that country, of the services that the investment firm intends to provide in Italy;
b) submission of a programme of activities specifically indicating the services that the investment firm intends to provide, including an illustration of the type of operations involved, the procedures adopted and the type of accessory services to be provided, and in any event whether said services will be provided through a branch;
c) adoption of an organisational and equity structure compatible with the service to be authorised.
3. The application for authorisation, signed by the legal representative of the investment firm and in compliance with current provisions relating to stamp duty, shall be submitted to Consob. The provisions of articles 7.4, 7.5, and 20 shall apply.
4. The application shall indicate:
a) the company name, registered office, head office and related telephone and fax numbers;
b) the services that the firm intends to provide;
c) the list of annexed documents.
5. The application for authorisation shall be accompanied by the following documentation:
a) confirmation from the competent authority of the home member state that in that country the investment firm regularly and effectively provides the services for which authorisation is requested, based on current regulations in that country;
b) programme of activities pursuant to subsection 2b), in all cases containing the description of the method for the provision of services and customer procurement, drafted in accordance with the model in Annex 1;
c) report on the organisational and equity structure adopted for the provision of the services to be authorised.
6. Consob, after consulting the Bank of Italy, shall resolve upon the application within a maximum one hundred and twenty days. The applicant company and home state authority shall be informed of the resolution.
7. Should Consob fail to resolve upon the application by the deadline of one hundred and twenty days, the application shall be considered accepted.
8. Consob and the Bank of Italy shall inform the investment firm of the conditions, including codes of conduct, which in the overall interest of the services must be observed. The provisions of articles 11.2, 11.3, 12, 13, 14, 15, 16 and 20 shall apply.
Part VI
Final provisions
Article 25
(Final provisions)
1. The provisions of this Book shall also apply to investigations in progress at the date of its entry into force.
2. For cases indicated in subsection 1, Consob may request integration to documentation necessary for investigations and the completion deadlines shall be suspended until the date of receipt by Consob of the complete documentation.
BOOK III
Provision of investment services, activities and accessory services
Part I
Preliminary provisions
Article 26
(Definitions)
1. In this Book:
a) "stockbrokers" shall mean persons registered as such pursuant to article 201, subsection 7 of the Consolidated Law;
b) "authorised intermediaries" or "intermediaries" shall mean the investment firms, including companies pursuant to article 60, subsection 4 of Italian Legislative Decree 415 of 1996, Italian banks authorised to provide investment services and activities, stockbrokers, financial intermediaries registered pursuant to article 108 of Italian Legislative Decree 385/1993
authorised to provide investment services, asset management companies and management companies harmonised for the provision of portfolio management and investment consultancy services, Poste Italiane – BancoPosta Services Division authorised pursuant to article 2 of Italian Presidential Decree 144 of 14 March 2001, EU investment firms and banks with branches in Italy and non-EU
investment firms and banks authorised to provide investment services and activities in Italy;
c) "customer" shall mean natural or legal person to whom investment or accessory services are provided;
d) "professional customer" shall mean a private professional customer that meets the requirements of Annex 3 attached, and a public professional customer that meets the requirements of the regulations issued by the Minister for the Economy and Finance pursuant to article 6, subsection 2-sexies of the Consolidated Law;
e) "retail customer" shall mean the customer that is neither professional or a qualified counterparty;
f) "limit order" shall mean a buy or sell order for a financial instrument at a set price limit or at a more convenient price and for a fixed quantity.
Part II
Transparency and correctness in the provision of investment services/activities and accessory services
Title I
INFORMATION, ADVERTISING AND PROMOTION NOTICES, AND CONTRACTS
Chapter I
Information, advertising and promotion notices
Article 27
(General information requirements)
1. All information, including advertising and promotional notices, addressed to customers and potential customers by intermediaries must be correct, clear and not misleading. Advertising and promotional notices shall be clearly identifiable as such.
2. Intermediaries shall provide customers and potential customers with appropriate information, in a comprehensible format, in order that the nature of the investment service, the specific types of financial instruments involved and related risks are easily understandable and, consequently, the customer shall be able to make informed decisions regarding investments. Such information, which
may be provided in standardised format, refers to:
a) the investment firm and related services;
b) the financial instruments and investment strategies proposed, including appropriate guidelines and warnings on the investment risks for such instruments or particular investment strategies;
c) the execution venues, and
d) related costs and charges.
Article 28
(Conditions for information that is correct, clear and not misleading)
1. Pursuant to article 27, subsection 1, intermediaries shall ensure that all information, including advertising and promotional notices, issued to retail customers or potential retail customers, or that may have been received by such persons, satisfies the conditions of this article.
2. The information shall:
a) include the name of the intermediary;
b) not emphasise any potential advantage of an investment service or financial instrument unless a correct and clear indication is given of any significant risks;
c) have a content and presentation that in all probability will be comprehensible to the average investor in the population to which it is addressed or is likely to be received;
d) not conceal, minimise or withhold important elements or warnings.
3. Where the information compares investment or accessory services, financial instruments or persons providing the investment or accessory services, such information shall satisfy the following conditions:
a) the comparison shall be correct and balanced;
b) the information sources used for the comparison shall be specified;
c) the main facts and assumptions used for the comparison shall be indicated.
4. Where the information contains an indication of past results of a financial instrument, financial index or investment service, these shall satisfy the following conditions:
a) said indication shall not constitute the predominant element of the notice;
b) the information shall provide appropriate data on results with regard to:
b1) the five previous years, or
b2) the entire period during which the financial instrument was offered, since the financial index was created or the investment service provided, if less than five years, or
b3) a longer period as may be decided by the intermediary.
In any event, said data shall be based on complete 12-month periods;
c) the reference period and source of information shall be clearly indicated;
d) the information shall contain a visible warning that the data relates to the past and that past results cannot be deemed to be an indication of future results;
e) where such indication is based on data expressed in a currency other than that of the EU member state in which the retail customer or potential retail customer is resident, the information shall clearly indicate said currency and warn that returns could increase or decrease due to exchange fluctuations;
f) where the indication is based on gross results, the amount of commissions, fees and other charges shall be specified.
5. Where the information includes or makes reference to historic data processing, such information must relate to a financial instrument or financial index and shall satisfy the following conditions:
a) historic data processing shall be based on real data for one or more financial instruments or financial indices, identical to or underlying the financial instrument in question;
b) with regard to the real historic data pursuant to paragraph a), the conditions of subsection 4, paragraphs a), b), c), e) and f) shall be satisfied;
c) the information shall contain a visible warning that the figures are the result of historic data processing and that past results cannot be deemed to be an indication of future results;
6. Where the information contains estimated future results, the following conditions shall be satisfied:
a) the information shall not be based upon or contain references to estimations of past results;
b) the information shall be based upon reasonable assumptions supported by objective data;
c) where the information is based on gross results, the amount of commissions, fees and other charges shall be specified;
d) the information shall specify that said forecasts do not constitute a reliable indicator of future results.
7. Where the information makes reference to a specific tax treatment, the information shall clearly indicate that the tax treatment depends on the individual position of each customer and may be subject to future amendment.
8. The information shall not indicate or suggest that the competent authority guarantees or approves the products and services specified in the information.
Article 29
(Information on the intermediary and his services)
1. The intermediaries shall provide retail customers or potential retail customers with the following general information, where applicable:
a) the name and address of the intermediary and related contact numbers;
b) the languages in which the customer may correspond with the intermediary and receive documents and other information from the intermediary;
c) the communication methods that must be used between intermediary and customer, also, if relevant, for the submission and receipt of orders;
d) a statement to the effect that the intermediary is authorised and the name and address of the authority that released the authorisation;
e) where the intermediary operates through an associate agent in compliance with article 23 of Directive 2004/39/CE, a statement to this effect specifying the member state in which said agent is registered;
f) the nature, frequency and dates of documentation to be provided to the investor as confirmation of the activities performed pursuant to articles 53 to 56;
g) if the intermediary holds financial instruments or sums of money for customers, a summary description of the methods implemented to guarantee their protection;
h) the investor compensation system or relevant deposit guarantees, with a summary description of the cover terms;
i) a description, also in summary format, of the policy pursued by the intermediary with regard to conflict of interest;
l) as and when requested by the customer, greater details of the conflict of interest policy in hard copy or through the intermediary’s web site, provided that the conditions pursuant to article 36, subsection 2 are met.
2. Where portfolio management services are provided, the intermediaries shall adopt an appropriate assessment and comparison method for operating results, also indicating a significant reference parameter, coherent with the investment objectives of the customer and with the type of financial instruments included in the customer portfolio, so as to allow the customer to evaluate the service
provided.
3. Where intermediaries propose the provision of portfolio management to a retail customer or potential retail customer, in addition to the information indicated under subsection 1, the following information, if relevant, shall be provided:
a) information on the method and frequency of assessment of the financial instruments contained in the customer portfolio;
b) details of any appointed management delegates, specifying the extent of powers delegated;
c) the description of the reference parameter against which the customer portfolio yield shall be compared;
d) the types of financial instruments that may be included in the customer portfolio and the types of operation that could be performed on such instruments, including any limits;
e) the management objectives, the level of risk within which the manager may exercise his discretion and any specific restrictions to said discretion.
Article 30
(Information on the safeguarding of financial instruments and sums of money of the customer)
1. Intermediaries that hold financial instruments or sums of money pertaining to retail customers shall provide such customers with information in accordance with the following subsections, where relevant, also pursuant to Bank of Italy regulations adopted in compliance with article 6, subsection 1 of the Consolidated Law.
2. The intermediaries shall inform the retail customer or potential retail customer of any possibility that financial instruments or sums of money pertaining to that customer may be held by a third party on behalf of the intermediary, and the liability assumed, in compliance with applicable national law, with regard to any act or omission by said third party and of the consequences that
insolvency of the latter may bring upon the customer.
3. Where financial instruments of the retail customer or potential retail customer may be held in an omnibus account by a third party, the intermediaries shall inform the customer of this fact and shall provide clear warning of the risks that may derive therefrom.
4. Where accounts containing financial instruments or sums of money pertaining to the customer or potential customer may or may not be subject to non-EU legislations, the intermediaries shall provide information of this circumstance and shall indicate to what extent the rights of the customer or potential customer over such financial instruments or sums of money may be influenced.
5. The intermediaries shall inform the customer of the existence and terms of any right of guarantee or privileges that the intermediary, or sub-depository, shall claim or may claim with regard to the financial instruments or sums of money of the customer, or any related right to compensation that may exist.
6. Prior to using, on their own account or on behalf of another customer, financial instruments held on behalf of a retail customer, the intermediaries shall, in a timely manner and in hard copy, provide the customer with clear, complete and accurate information on the obligations and liabilities of the intermediary in relation to the use of such financial instruments, including the terms
for restitution of the instruments and related risks.
Article 31
(Information on financial instruments)
1. The intermediaries shall provide customers or potential customers with a general description of the nature of risks involved with the financial instruments concerned, in particular taking into account the customer category as a retail or professional customer. The description shall illustrate the characteristics of the specific type of instrument involved, together with the risks related
to such instruments, in sufficient detail to allow the customer to adopt informed investment decisions.
2. The description of the risks shall include, where relevant to the specific type of instrument, and the status and level of awareness of the customer, the following elements:
a) the risks related to the type of financial instrument, including an explanation of its effect and impact, together with the risk of total loss of the investment;
b) the price volatility of such instruments and any related liquidability limits;
c) the fact that an investor might assume, as a result of transactions on such instruments, financial commitments and other additional obligations, including potential liabilities, further to those relating to the purchase cost of the instruments;
d) any marginal requirements or similar obligations applicable to such instruments.
3. Where the intermediary provides the retail customer or potential customer with detailed information on a financial instrument forming part of a current public offering, and a prospectus has been published for said offering in compliance to article 94 et seq of the Consolidated Law, the intermediary shall inform the customer or potential customer of the terms of said prospectus.
4. Where it is likely that the risks relating to a financial instrument or combined financial transaction involving two or more different financial instruments are greater than the risks relating to the individual components, the intermediary shall provide an adequate description of the individual components and the manner in which their interaction increases risk.
5. In a case in which financial instruments incorporate a third party guarantee, information relating to said guarantee shall include sufficient detail regarding both the guarantor and the guarantee, in order that the retail customer or potential retail customer may correctly evaluate the guarantee.
Article 32
(Information on costs and charges)
1. Intermediaries shall provide retail customers and potential retail customers with information on the costs and charges involved in the provision of services, including the following elements where relevant:
a) the total amount payable by the customer for the financial instrument, investment service or accessory service, including all related fees, commissions, charges and expense, and all taxes to be paid through the intermediary or, if an exact total cannot be indicated, the basis on which said total shall be calculated in order that the customer may perform verification;
b) where any part of the total amount indicated under paragraph a) above must be paid or is expressed in foreign currency, an indication of said currency, with related taxes and exchange commission due;
c) an indication of the possibility that other charges to the customer may emerge, including tax, in relation to the financial instrument transactions or investment service, that shall not be payable through or imposed by the intermediary;
d) the payment methods.
For the purposes of paragraph a), commissions applied by the intermediary shall in any event be indicated separately.
Article 33
(Information on open-end UCITS)
1. A simple prospectus in relation to units of open-end UCITS drafted in compliance with relevant EU measures, and appropriate to the fulfilment of obligations envisaged under articles 31 and 32, limited to the actual UCITS costs and charges, shall include commissions received and paid.
Article 34
(Methods and terms for the provision of information)
1. For the purposes of article 27, subsection 2, intermediaries shall observe the measures contained in this article.
2. The intermediaries shall provide the retail customer or potential retail customer, in good time prior to any binding contract for the provision of investment or accessory services, information relating to the terms of the contract.
3. Intermediaries shall provide information pursuant to articles 29 to 32 to retail customers or potential retail customers in good time, prior to the provision of investment or accessory services.
4. Intermediaries shall provide professional customers with information pursuant to article 30, subsections 4 and 5, in good time prior to provision of the service concerned.
5. The information pursuant to subsections 2, 3 and 4 shall be provided in hard copy or through the intermediary’s web site, provided that the conditions of article 36, subsection 2 are met.
6. The intermediaries shall inform the customer in good time of any significant amendment to the information provided pursuant to articles 29 to 32. Said notice shall be issued in hard copy if the information concerned was originally provided in hard copy.
7. The intermediaries shall guarantee that the information contained in advertising and promotional communications complies with that provided by the firm to the customers as part of the provision of investment and accessory services.
8. Where advertising or promotional communications contain an offer or invitation pursuant to paragraphs a) and b) below, and specify the response methods or include a form upon which a response may be provided, said communications shall contain the information referred to in articles 29 to 32 as may be relevant to said offer or invitation:
a) offer to conclude a contract in relation to a financial instrument, investment service or accessory service with any person responding to the communication;
b) invitation to any person responding to the communication to offer the conclusion of contract in relation to a financial instrument, investment service or accessory service;
9. Subsection 8 shall not apply where, in order to respond to an offer or invitation contained in said promotional communication, the potential retail customer is obliged to refer to one or more other documents which, jointly or separately, contain such information.
Article 35
(Information regarding customer classification)
1. Intermediaries shall inform customers in hard copy of their new classification as retail customer, professional customer or qualified counterparty.
2. Intermediaries shall inform customers in hard copy of any right to request a different classification and regarding any limits that would derive in terms of customer protection.
3. At the discretion of the intermediary or on request from the customer, intermediaries may:
a) treat a customer that could be classified as a qualified counterparty pursuant to article 6, subsection 2-quarter, paragraphs d1), d2), d3) and d5) of the Consolidated Law, or pursuant to article 58, subsection 2, as a professional or retail customer
b) treat a customer with professional customer rights as a retail customer.
Article 36
(Information in hard copy and via an Internet web site)
1. Where, for the purposes of this regulation it is required that the information be provided in hard copy, the intermediaries shall:
a) use a printed format;
b) use a non-printed format provided that:
i) said format proves appropriate for the context in which intermediary-customer relations are performed; and
ii) the customer or potential customer has been informed of the option between printed or non-printed formats, and has specifically chosen the latter.
2. Where, for the purposes of articles 29, 30, 31, 32, 34 and 46 subsection 3, intermediaries provide information to a customer through an Internet web site and said information is not addressed personally to the customer, the following conditions must be met:
a) use of the Internet web site proves appropriate for the context in which intermediary-customer relations are performed;
b) the customer specifically consents to the provision of information in said format;
c) the customer is informed electronically of the web site address and the access point to such information within the web site;
d) such information is up to date;
e) the information is available continuously through said web site for the entire period in which the customer may reasonably be expected to require access.
3. For the purposes of this article, the provision of information by electronic means shall be considered appropriate for the context in which intermediary-customer relations are performed or will be performed if there is proof that the customer can gain regular access to the Internet. Should the customer provide an e-mail address for the purpose of said relations, this shall be considered
an element of proof.
Chapter II
Contracts
Article 37
(Contracts)
1. Intermediaries shall provide retail customers with their own investment services, other than investment consultancy, on the basis of a specific contract in writing. A copy of said contract shall be provided to the customer.
2. The contract shall:
a) specify the services provided and their characteristics, indicate the content of the services provided and the type of financial instruments and transactions involved;
b) establish the period of validity and renewal method for the contract, together with the terms to be adopted for any amendment to said contract;
c) indicate the methods by which the customer may issue orders and instructions;
d) indicate the frequency, type and content of documentation to be provided to the customer as statements on the activities performed;
e) for the execution of customer orders, indicate and govern the receipt and transmission of orders, together with portfolio management and loss threshold in cases where negative positions opened in relation to transactions that could lead to actual or potential liabilities greater than the purchase cost of the financial instruments, over and above which the customer must be informed;
f) indicate the fees payable to the intermediary or objective criteria for their calculation, specifying how such fees are accumulated and, unless otherwise communicated, regarding incentives received in compliance with article 52;
g) indicate if and by what method and content, in relation to the investment service, investment consultancy services may be provided;
h) indicate other contractual terms agreed with the investor for provision of the service;
i) indicate any settlement and arbitration procedures for the out-of-court settlement of any dispute, as defined in article 32-ter of the Consolidated Law.
3. The provisions of this article shall apply to accessory services relating to the granting of financing to investors.
Article 38
(Portfolio management contracts)
1. In addition to the terms established under art. 37, the contract with retail customers relating to portfolio management shall:
a) indicate the types of financial instruments that may be included in the customer portfolio and the types of operation that could be performed on such instruments, including any limits;
b) indicate the management objectives, the level of risk within which the manager may exercise his discretion and any specific restrictions to said discretion;
c) indicate whether the customer portfolio may be characterised by a leverage effect;
d) provide the description of the reference parameter against which the customer portfolio yield shall be compared;
e) indicate whether the intermediary delegates execution of the assignment to third parties, specifying details of the relevant powers delegated;
f) indicate the method and frequency of assessment of the financial instruments contained in the customer portfolio.
2. For the purposes of subsection 1a), the contract shall specify the intermediary options to invest in financial instruments not admitted for trading on a regulated market, in derivatives or illiquid or highly volatile instruments; or to proceed with short sales, purchases using borrowed sums of money, financial transactions through securities or any transaction involving the payment of
margins, guarantee deposits or exchange risk.
Title II
ADEQUACY, APPROPRIATENESS AND "SIMPLE EXECUTION OR RECEIPT OF ORDERS
Chapter I
Adequacy
Article 39
(Information from customers in investment and portfolio management consultancy)
1. In order to recommend the investment services and financial instruments suited to the customer or potential customer, in the provision of investment consultancy or portfolio management services, the intermediaries shall obtain necessary details from the customer or potential customer in relation to:
a) awareness and experience of the investment sector relevant to the type of instrument or service;
b) the financial position;
c) the investment objectives.
2. The information pursuant to subsection 1a) shall include the following elements, to the extent to which they take suitable account of the customer characteristics, nature and importance of the service to be provided, and of the type of product or transaction concerned, together with the complexity and risks of said service, product or transaction:
a) the type of service, transaction and financial instruments with which the customer is familiar;
b) the nature, volume and frequency of financial instrument transactions performed by the customer and the period in which such transactions were executed;
c) the level of education, profession or, if relevant, the former profession of the customer.
3. The information pursuant to subsection 1b) shall include, where appropriate, data on the source and consistency of the customer’s income, overall assets and financial commitments.
4. The information pursuant to subsection 1c) shall include data on the period for which the customer wishes to retain the investment, his preferences in relation to risk, his own risk profile and investment aims, where relevant.
5. The intermediaries may rely on the information provided by the customer or potential customer unless such information proves to be clearly exaggerated, incorrect or incomplete.
6. Where intermediaries providing investment consultancy or portfolio management services are unable to obtain the information required under this article, they shall abstain from providing said services.
7. Intermediaries shall not encourage a customer or potential customer to withhold information required for the purposes of this article.
Article 40
(Adequacy evaluation)
1. Based on information obtained from the customer, and taking into account the nature and characteristics of the service provided, the intermediaries shall assess whether the specific transaction recommended or executed as part of the provision of portfolio management services satisfies the following criteria:
a) correspondence with the customer’s investment objectives;
b) the nature of the transaction is such that the customer is financially able to face any risk related with the investment compatible with his investment objectives;
c) the customer has the necessary experience and awareness of the nature of the transaction to understand the risks involved in such a transaction or management of the portfolio.
A series of transactions, each of which is suitable if considered individually, may not be appropriate if the frequency of such transactions is not in the best interests of the customer.
2. Where investment consultancy or portfolio management services are provided to a professional customer, intermediaries may presume that, with regard to the instruments, transactions and services for which said customer is classified as a professional customer, he has the necessary level of experience and awareness pursuant to subsection 1c).
3. In the case of provision of investment consultancy services to a professional customer, considered such by right under the terms of Annex 3 attached or under the regulation issued by the Ministry for the Economy and Finance pursuant to article 6, subsection 2-sexies of the Consolidated Law, intermediaries may presume, for the purposes of subsection 1b), that the customer is financially
able to face any investment risk compatible with his investment objectives.
Chapter II
Appropriateness
Article 41
(Information from customers in services other than investment and portfolio management consultancy)
1. Where investment services are provided other than consultancy or portfolio management, intermediaries shall request information from the customer or potential customer regarding his awareness and experience in the investment sector relevant to the type of instrument or service proposed or requested. Articles 39.2, 39.5 and 39.7 shall apply.
Article 42
(Appropriateness evaluation)
1. In the provision of investment services other than investment consultancy and portfolio management, and based on information pursuant to article 41, intermediaries shall verify that the customer has the necessary level of experience and awareness to understand the risks deriving from the instrument or investment service offered or requested.
2. Intermediaries may presume that a professional customer has the necessary level of experience and awareness to understand risks relating to the investment service or transactions or type of transaction or instruments according to which the customer was classified as professional.
3. Where for the purposes of subsection 1 the intermediary considers that the instrument or service is not appropriate to the customer or potential customer, the intermediary shall advise accordingly. Said advice may be provided in a standardised format.
4. Where the customer or potential customer decides not to provide the information pursuant to article 41, or where such information is insufficient, the intermediaries shall advise the customer or potential customer that such a decision inhibits any intermediary verification that the service or instrument is appropriate to the customer. Said advice may be provided in a standardised format.
Chapter III
Simple execution or receipt of orders
Article 43
(Terms)
1. Intermediaries may provide order execution services on behalf of customers, or the receipt and transmission of orders, without the need to obtain information or perform the assessment required under Chapter II, provided that all the following conditions are satisfied:
a) the aforementioned services are linked to shares admitted for trading on a regulated market, or equivalent market in another country, money market instruments, bonds or other debt securities (excluding bonds or debt securities with an underlying derivative), harmonised UCITS and other simple financial instruments;
b) the service is provided on the initiative of the customer or potential customer;
c) the customer or potential customer has been clearly informed that, in providing said service, the intermediary is not obliged to assess appropriateness and therefore that the investor shall not benefit from the protection offered by related measures. Said advice may be provided in a standardised format;
d) the intermediary complies with conflict of interest obligations.
Article 44
(Simple financial instruments)
1. Any financial instrument not mentioned under article 43, subsection 1, paragraph a) shall be considered simple if the following criteria are met:
a) it does not find definition under the terms of article 1, subsection 1-bis, paragraphs c) and d) of the Consolidated Law, or in the definitions provided by article 1, subsection 2, paragraphs d), e), f), g), h), i) and j) of said Consolidated Law;
b) there are frequent opportunities to sell, redeem or otherwise obtain repayment of such a financial instrument at prices openly available to market operators. Said prices must be those of the market or those made available, or confirmed, by assessment systems other than those adopted by the issuer;
c) no actual or potential liability for the customer is implied which exceeds the cost of purchase of the instrument;
d) sufficient complete information is openly available and the characteristics are sufficiently simple to understand that the average retail customer may make an informed decision regarding whether or not to execute a transaction in relation to said instrument.
Title III
BEST EXECUTION
Chapter I
Execution of orders on behalf of customers
Article 45
(Measures for the execution of orders under the best conditions for the customer)
1. Intermediaries shall adopt all reasonable measures and, for this purpose, implement effective mechanisms to achieve, where orders are to be executed, the best possible result for their customers, with due regard to the price, cost, speed and probability of execution and settlement, to the size and nature of the order, or any other consideration relevant to its execution.
2. In order to establish the relative importance of factors pursuant to subsection 1, intermediaries shall take the following criteria into account:
a) customer characteristics, including his classification as a retail or professional customer;
b) customer order characteristics;
c) characteristics of the financial instruments involved in the order;
d) characteristics of the execution venues to which the order may be addressed.
3. With regard to subsections 1 and 2, intermediaries shall adopt an order execution strategy that:
a) for each instrument category, identifies at least the execution venues that in the long-term offer the best possible result in relation to the execution of customer orders;
b) steers the decision towards an execution venue identified under paragraph a).
4. Intermediaries shall avoid the structuring or application of commissions in accordance with methods that lead to undue discrimination between one execution venue or another.
5. Where intermediaries execute orders on behalf of a retail customer:
a) the decision pursuant to subsection 3a) shall be based upon the sum total of the price of the financial instrument and related execution costs. Said costs shall include all expense sustained by the customer and directly linked to execution of the order, including fees charged by the execution venue, compensation fees and the settlement of any other sum payable to third parties in
relation to execution of the order. Factors other than the total amount payable may be given precedence over the immediate price and cost consideration only if these prove instrumental in providing the best possible result for the retail customer in terms of the total amount payable;
b) the decision pursuant to subsection 3b) shall be based on the total amount payable. For this purpose, the firm's own fees and costs for execution of the order may also be taken into account for each appropriate execution venue.
6. In any event, should the customer issue specific instructions, the intermediary shall execute the order, only in relation to the elements for which indications are received, in accordance with said instructions.
Article 46
(Information on order execution strategy)
1. The intermediaries shall:
a) provide information appropriate to their customers with regard to the order execution strategy adopted pursuant to article 45, subsection 3;
b) specifically inform customers whether or not the strategy may involve the execution of orders outside a regulated market or multilateral trading facility.
2. The intermediaries shall:
a) obtain the preliminary consent of the customer regarding the order execution strategy;
b) obtain specific preliminary consent of the customer prior to the execution of orders outside a regulated market or multilateral trading facility. Such consent may be expressed in general terms or in relation to individual transactions.
3. Pursuant to subsection 1a), the intermediaries shall provide retail customers, in good time prior to provision of the service, with the following information regarding their execution strategy:
a) an indication of the relative importance assigned to factors referred to under article 45, subsection 1 or the procedure adopted in determining the relative importance of said factors;
b) a list of the execution venues through which the intermediary regularly operates in performing obligations relating to the adoption of all reasonable measures to achieve the best long-term result possible in the execution of customer orders;
c) clear and visible warnings that any specific instructions from the customer may prejudice the measures envisaged by the execution strategy only with regard to the elements involved in such instructions.
4. The information pursuant to subsection 3 shall be provided in hard copy or through a web site, in compliance with the conditions of article 36, subsection 2.
5. Intermediaries must be able to demonstrate to customers, on request, that orders have been executed in compliance with the execution strategy.
Article 47
(Verification and updating of execution measures and strategy)
1. The intermediaries shall monitor the efficacy of their order execution measures and execution strategy in order to identify and, if necessary, correct any failings.
2. Intermediaries shall review the execution measures and strategy at least on an annual basis, and at the time of occurrence of significant circumstances that could influence the ability to achieve the best long-term results possible in the execution of customer orders through venues included in the execution strategy.
3. The intermediaries shall inform customers of any significant change to the adopted execution strategy.
Chapter II
Receipt and transmission of orders and portfolio management
Article 48
(Measures for the transmission of orders under the best conditions for the customer)
1. In the provision of services involving the receipt and transmission of orders and portfolio management, intermediaries shall adopt all reasonable measures to achieve the best possible results for their customers, taking into account the factors and criteria referred to under article 45, subsections 1 and 2. For retail customers, account is taken of the principles of article 45,
subsection 5.
2. For the purposes of subsection 1, the intermediaries shall also establish a transmission strategy which, for each instrument category, identifies the persons to whom the orders shall be transmitted in accordance with the execution strategies adopted by the latter.
3. Intermediaries shall provide appropriate information to their customers with regard to their own transmission strategy established pursuant to this article.
4. In any event, should the customer issue specific instructions, the intermediary shall be obliged to comply with said instructions, only in relation to the elements for which indications are received.
5. Intermediaries shall monitor the efficacy of the strategy referred to under subsection 2, and in particular the quality of execution by the persons identified for order execution purposes, and if necessary remedy any failings.
6. Intermediaries shall review the transmission strategy at least on an annual basis, and at the time of occurrence of significant circumstances that could influence the firm’s ability to achieve the best result possible for their customers.
7. This article shall not apply where the intermediary providing portfolio management and/or receipt and transmission of order services also executes the orders received or implements portfolio trading decisions on behalf of their customers. In such cases, Chapter I shall apply.
Title IV
CUSTOMER ORDER MANAGEMENT
Article 49
(General principles)
1. Intermediaries handling orders on behalf of customers shall apply measures to guarantee rapid, correct and efficient treatment of said orders with respect to other customer orders and the trading interests of the intermediary.
2. In the case of price-limited customer orders, in relation to shares admitted to trading on a regulated market and which are not executed immediately under the prevailing market conditions, the intermediaries authorised to execute orders on behalf of customers shall adopt measures to facilitate the most rapid execution possible of said orders by their immediate publication, in a manner
easily accessible to other market operators, unless explicit orders to the contrary are issued by the customer. For this purpose, intermediaries may transmit price-limited customer orders to a regulated market and/or multilateral trading facility. Article 31 of Regulation 1287/2006/EC shall apply.
3. For the purposes of subsection 1, intermediaries shall comply with the following conditions when handling customer orders, :
a) guarantee that orders executed on behalf of customers are readily and accurately recorded and assigned;
b) handle equivalent customer orders progressively and readily unless the order characteristics or prevailing market conditions render such action impossible or the interests of the customer call for a different procedure;
c) inform the retail customer of any significant problems that could influence the correct execution of orders as soon as such difficulties become known.
4. Where the intermediary is responsible for monitoring or arranging the settlement of an executed order, the intermediary shall adopt all reasonable measures to ensure that the financial instruments or sums of money pertaining to customers, received for the settlement of an executed order, are readily and correctly transferred to the customer account.
5. Intermediaries shall not make improper use of information relating to orders pending execution and shall take all reasonable measures to inhibit the improper use of such information by any relevant party as defined by the regulation adopted pursuant to article 6, subsection 2-bis of the Consolidated Law.
6. This article, unless otherwise specified under subsections 2 and 3c), shall also apply to intermediaries authorised to provide portfolio management services.
Article 50
(Pooling and assignment)
1. Intermediaries may handle a customer order or own transaction by pooling with the order of another customer only where the following conditions are satisfied:
a) it must be unlikely that pooling of the orders and transactions is detrimental to any one of the customers whose orders are included in the pool;
b) each customer whose order is expected to be pooled shall be informed that the pooling effect may be to his detriment in relation to given order;
c) an order assignment strategy shall be established and applied in which sufficiently precise terms are envisaged for the correct division of pooled orders and transactions. The strategy shall govern the manner in which the volume and price of orders determines the assignment and handling of partial executions.
2. In the case of partial execution of pooled customer orders, the intermediaries shall distribute the related transactions evenly according to their own order assignment strategy.
3. This article shall apply also to intermediaries authorised for portfolio management, except in relation to subsection 1b). Subsection 1b) shall apply in the case of specific instructions from the customer.
Article 51
(Assignment after pooling of customer orders using own provisions)
1. After pooling their own transactions with one or more customer orders, intermediaries shall not assign the related transactions in a manner damaging to a customer.
2. In the case of partial execution of customer orders pooled with own transactions, the intermediaries shall assign transactions executed on behalf of the customer before those of the intermediary. The transactions executed may also be proportionally assigned to the intermediary if, in compliance with the order assignment strategy referred to under article 50, subsection 1, paragraph c),
it would not otherwise have been possible to execute the order under such advantageous conditions or its execution would not have been possible at all.
3. In any event, within the order assignment strategy pursuant to article 50, subsection 1, paragraph c), intermediaries shall adopt measures to inhibit any reassignment of own transactions executed together with customer orders in a manner not beneficial to the customer.
4. This article shall also apply to intermediaries authorised to perform portfolio management.
Title V
INCENTIVES
Article 52
(Incentives)
1. In relation to the provision of an investment or accessory service to a customer, intermediaries may not pay or claim fees or commissions, or provide or receive non-monetary services, except:
a) fees, commissions or non-monetary services paid or provided to or from a customer or person acting on behalf of the customer;
b) fees, commissions or non-monetary services paid or provided to or from a third party or person acting on behalf of said third party, where the following conditions apply:
b1) the existence, nature and amount of any fees, commissions or services or, where such amount cannot be ascertained, the calculation method for said amount are communicated clearly to the customer, in a full, accurate and understandable manner, prior to provision of the investment or accessory service;
b2) payment of the fees or commissions or the provision of non-monetary services is required to increase the quality of the service provided to the customer and must not impede any intermediary obligation to serve the best interests of the customer;
c) adequate fees that make provision of the service possible or are necessary for such purpose, e.g. depository costs, regulatory and exchange commissions, compulsory withdrawals or legal expense, and which, by nature, cannot enter into conflict with the firm's duty to act in an honest, fair and professional manner in the best interests of their customers.
2. Pursuant to subsection 1, paragraph b), point b1), intermediaries may communicate the essential terms of agreements concluded with regard to fees, commissions or non-monetary services in summary format, providing further details on request from the customer.
Title VI
REPORTING AND REGISTRATION
Article 53
(Reporting on services other than portfolio management)
1. Customers shall receive statements from the intermediary of the services provided. Such statements shall include, where applicable, the costs of the transactions and services provided on their behalf.
2. For the provision of services involving the execution of orders, receipt and transmission of orders, or placement, including door-to-door selling:
a) intermediaries shall readily provide to the customer, in hard copy, essential information regarding execution of the order;
b) for a retail customer, intermediaries shall send a notice in hard copy to the customer, confirming execution of the order as soon as possible and no later than the first working day following execution or, if the investment firm receives confirmation from a third party, by the next working day after receipt of said third party confirmation at the latest.
3. The provisions of subsection 2b) shall not apply where such confirmation would contain the same information as another confirmation that must be readily sent to the retail customer by a different person.
4. In addition to the provisions of subsection 2, intermediaries shall provide the customer, on request, with information regarding the status of his order.
5. For retail customer orders relating to UCITS units or shares performed periodically, intermediaries shall abide by the provisions of subsection 2b), or provide the retail customer with information as indicated in subsection 6 at least once every six months.
6. The notice pursuant to subsection 2b) shall contain the following information, as applicable, also pursuant to annex I, table I of Regulation 1287/2006/CE:
a) identification details of the intermediary issuing the notice;
b) the name or other designation element of the customer;
c) the date of execution;
d) the time of execution;
e) the type of order (price-limited order, market price order or other specific type);
f) identification details of the execution venue;
g) identification details of the instrument;
h) the purchase/sale indicator;
i) the nature of the order, if not relating to a purchase/sale;
j) the quantity;
k) the unit price;
l) the total amount;
m) the sum total of commissions and costs applied and, if requested by the retail customer, the breakdown of said commissions and costs into individual items;
n) the customer liabilities with regard to regulation of the transaction, including the payment and delivery terms, together with significant account details, where such liabilities and details have not been previously notified to the customer;
o) whether the customer counterparty is the intermediary or other firm of the intermediary group or another customer of the intermediary, unless the order was executed through an anonymous trading system.
7. For the purposes of subsection 6k), if the order is executed in tranches, the intermediary may provide the customer with information on the price or average price of each tranche. Where the average price is provided, the intermediary shall inform the retail customer, on request, of the price of each tranche.
8. The intermediary may provide the customer with information pursuant to subsection 6 using standard codes, provided that an explanation of the codes used is supplied.
Article 54
(Reporting on portfolio management services)
1. Intermediaries providing portfolio management services shall issue customers with periodic statements, in hard copy, of the service provided unless such statements are issued by a different person.
2. The periodic statements pursuant to subsection 1 issued to retail customers shall include the following information, where relevant:
a) name of the intermediary;
b) the name or other designation element of the retail customer account;
c) the statement of content and assessment of the portfolio, including details relating to each financial instrument held, its market value or fair value if the market value is unavailable, the cash balance at the start and end of the statement period and the portfolio yield during the statement period;
d) the total amount of fees and charges applied during the statement period, with an indication of individual items at least with regard to the total management fees and total costs related to the execution, including, where relevant, a statement to the effect that a more detailed breakdown of the items shall be issued on request;
e) comparison of the yield for the statement period against the reference parameter as agreed between the intermediary and the customer;
f) the total amount of dividends, interest and other payments received during the statement period in relation to the customer portfolio;
g) information on other company events that confer rights with regard to financial instruments held in the portfolio;
h) for each transaction executed during the period, information pursuant to article 53, subsection 6, paragraphs c) to l), where applicable, unless the customer opts to receive such information each time a transaction is performed, in which case subsection 5 shall apply.
3. For retail customers, the periodic statements pursuant to subsection 1 shall be issued on a six-monthly basis except in the following cases:
a) if requested by the customer, the periodic statement is issued quarterly;
b) in cases where subsection 5 is applied, the periodic statement is in any event issued at least once every 12 months;
c) where the contract between the intermediary and retail customer authorises a portfolio characterised by a leverage effect, the periodic statement is issued at least once a month.
4. Intermediaries shall inform retail customers of their right to submit requests for the application of provisions indicated under subsection 3a). The periodic statement pursuant to subsection 3b) shall be issued on a six-monthly basis in relation to the portfolios involving transactions on financial instruments referred to in article 1, subsection 1-bis, paragraph c) or article 1,
subsection 3 of the Consolidated Law.
5. Where the customer receives information each time a transaction is executed, intermediaries shall readily issue the essential information in hard copy to that customer on execution of a transaction.
6. Where subsection 5 applies, if the customer concerned is a retail customer the intermediary shall issue a confirmation notice of the transaction containing information pursuant to article 53 subsection 6 by the first working day after execution at the latest or, if the intermediary receives such confirmation from a third party, at the latest the next working day after receipt of said
confirmation.
7. Subsection 6 shall not apply where such confirmation would contain the same information as another confirmation that must be readily sent to the retail customer by a different person.
Article 55
(Additional reporting obligations for portfolio management transactions or transactions with potential liabilities)
1. Intermediaries providing portfolio management services to retail customer, or manage retail customer accounts that include a negative position on transactions with potential liabilities, shall inform the customer of any loss that exceeds the pre-established threshold agreed between the intermediary and the customer, no later than the end of the working day on which said threshold was
exceeded or, if said threshold is exceeded on a non-working day, by the end of the next working day.
Article 56
(Reporting on customers’ financial instruments, cash and cash equivalents)
1. Intermediaries that hold financial instruments, cash or cash equivalents for customers shall issue to each customer, at least once a year, a statement in hard copy of such financial instruments, cash or cash equivalents.
2. The customer assets statement pursuant to subsection 1 shall include the following information:
a) details of all financial instruments, cash and cash equivalents held by the investment firm on behalf of the customer at the end of the statement period;
b) to what extent any customer financial instruments, cash or cash equivalents were subject to security-related financial transactions;
c) the extent of any benefits matured by the customer as a result of investment in security-related financial transactions and the basis on which such benefits matured.
In the case of unpaid transactions, the information pursuant to paragraph a) may be based on either the trading date or settlement date, provided the same base is applied to all information of this nature contained in the statement.
3. Intermediaries that hold financial instruments, cash or cash equivalents for customers and provide the customer with portfolio management services may include the statement pursuant to subsection 1 in the periodic statement issued pursuant to article 54, subsection 1.
Article 57
(Registration of telephone and electronic orders)
1. Intermediaries shall record telephone orders issued by customers on magnetic tape or equivalent media, and shall keep evidence of customer orders issued electronically.
TITLE VII
RELATIONS WITH QUALIFIED COUNTERPARTIES
Article 58
(Relations with qualified counterparties)
1. Qualified counterparties shall be those customers to whom order execution and/or own account trading and/or receipt and transmission of orders services are provided, defined as such in article 6, subsection 2-quater, paragraphs d1), d2), d3) and d5) of the Consolidated Law.
2. Also classed as qualified counterparties are companies pursuant to Annex 3, part I, paragraphs (1) and (2) not already indicated under subsection 1, to which the aforementioned services are provided, and companies classed as such pursuant to article 24, paragraph 3 of Directive 2004/39/EC, by the law of the home member state in which they are registered or are subject to identical terms
and conditions in the non-EU home state in which they are registered. From such counterparties the intermediaries shall obtain explicit confirmation, in general terms or in relation to each transaction, of their acceptance of treatment as qualified counterparties.
3. For the provision of investment services and related accessory services to qualified counterparties, the rules of conduct pursuant to articles 27 to 56 shall not apply, except for subsection 2 of article 49. The provisions of article 35 shall remain valid.
4. A classification as qualified counterparty shall not prejudice the right of the person to request, in general terms or for each individual transaction, to be treated as a professional customer or, on express request, as a retail customer. Said request is subject to the consent of the intermediary.
5. Where, for the purposes of subsection 4, a qualified counterparty expressly requests treatment as a retail customer, the provisions of the last three subsections of annex 3, part I relating to requests for treatment as a non-professional customer shall apply.
Title VIII
RELATIONS WITH MANAGERS OF MULTILATERAL TRADING FACILITIES AND INVESTORS
Article 59
(Relations with managers of multilateral trading facilities and investors)
1. In relations between intermediaries authorised to manage multilateral trading facilities and investors in said systems, the rules of conduct pursuant to articles 27 to 57 shall not apply.
PART III
STOCKBROKERS
Article 60
(Stockbrokers)
1. Stockbrokers shall be obliged to comply with this regulation.
Article 61
(Audit)
1. Where compatible and except for articles 156.5, 157, 158, 159.1, 159.2, 159.3, 159.4, 159.5, 159.7, 159.8, 165 and 165-bis, the provisions of part IV, title III, chapter II, section VI of the Consolidated Law and articles 145 and 145-bis of the enactment Regulation to Italian Legislative Decree no. 58 of 24 February 1998 on the rules of conduct for issuers shall apply to stockbrokers.
2. The independent auditors, other than the provisions of article 155, subsection 1 of the Consolidated Law, shall verify:
a) that the organisation and internal procedures guarantee observance of reporting obligations and the registration of orders and transactions executed on behalf of customers;
b) on at least a quarterly basis, that the consistency of individual customer positions and the separation of customer assets from stockbroker assets, also on the basis of statements issued by sub-depositories.
Article 62
(Appointment and cancellation of the assignment)
1. Appointment conferred upon the stockbroker shall have a duration of nine financial years and may not be renewed or conferred again until at least three years after the termination date of the previous appointment.
2. The stockbroker shall cancel the assignment in the event of just cause, at the same time arranging that appointment be conferred upon another independent auditing firm. A divergence of opinion with regard to accounting assessment or audit procedures shall not constitute just cause for cancellation. The independent auditors subject to cancellation of the assignment shall continue to
perform audit tasks until the newly conferred assignment becomes effective, i.e. until office is conferred by Consob.
3. Consob shall confer office upon the independent auditors and determine the fees if, after sixty days from expiry of the assignment or notice pursuant to article 163, subsection 5 of the Consolidated Law, the stockbroker has not arranged a new appointment. Consob shall issue resolution within forty-five days from expiry of the aforementioned deadline.
Article 63
(Notices to Supervisory Authorities)
1. The stockbroker shall inform Consob and the Bank of Italy that appointment has been conferred, the content of the agreement and the reasons for any cancellation.
2. Without delay, the independent auditors shall:
a) send their report on the financial statements to Consob and the Bank of Italy;
b) inform said Authorities of any irregularities encountered during audit pursuant to article 61, subsection 2.
BOOK IV
PROVISION OF COLLECTIVE ASSET MANAGEMENT SERVICES AND UCITS MARKETING
Part I
PRELIMINARY PROVISIONS
Article 64
(Definitions)
1. In this Book:
a) "ministerial regulation" shall mean the regulation defined under article 37 of the Consolidated Law;
b) "collective asset management service" shall mean the service as defined under article 1, subsection 1, paragraphs n1) and n2) of the Consolidated Law;
c) "closed-end fund" shall mean the mutual investment fund for which right of redemption is recognised to investors only on pre-established maturity dates and is not reserved for institutional investors under the terms of the ministerial regulation;
d) "investor" shall mean a natural or legal person to whom collective asset management services are offered or provided;
e) "retail investor" shall mean an investor that does not meet the requirements of private professional customer pursuant to Annex 3 attached, or of public professional customer pursuant to regulations issued by the Minister for the Economy and Finance pursuant to article 6, subsection 2-sexies of the Consolidated Law; Investors recognised by the asset management company and SICAV
as qualified operators pursuant to the previous measures, based on parameters similar to those of Annex 3, section II to this regulation and to the regulation issued by the Minister for Economy and Finance pursuant to article 6, subsection 2-sexies of the Consolidated Law, may continue to be considered as investors other than retail investors.
Part II
TRANSPARENCY AND CORRECTNESS IN THE PROVISION OF COLLECTIVE ASSET MANAGEMENT SERVICES
Title I
PROVISION OF SERVICES
Article 65
(General rules of conduct)
1. Where collective asset management services are provided, asset management companies and SICAVs shall:
a) operate with due diligence, accuracy and transparency in the interests of UCITS investors and market integrity;
b) ensure that management activities are performed independently, in compliance with the objectives, investment policy and specific risks of the UCITS, as indicated in the prospectus or, if no prospectus is issued, in the management regulations or articles of association of the UCITS;
c) acquire adequate knowledge of the financial instruments, assets and other securities in which investment of the managed assets and their liquidability conditions is possible;
d) abstain from conduct that could benefit managed assets to the detriment of a third party or customer;
e) operate with a view to limiting costs charged to the managed UCITS.
Article 66
(Provision of collective asset management services)
1. For the purposes of art. 65 and for each UCITS managed, asset management companies and SICAVs shall:
a) acquire the information necessary to formulate forecasts and perform analyses;
b) consequently define general investment strategies;
c) arrange execution of the transactions based on the general investment strategies;
d) monitor the consistency of the managed portfolio against general investment strategies and related risks.
2. For each UCITS managed, the asset management companies and SICAVs shall retain documentation on the provision of asset management services, containing the strategies defined and the analyses and monitoring performed.
Article 67
(Special provisions regarding closed-end funds)
1. For each closed-end fund managed, the asset management companies shall:
a) define and update an asset, economic and financial plan consistent with the duration of the fund and market conditions.
b) seek and select possible transactions consistent with the plan referred to under paragraph a);
c) assess the selected transactions in consideration of opportunities and overall related risks;
d) perform any due diligence activities related to the transactions prior to arranging execution;
e) monitor the management performance of the fund with respect to the plan referred to in paragraph a).
2. For each closed-end fund managed, the asset management companies shall retain documentation on the activities performed pursuant to subsection 1.
Title II
BEST EXECUTION
Chapter I
Execution of orders on behalf of UCITS
Article 68
(Measures for the execution of orders on financial instruments under the best conditions for the UCITS)
1. Asset management companies and SICAVs shall adopt all reasonable measures and implement effective mechanisms to achieve, where orders on financial instruments on behalf of managed UCITS are to be executed, the best possible result with regard to the price, cost, speed and probability of execution and settlement, to the size and nature of the order, or any other consideration relevant to
its execution.
2. In order to establish the relative importance of factors pursuant to subsection 1, asset management companies and SICAVs shall take the following criteria into account:
a) the objectives, investment policy and risks specific to the UCITS, as indicated in the prospectus, or if no prospectus is issued, in the management regulations or articles of association of the UCITS;
b) the order characteristics;
c) the characteristics of financial instruments involved in the order and their liquidability conditions;
d) characteristics of the execution venues to which the order may be addressed.
3. With regard to subsections 1 and 2, asset management companies and SICAVs shall adopt an order execution strategy that:
a) for each instrument category, identifies at least the execution venues that in the long-term offer the best possible result in relation to the execution of orders;
b) steers the decision towards an execution venue identified under paragraph a).
4. The asset management companies and SICAVS shall provide appropriate information to investors on the order execution strategy adopted pursuant to subsection 3.
Article 69
(Verification and updating of execution measures and strategy)
1. The asset management companies and SICAVs shall monitor the efficacy of their order execution measures on financial instruments and their execution strategy in order to identify and, if necessary, correct any failings.
2. Asset management companies and SICAVs shall review the execution measures and strategy at least on an annual basis, and at the time of occurrence of significant circumstances that could influence the ability to achieve the best long-term results possible in the execution of orders on financial instruments through venues included in the execution strategy.
Chapter II
Transmission of orders on behalf of UCITS
Article 70
(Measurements for the transmission of orders on financial instruments under the best conditions for the UCITS)
1. In the provision of collective asset management and SICAV services involving the receipt and transmission of orders on financial instruments on behalf of the managed UCITS, all reasonable measures shall be adopted to achieve the best possible results for their managed UCITS, taking into account the factors and criteria referred to under article 68, subsections 1 and 2.
2. For the purposes of subsection 1, the asset management companies and SICAVs shall also establish a transmission strategy which, for each financial instrument category, identifies the persons to whom the orders shall be transmitted in accordance with the execution strategies adopted by the latter.
3. The asset management companies and SICAVS shall provide appropriate information to investors on the order transmission strategy adopted pursuant to this subsection.
4. Asset management companies and SICAVs shall monitor the efficacy of the strategy referred to under subsection 2, and in particular the quality of execution by the persons identified for order execution purposes, and if necessary remedy any failings.
5. Asset management companies and SICAVs shall review the transmission measures and strategies at least once a year and, in any event, should significant circumstances arise that could influence the continued achievement of the best possible result for the managed UCITS.
Title III
UCITS order management
Article 71
(General principles)
1. Where orders on behalf of managed UCITS are executed or transmitted, asset management companies and SICAVs shall apply measures to ensure the rapid, correct and effective treatment of such orders with respect to orders from other customers, UCITS or the company.
2. For the purposes of subsection 1, asset management companies and SICAVs shall:
a) guarantee that orders executed on behalf of UCITS are readily and accurately recorded and allocated;
b) handle equivalent UCITS orders progressively and readily unless the order characteristics or prevailing market conditions render such action impossible or the interests of the UCITS call for a different procedure;
3. Asset management companies and SICAVs shall adopt reasonable measures to ensure that the UCITS financial instruments or sums of money, received in settlement of the executed order, are readily and correctly transferred to the reference UCITS account.
4. Asset management companies and SICAVs shall not make improper use of information relating to UCITS orders pending execution and shall take all reasonable measures to inhibit the improper use of such information by any relevant party as defined by the regulation adopted pursuant to article 6, subsection 2-bis of the Consolidated Law.
Article 72
(Pooling and assignment)
1. Asset management companies and SICAVs shall not handle orders on financial instruments for a customer or UCITS pooled with the order of another UCITS unless the following conditions are satisfied:
a) the risk that pooling of the orders and transactions is detrimental to any one of the UCITS or customers whose orders are included in the pool is minimised;
b) an order assignment strategy shall be established and applied in which sufficiently precise terms are envisaged for the correct division of pooled orders and transactions. The strategy shall govern the manner in which the volume and price of orders determines the assignment and handling of partial executions.
2. In the case of partial execution of pooled orders, the asset management companies and SICAVs shall distribute the related transactions evenly according to their own order assignment strategy.
Title IV
INCENTIVES
Article 73
(Incentives regarding collective asset management services)
1. In relation to the provision of collective asset management services, asset management companies and SICAVs may not pay or claim fees or commissions, or provide or receive non-monetary services, except:
a) fees, commissions or non-monetary services paid or provided to or from an investor or person acting on behalf of the investor;
b) fees, commissions or non-monetary services paid or provided to or from a third party or person acting on behalf of said third party, where the following conditions apply:
b1) the existence, nature and amount of any fees, commissions or services or, where such amount cannot be ascertained, the calculation method for said amount are communicated clearly to the investor, in a full, accurate and understandable manner, prior to provision of the service;
b2) payment of the fees or commissions or the provision of non-monetary services is required to increase the quality of the collective asset management service and must not impede any company obligation to serve the best interests of the UCITS;
c) adequate fees that make provision of the management service possible or are necessary for such purpose, e.g. depository costs, regulatory and exchange commissions, compulsory withdrawals or legal expense, and which, by nature, cannot enter into conflict with the company's duty to act in an honest, fair and professional manner in the best interests of the UCITS.
2. Pursuant to subsection 1b), asset management companies and SICAVs may communicate the essential terms of agreements concluded with regard to fees, commissions or non-monetary services in summary format, providing further details on request from the investor.
Title V
REPORTING AND REGISTRATION
Article 74
(Information on transactions executed)
1. Asset management companies and SICAVs that execute an order on behalf of an investor shall:
a) readily provide to the investor, in hard copy, essential information regarding execution of the order;
b) in the case of a retail investor, issue notice to said investor, in hard copy, as soon as possible and in any event no later than the first working day after execution, to confirm execution of the order.
2. The notice pursuant to subsection 1b) shall contain the following information:
a) identification details of the asset management company or SICAV;
b) the name or other designation element of the investor;
c) the date and time of receipt of the order and method of payment;
d) the date of execution;
e) identification details of the UCITS;
f) the nature of the order (subscription, redemption, switch);
g) the number of UCITS units or shares assigned;
h) the unit value at which the units or shares were subscribed or redeemed, and the reference value date;
i) the total amount;
j) the sum total of commissions and costs applied and the breakdown of said commissions and costs into individual items;
k) the investor liabilities with regard to settlement of the transaction, including the payment and delivery terms, together with significant account details, where such liabilities and details have not been previously notified to the investor;
3. Subsection 3b) shall not apply where such information on transactions executed would contain the same information as another confirmation that must be readily sent to the retail investor by a different person.
4. The asset management companies and SICAVs may provide the investor with information pursuant to subsection 1 using standard codes, provided that an explanation of the codes used is supplied.
5. On request from the investor, the asset management companies and SICAVs shall provide information regarding the status of his order.
6. Where orders are executed periodically on behalf of a retail investor, asset management companies and SICAVs may, as an alternative to the provisions of subsection 1b), provide the information referred to in subsection 2 at least every six months.
Article 75
(Periodic reporting)
1. Asset management companies and SICAVs shall:
a) in the places and by the methods indicated in the management regulations and, where applicable, the prospectus, make periodic UCITS prospectuses and percentage yield data for the reference period available to investors;
b) on publication of the periodic prospectuses referred to in paragraph a) above, make the UCITS portfolio composition as offered to the public available to investors, indicating in decreasing order at least the first fifty assets as required under the ministerial regulation and all those that exceed 0.5% of assets;
c) on a six-monthly basis, on request from investors that have not collected the certificates, issue in hard copy a summary prospectus indicating the number of relevant UCITS units or shares and their opening and closing values for the reference period, together with any subscriptions, disinvestments and unit proceeds assigned. The prospectus shall be issued to the home address of the
investor or, with their consent, made available by other means.
2. UCITS percentage yield data that is in any event disclosed to asset management companies and SICAVs shall always be compared with that of the objective reference parameter, if any, or accompanied by the level of risk borne, comparing this with the level of risk indicated in the prospectus.
Article 76
(Registration of telephone and electronic orders)
1. Asset management companies and SICAVs shall record telephone orders issued by investors on magnetic tape or equivalent media, and shall keep evidence of investor orders issued electronically.
PART III
TRANSPARENCY AND CORRECTNESS IN UCITS MARKETING
Article 77
(UCITS marketing)
1. Asset management companies that market UCITS units or shares shall observe the principles and general rules of the Consolidated Law on the distribution of financial instruments.
2. Asset management companies that market UCITS units or shares shall apply the provisions of articles 26, 27, 28, 29.1, 30, 31, 32, 33, 34, 35, 36, 37, 41, 42, 49.1, 49.3, 49.5, 52, 53 and 57 of this regulation.
3. The provisions of subsections 1 and 2 shall also apply to SICAVS that market their own shares.
BOOK V
DOOR-TO-DOOR SELLING / DISTANCE MARKETING AND PLACEMENT
Part I
DOOR-TO-DOOR SELLING
Article 78
(Door-to-door selling)
1. For the door-to-door selling of financial instruments, investment services and activities, and financial products governed by article 30 of the Consolidated Law, investment firms, banks, financial intermediaries registered on the list pursuant to article 107 of Italian Legislative Decree 385 of 1 September 1993, asset management companies, harmonised management companies, SICAVs and
Poste Italiane (BancoPosta Services Division) authorised pursuant to article 2 of Italian Presidential Decree 144 of 14 March 2001, in direct relations with customers shall make use of approved persons in fulfilment of the provisions of Book III.
2. For the door-to-door selling of UCITS units or shares, the asset management companies and SICAVs shall observe the limits and provisions of article 77.
3. The provisions of subsection 1 shall also apply to the door-to-door selling of accessory services and open-end pension funds by investment firms.
Part II
DISTANCE MARKETING AND PLACEMENT
Article 79
(Persons)
1. EU investment firms with branches in Italy, non-EU investment firms, Italian and non-EU banks, EU banks with branches in Italy and Poste Italiane (BancoPosta Services Division) with authorisation pursuant to article 2 of Italian Presidential Decree 144 of 14 March 2001, all authorised pursuant to article 1, subsection 5, paragraph c) or c-bis) of the Consolidated Law, together with
financial intermediaries registered on the list pursuant to article 107 of Italian Legislative Decree 385 of 1 September 1993 and authorised to provide the same services, may organise the advertising and placement through distance communication techniques of financial products and investment services and activities provided by other intermediaries.
2. Italian investment firms, EU investment firms with branches in Italy and non-EU investment firms may organise advertising and placement through distance communications techniques also for products and services pursuant to article 78, subsection 3.
3. Asset management companies and SICAVs may organise advertising and placement through distance communications techniques of UCITS units and shares to the extent permitted under article 77.
4. Harmonised management companies may organise advertising and placement through distance communications techniques only with respect to UCITS units or shares.
5. Italian investment firms, Italian banks authorised to provide investment services, financial intermediaries registered in the list pursuant to article 1, subsection 5, paragraph a) of the Consolidated Law and limited to derivatives only, in cases and according to terms established under article 18, subsection 3 of the Consolidated Law, asset management companies, harmonised management
companies, stockbrokers, Poste Italiane (BancoPosta Services Division) authorised pursuant to article 2 of Italian Presidential Decree 144 of 14 March 2001, non-EU investment firms and banks, together with EU investment firms and banks with branches in Italy and in any event authorised to provide investment services and activities in Italy, may organise advertising and placement through
distance communications techniques of their own investment services and activities.
6. Activities performed on behalf of professional customers pursuant to article 26, subsection 1, paragraph d) shall not constitute advertising and placement through distance communications techniques.
Article 80
(Limits to the use of distance communications techniques)
1. Advertising and placement through distance communications techniques shall not be performed and, if undertaken must be ceased immediately, with respect to customers explicitly objecting to their execution and continuation. For this purpose, the customer's option to object to the future receipt of such communications shall be expressly indicated.
Article 81
(Execution)
1. For advertising and placement through distance communications techniques, persons authorised pursuant to art. 79 shall observe the provisions of Book III.
2. For advertising and placement through distance communications techniques of UCITS units and shares, asset management companies and SICAVs shall abide by the provisions of article 77 of this Regulation.
PART III
MARKETING OF THIRD PARTY INVESTMENT SERVICES
Article 82
(Door-to-door selling and distance marketing and placement of third party investment services)
1. For door-to-door selling and distance marketing and placement of third party investment services, the intermediaries concerned shall make arrangements in a manner that observes the rules of conduct applicable to the service marketed.
2. For door-to-door selling and distance marketing and placement of third party investment services, the intermediary shall be liable for the completeness and accuracy of information transmitted to the person providing the service. An intermediary providing such service shall be liable for such provision on the basis of the information transmitted.
BOOK VI
DISTRIBUTION OF FINANCIAL PRODUCTS ISSUED BY BANKS AND INSURANCE COMPANIES
Article 83
(Definitions)
1. In this Book:
a) "financial insurance products" shall mean the life insurance III and V policies and transactions pursuant to article 2, subsection 1 of Italian Legislative Decree 209 of 7 September 2005, excluding individual pension plans pursuant to article 13, subsection 1, paragraph b) of Italian Legislative Decree 252 of 5 December 2005;
b) "persons authorised as insurance intermediaries" shall mean Italian and EU investment firms, Italian and EU banks, financial intermediaries registered on the list pursuant to article 107 of Italian Legislative Decree 385 of 1 September 1993 and Poste Italiane (BancoPosta Services Division) with authorisation pursuant to article 2 of Italian Presidential Decree 144 of 14 March
2001, also if operating through approved persons, employees, collaborators or other approved persons.
Article 84
(Distribution of financial products issued by banks)
1. Banks shall observe the provisions of 27, 28, 29.1, 30, 31, 32, 34, 35, 36, 39, 40, 41, 42, 49, 50, 51, 52, 53, 55, 57, 78, 80, 113.2, 113.3 and 113.4 of this Regulation, together with the joint Consob-Bank of Italy Regulation with regard to paragraphs d), e), i), j), l), m) and n) of article 6, subsection 2-bis of the Consolidated Law, even in relation to the sale at issue stage of its
own financial products.
2. Subsection 1 shall also apply to sales performed by distance communications techniques.
Article 85
(Persons authorised to act as insurance intermediaries)
1. For the distribution of financial insurance products, also by distance communication techniques, persons authorised to act as insurance intermediaries shall observe the provisions of 27, 28, 29.1, 30, 31, 32, 33, 34, 35, 36, 37, 39, 40, 41, 42, 49.1, 50, 51, 52, 53, 57, 78, 80, 113.2, 113.3 and 113.4 of this Regulation, together with the joint Consob-Bank of Italy Regulation with regard
to paragraphs d), e), i), j), l), m) and n) of article 6, subsection 2-bis of the Consolidated Law.
2. Persons authorised to act as insurance intermediaries, without prejudice to the provisions of the previous subsection, prior to underwriting of the proposal or contractual document, shall provide the contracting party with the following information:
a) their name, registered office and address;
b) reference to the insurance intermediaries register in which they are registered, pursuant to article 109 of Italian Legislative Decree 209 of 7 September 2005, and an instructions on how the actual registration may be verified;
c) the procedures which permit the contracting party to make a complaint against the person authorised to act as an insurance intermediary or the insurance company, or to make an out-of-court claim for the resolution of any dispute;
d) any direct or indirect investment exceeding 10% of the share capital or voting rights in an insurance firm;
e) any direct or indirect investment exceeding 10% of the share capital or voting rights of the person authorised to act as insurance intermediary in an insurance firm;
f) with regard to the proposed financial insurance product:
1) where consultancy is provided based on impartial analysis. In such circumstances, persons authorised to act as insurance intermediaries shall base their assessments on a sufficiently wide range of contracts available on the market in order to recommend a product that meets the requirements of the contracting party.
2) and, under contractual obligation, proposes contracts exclusively for one or more insurance companies, in such cases specifying the name of said companies;
3) where not obliged to propose contracts exclusively for one or more insurance companies and does not provide consultancy based on said obligation, pursuant to point 1) above, the person shall provide an impartial analysis. In this case and on request from the contracting party, the person shall communicate the name of the insurance companies with whom he has existing or potential working
relations, without prejudice to the obligation to inform the contracting party of his right to request such information.
3. Prior to the conclusion of any contract involving financial insurance products, persons authorised to act as insurance intermediaries, based particularly on information provided by the contracting party, must at least specify the requirements and needs of said contracting party and the rationale upon which his consultancy is based on a certain product of that type. Such specifications
shall be illustrated differently according to the complexity of the insurance contract proposed.
4. Persons authorised to act as insurance intermediaries shall abide by instructions issued by the insurance companies for which he operates.
Article 86
(Notification method)
1. Information to be provided to contracting parties pursuant to article 85 must be communicated:
a) in a correct, complete and easily understandable manner;
b) in Italian or other language agreed between the parties.
2. Information to be provided to contracting parties pursuant to article 85, subsections 2 and 3 must be issued in printed format or other hard copy format available to and accessible by the contracting party. Said information may nevertheless be explained verbally if the risk must be covered immediately or should the contracting party so request. In such cases, persons authorised to act as
insurance intermediaries shall arrange for the information to be provided in printed or other hard copy format immediately after conclusion of the contract, and in any event no more than two working days later.
Article 87
(Insurance companies)
1. For the distribution of financial insurance products, also by distance communication techniques, performed by insurance companies, the provisions of 27, 28, 29.1 except paragraph g), 31, 32, 33, 34, 35, 36, 39, 40, 41, 42, 49.1, 50, 51, 52, 53, 57, 80, 113.2, 113.3 and 113.4 of this Regulation shall be observed, together with the joint Consob-Bank of Italy Regulation with regard to
paragraphs d), e), i), j), l), m) and n) of article 6, subsection 2-bis of the Consolidated Law.
2. Information to be provided to contracting parties pursuant to the above subsection must be communicated:
a) in a correct, complete and easily understandable manner;
b) in Italian or other language agreed between the parties;
c) on printed or other hard copy format available to and accessible by the contracting party.
Said information may nevertheless be explained verbally if the risk must be covered immediately or should the contracting party so request. In such cases, the insurance companies shall arrange for the information to be provided in printed or other hard copy format immediately after conclusion of the contract, and in any event no more than two working days later.
3. The insurance companies shall adopt appropriate procedures to guarantee adequate instruction, professional training and observance of the rules of conduct pursuant to subsection 1, also where operations are through a distribution network, and monitor the actual observance thereof.
Article 88
(Distribution of bank products, insurance products and investment services)
1. Intermediaries providing distribution services in relation to financial products issued by banks and/or insurance companies governed by this Book, or the placement of financial instruments and/or investment consultancy, shall consider only relations with customers for the purpose of observing applicable rules of conduct in a standardised, coordinated manner.
BOOK VII
PROVISIONS ON ETHICAL OR SOCIALLY RESPONSIBLE FINANCING
Article 89
(Notification obligations)
1. Without prejudice to current law, for a prospectus drafted according to the models in Annex 1B of the regulation adopted by Resolution no. 11971 of 14 May 1999 and later amendments and for contracts pursuant to article 37 of this regulation in relation to products and services classed as "ethical" or "socially responsible", authorised persons and insurance companies
shall provide the following information:
a) the objectives and characteristics in relation to which the product or service is classified as ethical or socially responsible;
b) the general criteria for selection of the financial instruments based on the objectives and characteristics referred to under paragraph a);
c) policies and objectives that may be pursued in the exercise of voting rights in relation to the financial instruments held in portfolio;
d) any destination for initiatives of a social or environmental nature of income generated from the products offered and services provided, and their related extent;
e) any procedures adopted to guarantee pursuance of objectives referred to in paragraph a), including the existence of specialist organisations established among the authorised persons and insurance companies, and their related functions;
f) adoption of codes of self-conduct promoted by specialist persons.
2. A summary illustration of the information pursuant to subsection 1 must be made available on the Internet web site of authorised persons and insurance companies.
Article 90
(Reporting obligations)
1. Without prejudice to the provisions of current law, at least in the final report for the financial year in relation to products and services qualifying as "ethical" or "socially responsible", authorised persons and insurance companies shall issue the following in reference to the previous twelve months:
a) an illustration of the management activities in relation to the general selection criteria for financial instruments identified pursuant to article 89, subsection 1b);
c) information regarding the exercise of voting rights in relation to the financial instruments held in portfolio;
d) information regarding the destination for initiatives of a social or environmental nature of income generated from the products offered and services provided, and their related extent;
2. Information pursuant to subsection 1 must be made available in summary format on the Internet web site of authorised persons and insurance companies.
BOOK VIII
REGISTER AND APPROVED PERSON ACTIVITIES
Part I
PRELIMINARY PROVISIONS
Article 91
(Definitions)
1. In this Book:
a) "ministerial regulation" shall mean the regulation adopted by the Minister for the Economy and Finance in accordance with article 31, subsection 5 of the Consolidated Law;
b) "Competent authority" shall mean the authority defined under article 31, subsection 4 of the Consolidated Law;
c) "Register" shall mean the consolidated register of approved persons established under article 31, subsection 4 of the Consolidated Law;
d) "approved person" shall mean the approved person entered on the register established under article 31, subsection 4 of the Consolidated Law;
e) "territorial sections" shall mean the sections of the register indicated in article 98;
f) "authorised persons" shall mean the persons making use of duly approved persons pursuant to part II, title II, chapter IV of the Consolidated Law and related provisions;
g) "evaluation tests" shall mean the evaluation tests defined under article 31, subsection 5 of the Consolidated Law;
h) "supervision contribution" shall mean the contribution pursuant to the enactment measures of article 40, Italian Law no. 724 of 23 December 1994;
i) "fee due to the Competent Authority" shall mean the contribution defined under article 31, subsection 4 of the Consolidated Law.
Part II
COMPETENT AUTHORITY
Article 92
(Keeping of the register)
1. For the keeping of the register, the Competent Authority shall:
a) arrange the entry, subject to confirmation of the prescribed requirements, denial of entry where said requirements are not met and cancellation from the register, informing the interested parties, and amendments to the data contained in the register.
b) issue register entry and cancellation certificates;
c) perform all other activities necessary for the purpose of register entries, including the launch and organisation of the evaluation tests;
d) prepare and make public the procedures adopted to guarantee the efficient performance of duties, indicating, inter alia, the terms for Authority proceedings;
e) perform timely updating of the register based on measures adopted against approved persons by legal authorities, Consob and the Competent Authority;
f) monitor the continuation of prescribed requirements for entry in the register.
Article 93
(Consob supervision)
1. Consob may request reports from the Competent Authority, also on a periodic basis, containing data and information and the transmission of documents by methods and terms specified by Consob.
2. Where function or continued activities are impossible and in compliance with special statutory provisions, Consob may temporarily replace Competent Authority bodies with a Commissioner The fee payable to the commissioner shall be determined by Consob and shall be paid by the Competent Authority.
Article 94
(Information between Consob and the Competent Authority)
1. Consob and the Competent Authority shall exchange information to facilitate their respective duties.
2. In order to guarantee a more rapid and effective exchange of information, Consob and the Competent Authority shall use a single information system in completing their respective tasks. The usage and access methods for data contained on said system shall be established by Consob, in compliance with the provisions of article 4, subsection 10 of the Consolidated Law, by means of a special
operating manual.
3. Should the Competent Authority become aware of significant circumstances for the purpose of supervision of approved persons, Consob shall be informed immediately. Where cases are relevant to the application of article 55, subsection 2 of the Consolidated Law, the Competent Authority shall first verify available information with the legal authorities, obtaining appropriate documentation
for transmission without delay to Consob.
Article 95
(Handling of complaints against Competent Authority measures)
1. The interested party may file a complaint with Consob against measures adopted by the competent authority within thirty days of receipt of the notice. If the case involves an irregularity that can be remedied, Consob will assign a deadline to the plaintiff by which the remedy must be implemented and, should the plaintiff fail to comply, Consob shall declare the complaint to be
inadmissible. Consob shall formulate its own observations within sixty days of receipt of the complaint .
2. Where a complaint is not clearly without grounds, Consob shall inform the interested party and the Competent Authority, and commence examination of the circumstances of the complaint. On completion of investigations, subject to the assessment of any observations submitted by the Competent Authority regarding the content of the complaint, Consob shall inform the interested party and the
Competent Authority of its considerations.
Article 96
(Representation requirements for professional associations of approved persons)
1. The representation requirements of professional associations of approved persons and persons authorised pursuant to article 31, subsection 4 of the Consolidated Law are specified below.
2. Approved person associations:
a) must be established by public deed or authenticated simple agreement, be in operation for at least three years and have as its main purpose the protection of the professional interests of its members;
b) must have a membership comprising only approved persons duly entered on the register;
c) must have a number of members totalling not less than ten per cent of the number of approved persons entered on the register as at 31 December of the year of reference, and a national network covering at least ten Italian regions. Said regions shall be considered as inclusive of independent provinces.
3. Authorised person associations:
a) must be established by public deed or authenticated simple agreement, be in operation for at least three years and have as its main purpose the protection of the professional interests of its members;
b) must have a membership including authorised persons, all of whom make use of approved persons in a percentage of not less than ten per cent of the number of approved persons entered on the register as at 31 December of the year of reference.
PART III
REGISTER REGULATIONS
Article 97
(Consolidated register of approved persons)
1. Natural persons entered on the register shall possess the requirements indicated in article 99.
2. For each person entered, the register shall indicate:
a) name and surname;
b) place and date of birth;
c) place of residence and related address or, if resident outside Italy, the elected domicile in Italy and place of residence abroad, with related addresses;
d) date of inclusion on the register
e) for operative approved persons, the name of the authorized intermediary on whose behalf the approved person works ;
f) any existing precautionary measures or sanctions against the approved person and all other measures with an impact on the exercise of activities by the approved person.
3. The updated register shall be made available to the public by the Competent Authority using methods appropriate to guaranteeing maximum circulation, also through the Internet.
4. Consob shall immediately inform the Competent Authority, for implementation of action as required, of measures adopted and notified to the approved persons.
Article 98
(Territorial sections)
1. The register shall be divided into territorial sections corresponding to the territorial sections of the Competent Authority.
2. The territorial sections of the register shall be identified by the Competent Authority as no less than two, and in compliance with the principle of essential standardisation of said sections with reference to the number and geographic distribution of the persons entered .
Article 99
(Entry requirements)
1. For admission to the register, the following conditions must be met:
a) possession of integrity requirements as prescribed by the ministerial regulation and not in any situation of impediment in accordance with said regulation;
b) possess at least the minimum educational qualifications prescribed by the ministerial regulation;
c) have passed the evaluation test pursuant to article 100 of these regulations, or pursuant to regulations in force at the time the test is taken, or possess those professional requirements established by the Organisation on the basis of evaluation criteria identified by the ministerial regulation .
Article 100
(Evaluation test)
1. The evaluation test, of a theoretical and practical nature, shall be implemented on at least an annual basis by the Competent Authority according to the provisions published in the Italian Gazzetta Ufficiale and in the Consob Bollettino. The evaluation test must allow verification of the actual possession by candidates of the skills necessary to perform the activities of an approved
person.
2. The evaluation test shall be based on the following subjects: financial market law, governance of the activities of an approved person, financial mathematics and financial market economics, private and tax law with regard to the financial market.
3. The test shall be organised and assessed by the Competent Authority, for which purpose the Authority makes use of examining boards composed of members with proven professional skills and against whom there is no cause of incompatibility as established by the Competent Authority. Each examining board shall be composed of at least three members. In any event the majority of members of the
board shall be represented by persons not included in the register of approved persons or employees of authorised entities .
4. The Competent Authority shall establish the dates, venues and test performance methods, publishing such elements and all other information relevant to the evaluation test.
5. In order to participate in the evaluation test, the candidate must have the minimum education requirements as established by the ministerial regulation.
Article 101
(Inclusion on the register)
1. Subject to verification of the candidate’s possession of all prescribed requirements, the Competent Authority shall proceed to inclusion of the candidate in the register, indicating the elements pursuant to article 97, subsection 2.
2. The ruling on inclusion in the register shall be adopted by the deadline established in regulations issued by the competent authority. If by that date no ruling has been adopted, the application for entry shall be considered approved .
3. The application shall take effect from the date of submission, or, in the case of incompletion or irregularities, from the date of completion or correction.
4. The registration procedure can be suspended following a request to do so from Consob to the Authority, for the period necessary to conduct the investigations established by Consob with regard to the party concerned The competent authority shall inform the interested party of the start and end date of the suspension .
Article 102
(Cancellation from the register)
1. The Competent Authority shall cancel an approved person from the register in the following instances:
a) at the request of the interested party;
b) the loss of one or more requirements for inclusion on the register pursuant to article 99, paragraph a);
c) failure to pay the supervisory contribution;
d) failure to pay the Competent Authority contribution;
e) demise .
1-bis. The application for cancellation shall take effect from the date of submission, or, in the case of incompletion or irregularities, from the date of completion or correction .
2. The Competent Authority shall proceed to cancellation pursuant to subsection 1, paragraphs a), b) d) and e) subject to confirmation of the existence of relevant grounds .
2-bis. Where Consob ascertains failure to pay the supervisory contribution pursuant to subsection 1, paragraph c) and informs the competent authority, the authority shall arrange immediate cancellation .
2-ter. Disqualification as resolved by Consob shall result in immediate cancellation from the register .
3. The assumptions pursuant to subsection 1, paragraphs c) and d) shall be made after forty-five consecutive calendar days from expiry of the deadline established for payment of the contribution.
4. Approved persons cancelled from the register pursuant to subsection 1 may again be included on the register provided that:
a) in cases pursuant to subsection 1, paragraphs b), c) and d), the persons again possess the requirements specified in article 99, paragraph a), or have paid any contributions due;
b) in cases pursuant to subsection 2-ter, five years have passed since the date of issue of the disqualification notice .
5. The cancellation procedure as envisaged in subsection 1, paragraphs a), b), c) and d), can be suspended, following a request to do so from Consob to the Authority, for the period necessary to conduct the verification or investigations arranged by Consob in relation to the interested party. The cancellation period shall be suspended for the validity period of any precautionary
measures adopted pursuant to article 55, subsection 1 of the Consolidated Law on Finance and suspension from the register pursuant to article 196, subsection 1, paragraph c) of said law. The Authority shall inform the interested party of the start and end date of the suspension .
6. Cancellation from the register shall not prejudice the application of sanctions under the terms of article 196, subsection 1 of the Consolidated Law on Finance .
Article 103
(Approved person obligations to the Competent Authority )
1. Approved persons shall inform the Competent Authority without delay of:
a) the documentation archive location pursuant to article 109;
b) any change in the information elements pursuant to the paragraph a) and to article 97, subsection 2, paragraph c) .
2. …omissis… .
3. In the exercise of its duties, the Competent Authority may request data and information and the transmission of documents.
Article 103-bis
(Authorised person obligations to the Competent Authority)
1. Authorised persons shall inform the competent authority of the loss of requisites required for inclusion in the register by any approved person operating on their behalf.
2. Authorised persons shall provide the competent authority with the names of approved persons with whom they have established or ceased relations on an employment contract, agency agreement or under mandate in the previous month.
3. …omissis… .
4. Authorised persons shall cooperate with the competent authority for the purpose of ascertaining the integrity and professionalism requisites of registration applicants and for approved persons included in the register .
PART IV
APPROVED PERSON ACTIVITIES
Article 104
(Framework of activities)
1. Approved persons shall perform their duties and fulfil obligations assumed pursuant to the measures governing activities of the authorised persons, based on and limited to the assignment conferred.
Article 105
(Professional training methods)
1. Approved persons shall undertake professional training through participation in periodic courses, on completion of which an attendance certificate shall be issued. For this purpose, authorised persons shall adopt appropriate procedures to guarantee adequate instruction and professional training of approved persons operating on their behalf.
Article 106
(Incompatibility)
1. An approved person shall be incompatible:
a) with the role of auditor or assistant auditor pursuant to article 2403-bis of the Italian Civil code, or internal audit manager or assistant of an authorised person;
b) with the role of director, employee or collaborator of an authorised person not pertaining to the group on behalf of which he operates as approved person;
c) with the role of shareholder, director, auditor or employee of the independent auditors appointed to certify financial statements of the authorised person on behalf of whom the approved person operates;
d) with entry in the consolidated register of stockbrokers;
d-bis) with the exercise of financial advisory activities pursuant to article 18-bis of the Consolidated Law on Finance ;
e) with any other role or activity that would be in serious conflict with his orderly performance.
Article 107
(General rules of conduct)
1. Financial salesmen shall act with diligence, correctness and transparency. They must comply with legal and regulatory provisions regarding their activities and the category of the licensed party for which they operate. They must also comply with the procedures of the licensed party from which their assignment was received .
2. Approved persons shall maintain strict confidentiality in relation to information obtained from customers or potential customers or other persons in relation to their activities, except with regard to the person on whose behalf the approved person operates and the person whose investment services and activities, financial instruments or products are offered, or any case pursuant to
article 31, subsection 7 of the Consolidated Law and all other cases whereby the law imposes or permits disclosure. Use of the aforementioned information for other than strictly professional purposes is in any event forbidden.
Article 108
(Rules of presentation and conduct with customers or potential customers)
1. On initial contact, the approved person shall:
a) provide the customer or potential customer with a statement prepared by the approved person containing his identification details, register entry and personal details of the approved person, and the address to which the statement of withdrawal pursuant to article 30, subsection 6 of the Consolidated Law shall be sent;
b) provide the customer or potential customer with a copy of a notice in compliance with the model in Annex 4.
2. The approved person shall provide the customer or potential customer with the statement indicated in subsection 1a) also in the event of any change in the data contained therein.
3. The approved person shall fulfil all notification obligations to the customer or potential customer in a clear and complete manner, and shall verify that the customer has understood the essential characteristics of the transaction proposed.
4. The approved person shall verify the identity of the customer or potential customer prior to accepting subscriptions or orders. The approved person shall issue to the customer a copy of contracts, orders and all other documents subscribed by the latter.
5. For immediate forwarding, the approved person may receive only the following from the customer or potential customer:
a) bank or post office cheques, bank drafts or postal orders in the name of or in favour of the authorised person on behalf of whom he operates, or the person whose investment services and activities, financial instruments or products are offered, marked as not transferable ;
b) bank transfer order or similar in which the beneficiary is one of the persons indicated in paragraph a) above;
c) financial instruments that are registered or to the bearer, in the name of or in favour of the person providing the investment service and activities offered.
6. The approved person shall not receive any form of fee or financing from the customer or potential customer.
7. A financial salesman may not use electronic access codes to accounts pertaining to existing or potential customers, or persons in any event related, unless envisaged in the contract signed between the intermediary and the customer and always provided that:
a) the customer has given express, specific consent to use of the access codes by the salesman;
b) the method used allows the intermediary to check use of the codes by the salesman;
c) use by the salesman results in automatic disabling of the codes concerned .
Article 109
(Document archiving)
1. The approved person shall be responsible for the safekeeping, for at least five years and in the location indicated in article 103, a copy of the following documentation:
a) contracts promoted through him;
b) other documents signed by the customer or potential customer;
c) correspondence with the persons on whose behalf the approved person has acted.
2. The provisions of article 57 of this Regulation and provisions on document archiving adopted by the regulation pursuant to art. 6, subsection 2-bis of the Consolidated Law shall apply.
PART V
SANCTIONS AND PRECAUTIONARY MEASURES
Article 110
(Sanctions)
1. The sanctions pursuant to article 196, subsection 1, paragraphs a), b), c) and d) of the Consolidated Law shall be imposed by Consob, based on the seriousness of the offence and in consideration of any relapse, in relation to any infringement of the Consolidated Law, this regulation or other general or special provisions issued by Consob.
2. Without prejudice to subsection 1, Consob shall:
a) order expulsion in the case of:
1) infringement of the provisions of article 31, subsection 2 of the Consolidated Law;
2) door-to-door selling or distance marketing and placement on behalf of unauthorised persons;
3) falsification of the customer or potential customer signature on contractual forms or other documentation relating to transactions implemented by the customer;
4) obtaining, even on a temporary basis, of sums of money or other valuables pertaining to the customer or potential customer;
5) communication or transmission to the customer or potential customer or Consob of untruthful information or documents;
6) public offering executed in contravention of the provisions of Part IV, Title II, Chapter I of the Consolidated Law and related enactment measures;
7) conclusion of transactions not authorised by the customer or potential customer, in relation to any customer dealings or in any manner connected;
b) order suspension from the register pursuant to article 196, subsection 1, paragraph c) of the Consolidated Law in the event of:
1) failure to comply with notification obligations pursuant to the provisions referred to in article 104;
2) exercise of activities or acceptance of a role that is incompatible pursuant to article 106;
3) infringement of the provisions of article 107, subsection 2;
4) infringement of the provisions of article 108, subsection 3;
5) infringement of the provision of article 108, subsection 4;
6) acceptance from the customer or potential customer of means of payment, financial instruments and other assets with characteristics other than those prescribed in article 108, subsection 5;
7) receipt of fees or financing in contravention of article 108, subsection 6;
8) failure to comply with document archiving obligations pursuant to article 109;
c) order financial penalty pursuant to article 196, subsection 1, paragraph b) of the Consolidated Law in the event of:
1) failure to comply with obligations pursuant to article 103;
2) infringement of the provisions of article 108, subsections 1 and 2;
3. For each infringement or contravention indicated in subsection 2 and taking into account the circumstances and all available elements, Consob may order, in place of the recommended sanction, a form of sanction to a lower or higher degree.
Article 111
(Precautionary measures)
1. For the purposes of adoption of the precautionary measures pursuant to article 55, subsection 1 of the Consolidated Law, Consob shall assess the seriousness of known elements with particular weight given to the infringement of provisions calling for expulsion from the register, the implementation method of the illegal conduct and any repetition of the offence.
2. For the purposes of adoption of precautionary measures pursuant to article 55, subsection 2 of the Consolidated Law, Consob shall assess, to the extent of its powers conferred by law, the circumstances for which the approved person is subjected to personal precautionary measures in relation to Book IV, title I, chapter II of the Italian Criminal Procedure Code or based on which
allegations are brought for one of the offences indicated in said Code and, in particular, shall take into account the classification of the offence and appropriateness of the aforementioned circumstances in jeopardising specific interests involved in the activities of an approved person.
PART VI
FINAL AND TRANSITIONAL PROVISIONS
Article 112
(Final and transitional provisions)
1. The date of entry into force of operations of the Competent Authority and entry into force of provisions pursuant to parts II and III of this Book shall be declared by means of consecutive resolutions published in the Italian Gazzetta Ufficiale.
2. The provisions of Chapters II and III of the regulation approved by resolution no. 10629 of 8 April 1997 and later amendments and integrations shall remain valid until the entry into force of the provisions of subsection 1. The regional and provincial Commissions for the approved persons register shall continue to operate until the entry into force of Competent Authority operations.
2-bis. On entry into force of the provisions pursuant to subsection 1, approved persons already registered on the single national register of approved persons held by Consob shall be included by the competent authority in the single register envisaged by article 31, subsection 4 of the Consolidated Law on Finance under the same terms by which they are registered in the Consob single
national register. .
3. Until the entry into force of the provisions of subsection 1, any communication or transmission to the regional and provincial Commissions for the approved persons register of untruthful information or documents shall be subject to the sanction of expulsion and, for infringement of article 11 of the regulation approved by resolution no. 10629 of 8 April 1997 the financial penalty
pursuant to article 196, subsection 1, paragraph b) of the Consolidated Law shall apply. For each infringement or contravention identified in this subsection and taking into account the circumstances and all available elements, Consob may order, in place of the recommended sanction, a form of sanction to a lower or higher degree.
BOOK IX
ENTRY INTO FORCE AND TRANSITIONAL PROVISIONS
Article 113
(Entry into force and transitional provisions)
1. This Regulation shall enter into force on the day of its publication in the Italian Gazzetta Ufficiale.
2. Intermediaries shall arrange the fulfilment of notification obligations to existing customers as at the date of entry into force of this regulations, pursuant to articles 29 to 32, 35.2, 46 and 52.1.b1) at the first available opportunity or, failing which, no later than 30 June 2008.
3. With regard to existing customers as at the date of entry into force of this regulation that are already classified as professional investors, the notice pursuant to article 35, subsection 1 of classification as retail customer shall be issued at the first available opportunity or, failing which, no later than 30 June 2008.
4. Private customers known to intermediaries as professional investors for the purposes of previous provisions, based on parameters similar to those of Annex 3, section II to this regulation, may continue to be classified as professional customers.
5. Intermediaries shall arrange the fulfilment of notification obligations to existing customers as at the date of entry into force of this regulations, pursuant to articles 29 to 68, 35.2, 70 and 52.1.b1) at the first available opportunity or, failing which, no later than 30 June 2008.
6. Intermediaries shall arrange the fulfilment of notification obligations to existing customers as at the date of entry into force of this regulations, pursuant to articles 29 to 29, 35.2, 31 and 52.1.b1) at the first available opportunity or, failing which, no later than 30 June 2008. The aforementioned asset management companies and SICAVs shall observe subsection 3 of this article.
7. From the date of entry into force of this regulation, the regulation adopted by Consob resolution no. 11522/1998 and later amendments shall be repealed.
ANNEX 1
Model programme of initial operations
A) Illustration of each service and the investment activities for which authorisation is required.
1. Detailed description of the type of operations planned, including the products involved and the type of venue envisaged for execution of the orders.
2. Detailed description of the accessory services to be performed in conjunction with the investment service or activity for which authorisation is required.
3. Description of the investments relating to the investment service or activity, with particular reference to the following aspects:
a) implemented investments, related amount, amortisation schedules, objectives, related forms of financing, duration and charges.
b) investments in progress, related amount, objectives and expected implementation times, amortisation schedules and related forms of financing, duration and charges.
c) planned investments, related amount, forms of financing and expected implementation times.
4. Any plans to employ staff and related implementation status, or an indication of the staff assigned to the provision of investment services or activities for which authorisation is required.
5. Detailed description of the internal procedures finalised for the provision of investment services and activities.
6. Locations in which it is intended to provide investment services and activities, with a specific indication of any branches or offices, any recourse to the use of approved persons and/or distance communication techniques.
7. Description of strategic and product- or market-related factors, underlying the feasibility of the plans for the launch of investment services and activities, with particular reference to the following aspects:
a) underlying products;
a.1) policy for the research and development of new products;
a.2) potential market, with regard to the type of clientele, geographic areas, and planned customer procurement methods;
a.3) actual existing market, with regard to potential customers already identified:
b) feasible business volume over next three financial years, on a year-by-year basis, with a detailed and appropriately documented illustration of the certain and/or hypothetical elements which permit their assessment;
b.1) turnover on the basis of forecasts referred to in paragraph b) above;
b.2) adopted fees policy;
c) estimated operating costs over the next three financial years, on a year-by-year basis, with a detailed and appropriately documented illustration of the certain and hypothetical elements which permit their assessment;
c.1) adopted fees policy for distribution/marketing including door-to-door selling;
d) the finance policy pursued, considering the financial effects of the investments made, in progress or planned over the next three financial years;
d.1) estimated effects referred to in paragraph d), on a year-by-year basis, with a detailed and appropriately documented illustration of the certain and/or hypothetical elements which permit their assessment;
e) the share of fixed costs allocated to the investment service or activity:
f) estimated operating results for the next three financial years, on a year-by-year basis;
g) indication of when the investment service or activity is expected to become profitable.
B) Illustration of the financial position expected from the provision of investment services and activities, accessory services, and related and instrumental activities.
1. Financial statement forecasts (analytical balance sheet and income statement) for the first three financial years, prepared also in relation to alternative scenarios, indicating:
a) investments that the firm intends to make, with an indication of the amount, the amortisation schedule, the forms of financing, and the duration and implementation times;
b) operating costs by category;
c) expected economic results;
d) cashflow performance;
e) regulatory capital performance and estimated prudential requirements.
In drafting the aforementioned financial statements, care shall be taken to highlight the assumptions on which each forecast is based.
2. Methods of ensuring economic balance on business start-up, also in the event of turnover lower than expected or operating costs higher than estimated.
C) Additional information where authorisation is required by companies already in operation.
1. Description of past operations and the method for the disposal of activities incompatible with those permitted for investment firms.
2. Description of the initiatives and related implementation times to re-convert human resources and adapt technology to the needs of production processes which characterise investment firm activities.
ANNEX 2
Section I
Documentation on the integrity REQUIREMENTS of company members and branch managers (Note 1)
A) Italian persons or persons with an EU member state citizenship
1. criminal record certificate;
2. certificate of charges pending;
3. declaration to the effect that no financial penalty or measure has been inflicted with an impact on the capacity to act which could lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance;
4. certificate issued by the register of companies containing the anti-mafia disclaimer issued by the Chamber of Commerce, Trade and Industry, or the certificate issued by the Public Prosecutor’s Office to confirm the inexistence of precautionary measures taken pursuant to article 10 of Italian Law 575/65 as amended and integrated;
5. self-certification by the interested party to confirm that he has not been subject to criminal sentence or other sanctions in countries other than Italy for offence which, according to Italian law, would lead to the loss of integrity requirements, or indicating details of criminal sentences and/or sanctions inflicted in countries other than Italy;
B) Non-EU persons without residence permit in Italy
1. certificate issued by the competent authority of the country of residence confirming that the interested party has not been subject to measures corresponding with those that would lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance. Said certificates shall be accompanied by a legal
opinion, issued by a person qualified in the legal profession of the country of residence, ratifying the certificates in question.
Where the law of the country of residence does not issue such certificates, each interested party shall submit self-certification and the aforementioned legal opinion, also confirming the circumstance that, in said country, certificates covered by the self-certification are not issued;
2. declaration by the interested party to the effect that no measure has been inflicted in any country other than the country of residence which could lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance;
C) Non-EU persons with residence permit in Italy
1. documentation pursuant to paragraph A);
2. documentation pursuant to paragraph B).1 only. In such cases, certification shall be issued by the competent authority of the country of origin.
DOCUMENTATION ON THE INTEGRITY REQUIREMENTS OF COMPANY MEMBERS AND BRANCH MANAGERS
1. curriculum vitae signed by the interested party (Note 2);
2. declaration from the firm, company or authority with which the minimum period has matured for appointment to the office and/or certificates from university authorities, professional orders or to confirm teaching activities.
DOCUMENTATION ON INDEPENDENCE REQUIREMENTS
1. declaration in which the interested party confirms that the independence requirements are met (Note 3).
SELF-CERTIFICATION FOR COMPANY MEMBERS AND BRANCH MANAGERS
Italian Presidential Decree 445 of 28 December 2000, relating to the Consolidated Law of legislative and regulatory provisions on administrative documentation, recognised the option to use self-certification of aspects governed in relation to public administrations and relations between private entities.
Italian citizens and citizens of EU member states may make use of self-certification (art. 3, Italian Presidential Decree 445/2000).
Citizens of non-EU countries legally resident in Italy may use self-certification within the limits of the countries, personal credentials and facts that may be certified and confirmed by Italian public authorities (Note 4).
Intermediaries intending to allow their company members or branch managers to make use of self-certification must ensure that appropriate methods are adopted for the verification of declarations received. For this purpose, intermediaries must define special agreements with competent authorities for the issue of such certification, also through industrial associations.
Where such agreements have not been reached, self-certification may be used by subjects undertaking in writing to directly provide any documentation requested by the intermediary as proof of the declarations submitted.
The control body responsible for verification of requirements may not therefore accept self-certification that cannot be verified under the aforementioned terms.
In addition, for verification purposes the control body must adopt informal conduct that guarantees the full observance of current law. For this purpose, consistent verification must be performed on self-certification received.
As an example, a model self-certification is provided below which is considered to comply with current legislation on the requirements of members of investment firms.
SELF-CERTIFICATION MODEL VALID FOR COMPANY MEMBERS AND BRANCH MANAGERS
Att.n (Note 5) ____________________
__________________________
__________________________
SELF-CERTIFICATION
(articles 46 and 47, Italian Presidential Decree no. 445 of 28 December 2000)
I, the undersigned, ________________________ born in (town/city)____________________ (country/state/province)______________(______) on __/__/__, in the full knowledge that, pursuant to art. 76 of Italian Presidential Decree no. 445 of 28 December 2000, misleading declarations, false documentation and the use of documents that are false or contain untruthful information are punishable in
accordance with the Italian Criminal Procedure Code and special laws on such matters, in relation to appointment to the office of (title)______________________ of (company name)__________________________
having regard to the Regulation of the Minister of the Treasury, Budget and Economic Planning no. 468 of 11 November 1998,
HEREBY DECLARE
(A) PROFESSIONALISM REQUIREMENTS
- having matured overall experience of at least three/five consecutive years in:
a) activities as (Note 6)_______________
at (Note 7) ___________________
from______to______;
[….]
(B) INTEGRITY REQUIREMENTS
- not being in a position of ineligibility or lapse pursuant to art. 2382 of the Italian Civil Code;
- not having been subjected to precautionary measures imposed by legal authorities pursuant to Italian Laws 1423 of 27 December 1956 or 575 of 31 May 1965, as amended and integrated, without prejudice to the effects of rehabilitation;
- not having received irrevocable sentence, without prejudice to the effects of rehabilitation, to:
1) detention for one of the offences indicated in legislation governing banking, financial, securities and insurance activities, and in regulations governing markets, securities and instruments of payment;
2) imprisonment for one of the offences indicated in book V, title XI of the Italian Civil Code and Royal Decree no. 267 of 16 March 1942;
3) imprisonment for a period equal to or exceeding one year for an offence against the public administration, against the public trust, against the wealth, against public order, against the public economy or for a tax offence;
4) imprisonment for a period equal to or exceeding two years for any inculpable offence;
- not having received final sentence, with application of the penalty at the request of the parties, without prejudice to the ruling of limitation, to:
1) detention for a period equal to or exceeding one year for one of the offences indicated in legislation governing banking, financial, securities and insurance activities, and in regulations governing markets, securities and instruments of payment;
2) imprisonment for a period equal to or exceeding one year for one of the offences indicated in book V, title XI of the Italian Civil Code and Royal Decree no. 267 of 16 March 1942;
3) imprisonment for a period equal to or exceeding one year for an offence against the public administration, against the public trust, against the wealth, against public order, against the public economy or for a tax offence;
4) imprisonment for a period equal to or exceeding two years for any inculpable offence;
- not having been subject to criminal sentence or sanctions in other countries for offences which, according to Italian law, would lead to the loss of integrity requirements
or
having been subject to criminal sentence and/or sanctions in other countries (Note 8):
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________;
(C) CAUSES FOR SUSPENSION
- not having received suspended sentence to:
a) detention for one of the offences indicated in legislation governing banking, financial, securities and insurance activities, and in regulations governing markets, securities and instruments of payment;
b) imprisonment for one of the offences indicated in book V, title XI of the Italian Civil Code and Royal Decree no. 267 of 16 March 1942;
c) imprisonment for a period equal to or exceeding one year for an offence against the public administration, against the public trust, against the wealth, against public order, against the public economy or for a tax offence;
d) imprisonment for a period exceeding two years for any inculpable offence
or
having received suspended sentence to:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________;
- not having received suspended sentence, with application of the penalty at the request of the parties, to:
a) detention for a period equal to or exceeding one year for one of the offences indicated in legislation governing banking, financial, securities and insurance activities, and in regulations governing markets, securities and instruments of payment;
b) imprisonment for a period equal to or exceeding one year for one of the offences indicated in book V, title XI of the Italian Civil Code and Royal Decree no. 267 of 16 March 1942;
c) imprisonment for a period equal to or exceeding one year for an offence against the public administration, against the public trust, against the wealth, against public order, against the public economy or for a tax offence;
d) imprisonment for a period exceeding two years for any inculpable offence or
having received suspended sentence, with application of the penalty at the request of the parties, to:
____________________________________________________________;
- not having been provisionally subject to one of the measures indicated in article 10, subsection 3 of Italian Law no. 575 of 31 May 1965, as replaced by article 3 of Italian Law no. 55 of 19 March 1990, as amended and integrated
or
having been subject to the following measures:
____________________________________________________________
____________________________________________________________;
- not being subject to personal suspension measures or to the following measures:
___________________________________;
(D) INDEPENDENCE REQUIREMENTS
- being in possession of the independence requirements pursuant to article 13 of Italian Legislative Decree no. 58 of 24 February 1998;
(E) PERSONAL DATA TREATMENT
- having read the information pursuant to art. 10 of Italian Law 675 of 31 December 1996 as attached herewith;
- for the purposes of art. 71, subsection 4 of Italian Presidential Decree 445/2000, my consent to verification with the competent authorities by the company of the truth of my declaration.
I, the undersigned, hereby also undertake, at the request of the company, to submit documentation to confirm the truth of the information declared.
Place and date ________________________
The declarant
___________________________________
(signature to be authenticated by a notary public, chancellery, municipal secretary or assistant to the mayor pursuant to art. 21, subsection 2 of Italian Presidential Decree 445/2000)
- - - - - - - - - - - - - - - - - - - - - - -
INFORMATION (pursuant to Italian Legislative Decree no. 196 of 30 June 2003, the personal data protection code) - It is hereby declared that your personal data shall be treated in accordance with the provisions of Italian Legislative Decree no. 196 of 30 June 2003. Said data, to be treated at ___________________________, is necessary for verification of the aforementioned requirements. The
data shall be treated solely for said purposes, also by electronic means, and shall not be disclosed or transferred to a third party, without prejudice to the right to verify the truth of information with competent authorities. You may exercise rights granted to you pursuant to art. 7 of the aforementioned Legislative Decree which, amongst other things, gives right of access to your
personal data, the right to amend, update, complete or cancel any incorrect or incomplete data, and the right to oppose treatment for legitimate reasons by the treatment owner (_________________________) or by the data treatment manager (________________________).
You shall be responsible for the immediate reporting of any change or integration to the data provided, should this be relevant for requirement verification purposes.
_____________________
COMPLETION HELP NOTES
-
Documents confirming integrity requirements shall be dated no later than six months prior to submission of the application.
-
The curriculum vitae shall contain details of activities pursuant to art. 1 of Italian Ministerial Decree 468/98.
-
Should the ministerial provisions that establish the aforementioned independence requirements lapse in accordance with article 13, subsection 1 of the Consolidated Law, interested parties are in any event obliged, pursuant to subsection 3-bis of said article, to demonstrate satisfaction of the independence requirements stated or indicated in the Italian Civil Code. Documents confirming
independence requirements shall be dated no later than six months prior to submission of the application.
-
In other cases, citizens of non-EU countries with a residence permit for Italy may use self-certification where the submission of which is in application of international agreements between Italy and the country of origin of the declarant, duly specifying the relevant Agreement and the legislative measure by which it was transposed to Italian law.
-
Indicate the full name of the authorising investment firm.
-
Indicate:
- the administrative, audit or management duties performed for companies and/or
- the professional activities performed on matters relevant to the credit, financial, securities or insurance sectors and in any event relevant to asset management company or SICAV activities and/or
- university teaching activities, title (researcher, associate professor, etc.) and the subject taught and/or
- administrative or managerial duties performed for public authorities or public administrations with relevance to the credit, finance, securities or insurance sector, or for public authorities or public administrations with no relevance to the aforementioned sectors but involve the management of economic and financial resources.
-
Indicate the company/authority or professional studio where such experience was gained.
-
Indicate the country in which sentence or other type of sanction was imposed, the authority adopting the measure, the date and other identification details of proceedings papers.
Section II
Documentation on the integrity REQUIREMENTS of shareholders (Note 1)
A) Italian persons or persons with an EU member state citizenship
1. criminal record certificate;
2. certificate of charges pending;
3. declaration to the effect that no financial penalty or measure has been inflicted with an impact on the capacity to act which could lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance;
4. certificate issued by the register of companies containing the anti-mafia disclaimer issued by the Chamber of Commerce, Trade and Industry, or the certificate issued by the Public Prosecutor’s Office to confirm the inexistence of precautionary measures taken pursuant to article 10 of Italian Law 575/65 as amended and integrated;
5. self-certification by the interested party to confirm that he has not been subject to criminal sentence or other sanctions in countries other than Italy for offences which, according to Italian law, would lead to the loss of integrity requirements, or indicating details of criminal sentences and/or sanctions inflicted in countries other than Italy;
B) Non-EU persons without residence permit in Italy
1. certificate issued by the competent authority of the country of residence confirming that the interested party has not been subject to measures corresponding with those that would lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance. Said certificates shall be accompanied by a legal
opinion, issued by a person qualified in the legal profession of the country of residence, ratifying the certificates in question.
Where the law of the country of residence does not issue such certificates, each interested party shall submit self-certification and the aforementioned legal opinion, also confirming the circumstance that, in said country, certificates covered by the self-certification are not issued;
2. declaration by the interested party to the effect that no measure has been inflicted in any country other than the country of residence which could lead to the loss of integrity requirements as established by the Ministry for Economy and Finance pursuant to article 13 of the Consolidated Law on Finance;
C) Non-EU persons with residence permit in Italy
1. documentation pursuant to paragraph A);
2. documentation pursuant to paragraph B).1 only. In such cases, certification shall be issued by the competent authority of the country of origin.
SELF-CERTIFICATION FOR SHAREHOLDERS
Italian Presidential Decree 445 of 28 December 2000, relating to the Consolidated Law of legislative and regulatory provisions on administrative documentation, recognised the option to use self-certification of aspects governed in relation to public administrations and relations between private entities.
Italian citizens and citizens of EU member states may make use of self-certification (art. 3, Italian Presidential Decree 445/2000).
Citizens of non-EU countries legally resident in Italy may use self-certification within the limits of the countries, personal credentials and facts that may be certified and confirmed by Italian public authorities (Note 2).
Natural persons intending to acquire a qualifying interest in an intermediary may opt to issue self-certification in accordance with the model illustrated below.
If the interest is acquired by a company or authority that intends to allow its own members to use self-certification, such persons must adopt appropriate methods for the verification of declarations received.
For this purpose, intermediaries must define special agreements with competent authorities for the issue of such certification, also through industrial associations.
Where such agreements have not been reached, self-certification may be used by subjects undertaking in writing to directly provide any documentation requested by the intermediary as proof of the declarations submitted.
The control body responsible for verification of requirements may not therefore accept self-certification that cannot be verified under the aforementioned terms.
In addition, for verification purposes the control body must adopt informal conduct that guarantees the full observance of current law. For this purpose, consistent verification must be performed on self-certification received. As an example, a model self-certification is provided below which is considered to comply with current legislation on the requirements of shareholders in investment
firms.
in preparing documentation to be attached to the application for authorisation (see art. 14, subsection 1a of the regulation), where self-certification is to be issued by shareholders, Consob shall perform investigations on such documentation, by sampling and in all cases in which there are grounds to doubt the truth of the self-certification (see art. 71, Italian Presidential Decree no.
445/2000).
SELF-CERTIFICATION MODEL VALID FOR SHAREHOLDERS
Att.n (Note 3) ____________________
____________________________________
____________________________________
SELF-CERTIFICATION
(articles 46 and 47, Italian Presidential Decree no. 445 of 28 December 2000)
I, the undersigned, ____________________ born in (town/city)____________________ (country/state/province)_______________(______) on __/__/__, in the full knowledge that, pursuant to art. 76 of Italian Presidential Decree no. 445 of 28 December 2000, misleading declarations, false documentation and the use of documents that are false or contain untruthful information are punishable in
accordance with the Italian Criminal Procedure Code and special laws on such matters, in relation to appointment to the office of (title)_____________________ of (company name)________________________
having regard to the Regulation of the Minister of the Treasury, Budget and Economic Planning no. 469 of 11 November 1998,
HEREBY DECLARE
– not having been subjected to precautionary measures imposed by legal authorities pursuant to Italian Laws 1423 of 27 December 1956 or 575 of 31 May 1965, as amended and integrated, without prejudice to the effects of rehabilitation;
– not having received irrevocable sentence, without prejudice to the effects of rehabilitation, to detention for a period equal to or exceeding six months (or equal to or exceeding one year for a sentence in application of a request from the parties and without prejudice to the ruling of limitation) for one of the offences indicated in legislation governing banking, financial,
securities and insurance activities, and in regulations governing markets, securities and instruments of payment;
– not having received irrevocable sentence, without prejudice to the effects of rehabilitation, to imprisonment for a period equal to or exceeding six months (or equal to or exceeding one year for a sentence in application of a request from the parties and without prejudice to the ruling of limitation) for one of the offences indicated in book V, title XI of the Italian Civil Code and
in Royal Decree no. 267 of 16 March 1942;
– not having received irrevocable sentence, without prejudice to the effects of rehabilitation, or with application of the penalty at the request of the parties, without prejudice to the ruling of limitation, to imprisonment for a period equal to or exceeding one year for an offence against the public administration, against the public trust, against the wealth, against public order,
against the public economy or for a tax offence;
– not having received irrevocable sentence, without prejudice to the effects of rehabilitation, or with application of the penalty at the request of the parties, without prejudice to the ruling of limitation, to imprisonment for a period equal to or exceeding one year for any inculpable offence;
– not having been subject to criminal sentence or sanctions in other countries for offences which, according to Italian law, would lead to the loss of integrity requirements
or having been subject to criminal sentence and/or sanctions in other countries (Note 4):
____________________________________________________________
____________________________________________________________
____________________________________________________________
Place and date__________________
The declarant
(signature to be authenticated by a notary public, chancellery, municipal secretary or assistant to the mayor pursuant to art. 21, subsection 2 of Italian Presidential Decree 445/2000)
- - - - - - - - - - - - - - - - - - - - - - - -
INFORMATION (pursuant to Italian Legislative Decree no. 196 of 30 June 2003, the personal data protection code) - It is hereby declared that your personal data shall be treated in accordance with the provisions of Italian Legislative Decree no. 196 of 30 June 2003. Said data, to be treated at _______________________, is necessary for verification of the aforementioned requirements. The data
shall be treated solely for said purposes, also by electronic means, and shall not be disclosed or transferred to a third party, without prejudice to the right to verify the truth of information with competent authorities. You may exercise rights granted to you pursuant to art. 7 of the aforementioned Legislative Decree which, amongst other things, gives right of access to your personal
data, the right to amend, update, complete or cancel any incorrect or incomplete data, and the right to oppose treatment for legitimate reasons by the treatment owner (______________________) or by the data treatment manager (_______________________).
You shall be responsible for the immediate reporting of any change or integration to the data provided, should this be relevant for requirement verification purposes.
_____________________
COMPLETION HELP NOTES
-
Documents confirming integrity requirements shall be dated no later than six months prior to submission of the application.
-
In other cases, citizens of non-EU countries with a residence permit for Italy may use self-certification where the submission of which is in application of international agreements between Italy and the country of origin of the declarant, duly specifying the relevant Agreement and the legislative measure by which it was transposed to Italian law.
-
Indicate the full name of the authorising investment firm or, for natural persons, as follows: Consob through the authorising investment firm.
-
Indicate the country in which sentence or other type of sanction was imposed, the authority adopting the measure, the date and other identification details of proceedings papers.
ANNEX 3
PRIVATE PROFESSIONAL CUSTOMERS
A professional customer shall mean a customer in possession of the experience, awareness and competence necessary to make his own informed decisions on investments and to correctly evaluate the risks assumed.
I. Professional customers by law
This shall mean professional customers for the purpose of all investment services and instruments:
(1) persons authorised and regulated to operate in financial markets, both Italian and foreign, i.e.:
a) banks;
b) investment firms;
c) other authorised and regulated financial institutions;
d) insurance companies;
e) collective investment undertakings and management companies for such undertakings;
f) pension funds and management companies for such funds;
g) dealers acting on their own account on commodities and commodity-based derivatives;
h) persons dealing exclusively on their own account on financial instruments markets with indirect membership of clearing and settlement services and the local compensatory and guarantee system;
i) other institutional investors;
l) stockbrokers;
(2) large companies which at individual company level meet at least two of the following requirements:
— balance sheet total: 20,000,000 euro,
— net revenues: 40,000,000 euro,
— own funds: 2,000,000 euro.
(3) institutional investors whose main activity is investment in financial instruments, including companies dedicated to the securitisation of assets and other financial transactions.
The persons listed may request treatment from the service provider as a retail customer, and intermediaries may agree to provide such persons with a higher degree of protection. Where the customer is a company as previously defined, the intermediary must inform the customer, before any provision of service, that, on the basis of available information, he shall be considered by law to be
professional customer and shall be treated as such, unless agreed otherwise between the intermediary and the customer. The intermediary must also inform the customer that he may request modification to the agreement terms in order to obtain a higher level of protection.
A customer considered professional by law may request a higher level of protection if he believes he is unable to correctly evaluate or manage the assumed risks.
For this purpose, customers considered professional by law shall conclude a written agreement with the service provider establishing the services, transactions and products to which retail customer treatment shall be applied.
II. Professional customers on request
II.I. Identification criteria
Intermediaries may treat customers differently from those indicated in section I, where specific request to be classed as professional customers is submitted, provided the criteria and the procedures indicated below are observed. It is not, however, presumed that such customers possess an awareness and experience of the market comparable to those of the categories described in section I.
The disregard for rules of conduct envisaged for the provision of services to non-professional customers shall be permitted when, after appropriate evaluation of the customer’s competence, experience and awareness, the intermediary can reasonably consider, given the nature of the planned transactions and services, that the customer is capable of making his own informed decisions on
investments and of understanding the risks assumed.
The possession of professionalism requirements envisaged for managers and directors of persons authorised under the terms of EU directives for the financial sector may be considered as a reference for the evaluation of customer competence and awareness.
For the aforementioned evaluation, at least two of the following requirements must be met:
— the customer has executed significant transactions on the market in question, averaging 10 transactions per quarter in the previous four quarters.
— the value of the customer’s financial instrument portfolio, including cash deposits, must exceed 500,000 euro;
— the customer works or has worked in the financial sector for at least one year in a professional capacity which presumes awareness of the transactions and services envisaged.
In the case of legal persons, the above evaluation is conducted with regard to the person authorised to execute transactions on their behalf and/or said legal person.
II.2. Procedure
The customers defined above may waive the protection envisaged in the codes of conduct only after completion of the following procedure:
— customers must inform the intermediary in writing of their wish to be treated as professional customers, generally or with regard to a particular investment service or transaction or type of transaction or product;
— the intermediary must warn customers, clearly and in writing, of the protection and compensatory rights they may lose;
— the customers must declare in writing, in a document separate from the contract, that they are aware of the consequences deriving from the loss of such protection.
Before deciding to accept requests to waive protection, all reasonable measures must be taken to ensure that the customer requesting consideration as a professional customer satisfies the requirements indicated in section II, paragraph 1.
The intermediaries must adopt written internal measures for the classification of customers. Professional customers shall be responsible for informing the service provider of any changes that may influence their current classification. If, however, the intermediary should discover that the customer no longer satisfies the conditions necessary to receive treatment reserved for professional
customers, appropriate action must be taken.
ANNEX 4
Information on the rules of presentation and conduct of the APPROVED person with customers or potential customers
Pursuant to current law, the approved person:
* on initial contact and in the event of any change in the details indicated below, must provide the customer or potential customer with a statement prepared by the approved person containing his identification details, register entry and personal details of the approved person, and the address to which the statement of withdrawal pursuant to article 30, subsection 6 of the Consolidated Law
shall be sent;
* on initial contact, must provide the customer or potential customer with a copy of this information sheet;
* in direct relations with customers, must abide by the provisions of this regulation;
* with specific regard to investment consultancy or portfolio management services, must obtain information from the customer or potential customer to assess adequacy pursuant to article 40 of this regulation. In particular, the approved person must obtain information from the customer or potential customer with regard to:
a) his awareness and experience of investments in relation to each type of instrument or service;
b) his financial position;
c) his investment objectives;
and must inform the customer or potential customer that if any information pursuant to paragraphs a), b) and c) is not provided, the intermediary providing the investment consultancy or portfolio management service shall abstain from the provision of said services;
* with specific regard to investment services and activities other than investment consultancy and portfolio management, must obtain information from the customer or potential customer sufficient to assess the appropriateness of the transactions. In particular, the approved person must obtain information from the customer or potential customer on his awareness and experience in investments
relating to each type of instrument or service;
* must not encourage a customer or potential customer to withhold such information;
* prior to subscription of the purchase document or financial products, must provide the customer or potential customer with a copy of the prospectus and related information as prescribed;
* must provide the customer or potential customer with a copy of the contracts and all other documentation subscribed;
* for immediate forwarding, may receive only the following from the customer or potential customer:
aa) bank cheques or bank drafts in the name of or in favour of the authorised person on behalf of whom he operates, or the person whose investment services and activities, financial instruments or financial products are offered, marked as not transferable;
bb) bank transfer order or similar in which the beneficiary is one of the persons indicated in paragraph aa);
cc) financial instruments that are registered or to the bearer, in the name of or in favour of the person providing the investment service and activities offered;
* where the intermediary on behalf of whom the approved person operates is not authorised to provide consultancy services or if the customer has not provided information sufficient to allow the provision of consultancy services, may not make any recommendation as appropriate to the customer or based on consideration of customer characteristics;
* may not receive any form of fee or financing from the customer;
* may not use telematic access codes pertaining to accounts of the customer, potential customer or related person.
_____________________________
Footnotes:
