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Regulation containing implementation rules of Italian Legislative Decree no. 58 of 24 February 1998 on markets (adopted by Consob with Resolution no. 16191 of 29 October 2007, later amended by resolution no. 16530 of 25 June 2008, no. 16850 of 1 April 2009, no. 17221 of 12 March 2010, no. 17389 of 23 June 2010, no. 18079 of 20 January 2012 and no. 18214 of 9 May 2012)1

The amendments made by resolution no. 18214 of 9 May 2012 are highlighted in bold in the text.

INDEX

Title I

-

Legislative sources and definitions

Art. 1

-

Legislative sources

Art. 2

-

Definitions

     

Title II

-

Regulated markets

     

Chapter I

-

Financial resources of market management companies and the determination of related and instrumental activities

Art. 3

-

Financial resources

Art. 4

-

Related and instrumental activities

     

Chapter II

-

Organisational requirements and reporting obligations of management companies

Art. 5

-

Management company shareholders

Art. 6

-

Management company members

Art. 7

-

Management company articles of association and market regulation

Art. 8

-

Management company organisation

Art. 9

-

Management company reports on company events

Art. 10

-

Board of statutory auditors reports to Consob

Art. 11

-

Board of directors reports to Consob

Art. 12

-

Report on the ITC structure and risk management

Art. 13

-

Outsourcing of activities with strategic relevance to typical company management

Art. 14

-

Planning documentation and cooperation agreements

Art. 15

-

Management company recording of transactions

     

Chapter III

-

Admission, suspension and exclusion of financial instruments and operator access to regulated markets

Art. 16

-

Admission to trading of financial instruments on regulated markets

Art. 17

-

Suspension and exclusion from trading of financial instruments on regulated markets

Art. 18

-

Operators permitted to trade on regulated markets and operator designation of clearing and settlement systems

     

Title III

-

Multilateral trading facilities and systematic internalisers

Art. 19

-

Multilateral trading facilities

Art. 20

-

Multilateral trading facilities’ reporting obligations to Consob

Art. 21

-

Start-up and termination of systematic internaliser activities

Art. 22

-

Systematic internalisers on shares

   

 

Title IV

-

Transaction reporting obligations and transparency
     

Chapter I

-

Reporting obligations to Consob of transactions concluded on financial instruments

Art. 23

-

Reporting obligations to Consob of transactions concluded on financial instruments admitted to trading on regulated markets

Art. 24

-

Issue and exchange of information by Consob

     

Chapter II

-

Pre- and post-trading transparency on shares admitted to trading on regulated markets

Art. 25

-

Pre-trading transparency requirements for regulated markets and multilateral trading facilities

Art. 26

-

Cases of inapplicability of pre-trading transparency obligations for regulated markets and multilateral trading facilities

Art. 27

-

Pre-trading transparency requirements for systematic internalisers

Art. 28

-

Management of limit orders

Art. 29

-

Post-trading transparency requirements for regulated markets, multilateral trading facilities and authorised persons

Art. 30

-

Publication and public accessibility of information

Art. 31

-

Calculations and estimates applied in pre- and post-trading transparency on shares admitted to trading on regulated markets

     

Chapter III

-

Pre- and post-trading transparency on financial instruments admitted to trading on regulated markets

Art. 32

-

Pre- and post-trading transparency requirements for regulated markets and multilateral trading facilities

Art. 33

-

Pre- and post-trading transparency requirements for systematic internalisers

Art. 34

-

Post-trading transparency requirements for authorised persons

     

Title V

-

Implementation of links with foreign markets and extension of operations to other EU member states

Art. 35

-

Reports to Consob on the implementation of links with foreign markets and extension of operations to other EU member states

     

Title VI

-

Conditions for listing of certain companies
Art. 36 Conditions for listing of shares of parent companies of companies instituted and regulated by the laws of non-European Union Member States

Art. 37

-

Inhibitory conditions to the listing of shares of companies subject to management and coordination by other companies

Art. 38

-

Conditions for listing of shares of companies with equity composed entirely of equity investments

Art. 39

-

Final and transitional provisions

     

Title VII

-

Market integrity

     

Chapter I

-

Admitted market practices

Art. 40

-

Criteria for the admission of market practices

Art. 41

-

Procedures for the admission of market practices
     

Chapter II

-

Market practices on derivatives

Art. 42

-

Inside information in relation to derivatives on commodities

     

Chapter III

-

Market manipulation

Art. 43

-

Elements and circumstances to be assessed in the identification of market manipulation

     

Chapter IV

-

Suspect transactions

Art. 44

-

Persons obliged to report suspect transactions

Art. 45

-

Identification of suspect transactions

Art. 46

-

Reporting deadlines

Art. 47

-

Report content

Art. 48

-

Reporting methods

Art. 49

-

Confidentiality obligations and official secrecy

Art. 50

-

Transactions relating to foreign markets

     

Title VIII

-

Final and transitional provisions

Art. 51

-

Entry into force and final and transitional provisions

     

ANNEX 1

-

Model for link reporting by management companies

ANNEX 2

-

Model for link reporting by authorised persons

ANNEX 3

-

Examples of market manipulation

     
     

Title I
Legislative sources and definitions

Article 1
(Legislative sources)

1. This Regulation is adopted pursuant to article 61.2, 61.6-bis, 61.6-ter, 62.1-ter, 62.1-quater, 61.3-bis, 64.1, 61.1-quinquies, 65, 70-ter.2, 74.2, 77-bis.1, 77-bis.6, 78.2, 79-bis, 79-ter, 180.1 paragraph c), 181.2, 187-ter.7 and 187-nonies 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) "trading venues" shall mean regulated markets, multilateral trading facilities and systematic internalisers pursuant, respectively, to article 1 subsection 1 paragraph w-ter), article 1 subsection 5-octies and article 1 subsection 5-ter of the Consolidated Law;

c) "management company" shall mean the management company pursuant to article 61, subsection 1 of the Consolidated Law;

d) "minimum capital of management companies" shall mean the minimum total of paid-up and existing share capital in management companies;

e) "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;

f) "foreign markets" shall mean markets recognised by Consob pursuant to article 67, subsection 2 of the Consolidated Law and any other multilateral system where multiple purchase and sale interests in financial instruments, admitted for trading in accordance with the system rules, may meet to arrange contracts.

2. For the purposes of this regulation, the definitions contained in the Consolidated Law and in Regulation no. 1287/2006/EC of 10 August 2006 shall apply.

Title II
Regulated markets

Chapter I
Financial resources of market management companies and the determination of related
and instrumental activities

Article 3
(Financial resources)

1. At the time of authorisation and thereafter constantly, management companies shall have sufficient financial resources to allow systematic function of the regulated markets managed, taking into consideration the nature and entity of transactions concluded on the markets, together with the capacity and degree of risk to which they are exposed.

Article 4
(Related and instrumental activities)

1. Without prejudice to the provisions of article 18, subsection 3-bis of the Consolidated Law, management companies may perform the following activities as related and instrumental to the organisation and management of regulated markets:

a) elaboration, management, maintenance and marketing of telematic software, hardware and networks in relation to trading systems and the transmission of orders and data;

b) processing, distribution and marketing of data on financial instruments traded on the markets and market-related data;

c) implementation and management of matching and adjustment systems for transactions on financial instruments;

d) market image promotion, also by broadcasting information concerning the market, issuers and all other activities relating to market development;

e) implementation and management of guarantee systems for transactions executed on the markets;

f) management of multilateral systems for the exchange of monetary deposits;

g) elaboration, management and maintenance of IT networks for the display and entry, by persons authorised for trading on their own account, the execution of orders on behalf of customers and the receipt and transmission of orders, of financial instrument trading conditions that do not allow the conclusion of contracts through said network.

2. Management companies may make equity investments in companies that exclusively or primarily perform the activities pursuant to subsection 1. In addition, equity investments may be made in companies that manage guarantee, clearing and settlement systems, centralised depositories and companies that directly or indirectly manage regulated markets.

3. Management companies shall inform Consob without delay of the related and instrumental activities they intend to exercise and shall inform Consob in advance of any plan to perform equity investments pursuant to subsection 2.

Chapter II
Organisational requirements and reporting obligations of management companies

Article 5
(Management company shareholders)

1. Buyers and sellers shall inform the management company within 24 hours of any purchase or disposal of equity investments that result in exceeding the 5% threshold of ordinary share capital with voting rights in the management company, in compliance with the provisions of article 61, subsection 6 of the Consolidated Law.

2. Management companies shall inform Consob without delay of any purchase or disposal of equity investments that result in exceeding the 5% threshold of ordinary share capital with voting rights, providing documentation to confirm buyers' possession of the integrity requirements pursuant to article 61, subsection 5 of the Consolidated Law.

3. Management companies shall inform Consob of any change in the list of shareholders resulting from changes in equity investments pursuant to subsection 1. When submitting annual financial statements documentation to Consob, management companies shall also issue an updated version of the list of shareholders with an indication, for each holder of an equity investment exceeding 5% of ordinary share capital, of:

a) the number of shares with voting rights held;

b) the percentage of shares with voting rights with respect to the total shares with voting rights.

4. Management companies shall publish the list of shareholders on an annual basis, also through their Internet web site. Appropriate publicity shall also be arranged with respect to changes in the list of shareholders.

5. The information pursuant to subsections 2 and 3 shall also be submitted to the Bank of Italy with regard to markets, in accordance with article 63, subsection 3 of the Consolidated Law.

Article 6
(Management company members)

1. Management companies shall inform Consob without delay of the identity of persons holding office as directors, managers and auditors, managers of regulated market activities and transactions, and all subsequent changes in the identity of said persons. A copy of the minutes of the board of directors in which company members are appointed to office shall be submitted to Consob by the management company within 30 days.

2. Should it be deemed appropriate, Consob may request sight of documentation proving possession of integrity, professionalism and independence requirements of persons holding office as directors, managers and auditors, the inexistence of causes for suspension from office and the absence of impediments.

3. Management companies shall report on any change in the composition of control bodies within 15 days. In addition, at the time of submission of financial statements documentation, management companies shall inform Consob of the updated composition of control bodies.

Article 7
(Management company articles of association and market regulation)

1. Management companies shall submit to Consob any plans to modify their articles of association, after approval of the modifications by the board of directors and at least 20 days prior to the expected date for formal approval by the shareholders’ meeting, indicating the content and objectives of the proposed modifications.

2. Management companies shall submit to Consob any plans to modify market regulations at least 20 days prior to the expected date for formal approval by the shareholders’ meeting or supervisory council, indicating the content and objectives of the proposed modifications. Where the shares of a management company are listed on a regulated market, the 20-day deadline shall refer to formal approval by the board of directors.

3. The information pursuant to subsection 2 shall also be submitted to the Bank of Italy with regard to regulated markets, in accordance with article 63, subsection 3 of the Consolidated Law.

4. The management company shall arrange appropriate publication, also through their Internet web site, of the full and updated text of the regulation and any related enactment measures.

Article 8
(Management company organisation)

1. Management companies shall:

a) adopt appropriate measures to identify and manage the potentially negative consequences, in relation to market operations or their shareholders, of any conflict of interest between the regulated market, its owners or manager and its regular operations, in particular where such conflict could prove prejudicial to fulfilment of the provisions of article 64, subsection 1 of the Consolidated Law;

b) adopt appropriate measures to identify, mitigate and manage the risks to which they are exposed or which may compromise regular market operations;

c) implement measures to guarantee the sound management of technical operations relating to the trading system, including arrangements for effective emergency devices to overcome system malfunction risks;

d) implement effective mechanisms to facilitate the efficient and timely conclusion of transactions executed on the systems managed.

2. At the time of authorisation and constantly thereafter, in order that Consob may ascertain the existence of the devices necessary to satisfy obligations pursuant to subsection 1, management companies shall provide Consob with the necessary information and notices pursuant to articles 10, 11 and 12.

Article 9
(Management company reports on company events)

1. Management companies shall provide to Consob:

a) documents confirming the calling of a shareholders’ meeting, containing explicit details of the agenda to be discussed;

b) a copy of the minutes of shareholders’ meeting resolutions, complete with any attachments;

c) the company financial statements and, where applicable, the consolidated financial statements, within 30 days of approval by the shareholders’ meeting, accompanied by the minutes of the shareholders’ meeting, the directors’ report on operations, the statutory auditors’ report and independent auditors’ report;

d) a copy of the financial statements of subsidiaries and a summary prospectus of essential data on the financial statements of associate companies.

Article 10
(Board of statutory auditors reports to Consob)

1. The company’s board of statutory auditors shall submit to Consob, without delay, a copy of the minutes of meetings and audits concerning management irregularities discovered or infringement of regulations governing business activities, together with any other relevant details.

2. The company’s board of statutory auditors shall submit to Consob, on an annual basis at the time of submission of the financial statements, a report on the results of audits completed in areas pursuant to article 11.

Article 11
(Board of directors’ reports to Consob)

1. The company’s board of directors shall submit to Consob, on an annual basis at the time of submission of the financial statements, a report on organisational action taken with regard to:

a) the separation of operations departments from audit departments, and on the management of possible situations of conflict of interest in the assignment of duties;

b) internal audit activities with identification of tasks and responsibilities, in particular with regard to the identification and correction of irregularities discovered;

c) reporting procedures at the various departmental levels, with a specific indication of reporting on anomalies discovered and on remedial action taken.

2. The report pursuant to subsection 1 shall also contain the following aspects:

a) organisation chart and responsibilities chart;

b) delegatory procedures;

c) internal audit system organisation;

d) methodologies introduced to guarantee observance of market rules and regular operations, with particular reference to technology support activities;

e) direct controls to guarantee the reliability and integrity of accounting and management data;

f) assessment of the risk containment measures adopted, indicating any functional failings discovered;

g) the main results of actual controls implemented within the company at the various organisational levels;

h) organisational controls adopted for anti-money laundering purposes.

Said report may make reference to the previous year’s report to Consob on aspects with no significant change.

Article 12
(Report on the ITC structure and risk management)

1. At least once a year, management companies shall submit the audit plan relating to auditing of the main ITC structures for the provision of institutional services, with particular reference to ITC security measures implemented and planned business continuity procedures. Said audit shall be performed by third parties or by the management company's internal audit department, provided said department is different from and independent of the production departments.

2. Management companies shall inform Consob without delay of the results of audits pursuant to subsection 1, together with the measures adopted or to be adopted by the company to remedy any malfunction discovered, and specifying the related implementation times.

3. Management companies shall define appropriate policies and measures to guarantee business continuity and shall adopt a business continuity plan for the management of critical situations. In cases of need and emergency, management companies shall adopt suitable measures to allow the operation of managed markets and inform Consob of such situations without delay.

4. Measures to guarantee business continuity shall take into account the role of the financial system and the volumes traded on the markets managed. Such measures shall also be updated if market conditions or management company activities change.

Article 13
(Outsourcing of activities with strategic relevance to typical company management)

1. Management companies that adopt outsourcing for activities with strategic relevance to typical company management shall be liable for any outsourced departments, shall maintain guidance powers with respect to top management and shall adopt organisational measures to guarantee:

a) integration of outsourced activities into the overall internal audit system;

b) identification of the series of risks in relation to outsourced activities and the existence of a detailed periodic monitoring programme;

c) adequate control procedures with respect to outsourced activities, including a department responsible for such procedures and appropriate reporting from said department to the board of directors and board of statutory auditors;

d) business continuity of outsourced activities. For this purpose the management company shall obtain information on the emergency plans of persons providing such services, assess the quality of the measures envisaged therein and arrange coordinated business continuity options.

2. Management companies shall define the objectives assigned through outsourcing in relation to overall company strategy, maintaining awareness and governance of related processes and related risk control. For this purpose the management company shall have access, including direct access to premises of the service providers, to relevant information on outsourced activities, shall assess the quality of service provided and the organisation and capital adequacy of the provider.

3. Agreements between the management companies and the service providers shall:

a) identify the nature, subject, service objectives, the service methods and frequency, and data confidentiality obligations;

b) guarantee the observance of provisions indicated in subsection 2;

c) include appropriate controls to allow Consob to exercise its supervisory activities.

4. At the time of submission of the report on the organisational structure pursuant to article 11, the management company shall inform Consob of:

a) the organisational measures pursuant to subsection 1;

b) the agreements pursuant to subsection 3.

Article 14
(Planning documentation and cooperation agreements)

1. Management companies shall provide to Consob, without delay:

a) company planning documentation submitted to the board of directors or, if applicable, to the supervisory council, also with regard to subsidiaries, outlining the strategic objectives pursued and an indication of the implementation times and methods;

b) agreements submitted to the board of directors in relation to alliances or memoranda of understanding that could have an impact on the organisation and operations of the markets managed.

2. Advance notification of the strategic objectives and content of the agreements shall be provided to Consob in good time.

3. Management companies shall inform Consob and the Bank of Italy of plans for agreements with companies managing central counterparty, clearance and settlement systems of other EU member states for the guarantee, clearance and settlement of certain or all transactions concluded by regulated market investors. Said notification, to be issued 45 days prior to the launch of operations under the agreement, shall include the following information:

a) the terms and content of the agreement;

b) any links and measures between the guarantee, clearance and settlement systems and the regulated market system;

c) the technical terms identified to guarantee the efficient regulation of transactions concluded on the regulated market.

4. By the same deadline indicated in subsection 3, management companies shall inform Consob and the Bank of Italy of the termination of operations under agreements pursuant to subsection 3 and all other amendments to information provided previously.

5. In order to avoid duplicate controls, Consob and the Bank of Italy shall take into account the supervision of systems pursuant to subsection 3 by the competent supervisory authorities of other EU member states.

6. Management companies may reach agreements with companies managing central counterparty, clearance and settlement systems of non-EU countries provided that equivalent supervisory measures to those applicable under Italian law are practiced and subject to stipulation of agreements with the corresponding foreign authorities for the exchange of information. Operations under the terms of the agreement shall be subordinate to verification of the existence of terms pursuant to article 70-bis, subsection 2 of the Consolidated Law. For this purpose, management companies shall provide the information indicated in subsection 3.

Article 15
(Management company recording of transactions)

1. For each market managed, management companies shall establish electronic procedures for the recording of transactions executed on that market.

2. The recorded information, to be archived for not less than eight years, shall allow identification of:

a) details of the market investors concerned;

b) for markets using telematic trading systems, the individual offerings entered on the systems, including any that are amended, cancelled or not concluded and related date and time of entry, amendment or cancellation;

c) type of transaction;

d) subject of the transaction;

e) quantity;

f) unit price;

g) date and time of execution of the transaction.

3. The information pursuant to subsection 2a) and 2b), other than by the management companies, shall be available to Consob for consultation.

4. Electronic recording procedures shall allow Consob to perform searches at any time and on any financial instrument, any type of transaction and any market investor.

5. The management companies, at the time of extraordinary company transactions that could have an impact on price continuity of the financial instruments traded, shall make public the adjustment coefficients adopted.

6. Management companies shall submit periodic dataflows to Consob, in electronic format, in which data relating to the managed markets is organised or processed according to the methods indicated by Consob.

Chapter III
Admission, suspension and exclusion of financial instruments and operator access
to regulated markets

Article 16
(Admission to trading of financial instruments on regulated markets)

1. Management companies shall adopt clear and transparent rules on the admission of financial instruments to trading. Such rules shall guarantee that the financial instruments admitted to trading on a regulated market may be traded in a fair, orderly and efficient manner and, in the case of securities, shall be freely traded.

2. In the case of derivatives, the rules shall guarantee that the derivate characteristics are compatible with an orderly price formation process and guarantee the existence of effective regulatory conditions.

3. In addition to the provisions of subsections 1 and 2, management companies shall adopt and maintain:

a) effective devices to verify that issuers of securities admitted to trading on the regulated market observe issuer obligations in relation to Community law with regard to initial, continuous and ad hoc reporting obligations;

b) devices to facilitate market investor access to the information indicated in paragraph a) when published;

c) devices to regularly control the observance of requirements in relation to financial instruments admitted to trading.

c-bis) effective devices to enable investors to easily identify the obligations to which issuers admitted to trading on the regulated market have chosen to submit under the provision of the law and of the implementing regulations of Consolidate law1-bis.

4. The management companies shall fulfil the obligations of this article in compliance with the criteria and provisions of Regulation no. 1287/2006/EC.

Article 17
(Suspension and exclusion from trading of financial instruments on regulated markets)

1. Management companies may suspend or exclude from trading any financial instrument that ceases to observe the rules of the regulated market managed, taking into account the objectives of investor protection and regular market operations.

2. Management companies shall make public, without delay, and also through their Internet web site, any decision taken pursuant to subsection 1.

Article 18
(Operators permitted to trade on regulated markets and operator designation of clearing and settlement systems)

1. Without prejudice to the provisions of article 64, subsection 1, paragraph c) of the Consolidated Law, at the time of launch of operations of a regulated market, management companies shall provide Consob with the list of operators permitted to trade on said market. On an annual basis when submitting financial statements, management companies shall also provide Consob with an updated version of the list of operators permitted to trade on the regulated markets managed.

2. Non-EU investment firms and banks authorised to provide services in Italy pursuant to article 1, subsection 5, paragraph a) of the Consolidated Law may access regulated markets, provided the rules adopted by management companies and the terms of article 25, subsection 2 of the Consolidated Law are observed.

3. Management companies shall inform Consob without delay of proposals and/or requests for permission submitted by operators in relation to clearance and settlement systems, in observance of the terms of article 70-bis, subsection 2 of the Consolidated Law. Such notifications shall be issued to the Bank of Italy in the case of wholesale government security markets.

4. Management companies shall submit information to Consob to allow the authority to perform assessments pursuant to article 70-bis of the Consolidated Law. After 45 days from Consob's receipt of such information, where Consob has not issued observations, the terms of article 70-bis, subsection 2, paragraph b) of the Consolidated Law shall be deemed accepted for related designation purposes.

5. The notifications pursuant to subsections 3 and 4 shall also be submitted without delay to the Bank of Italy in the case of regulated markets pursuant to article 63, subsection 3 of the Consolidated Law.

Title III
Multilateral trading facilities and systematic internalisers

Article 19
(Multilateral trading facilities)

1. Authorised persons and management companies that manage multilateral trading facilities shall establish and maintain:

a) transparent, non-discretional rules and procedures to guarantee a fair and orderly trading process, together with objective criteria for the effective execution of orders;

b) transparent rules concerning the selection criteria for financial instruments that may be traded through their facilities;

c) transparent rules based on objective criteria governing access to the system, in compliance with the provisions of article 25, subsections 1 and 2 of the Consolidated Law;

d) effective devices and procedures for the regular control of observance of the rules by users;

e) measures necessary to promote the efficient regulation of transactions concluded through the multilateral trading facilities;

2. Authorised persons and management companies that manage multilateral trading facilities shall also:

a) provide and confirm public access to sufficient information as to allow users to form an opinion on investment matters, taking into account the nature of the users and type of instruments traded;

b) clearly inform users of their respective liabilities with regard to the rules for transactions executed through the facilities;

c) promptly execute any instruction issued by Consob regarding the suspension or exclusion of financial instruments from trading;

d) control transactions executed by users through their facilities to identify any infringement of the rules, abnormal trading terms or conduct classifiable as market abuse.

3. Authorised persons and management companies that manage multilateral trading facilities shall appropriately advertise the operating rules of the facilities managed, also through their Internet web site.

Article 20
(Multilateral trading facilities’ reporting obligations to Consob)

1. At the time of application for authorisation and any subsequent change in information declared, authorised persons and management companies that manage multilateral trading facilities shall provide Consob with the following:

a) the list of financial instruments admitted to trading and the operators permitted to trade on the systems managed;

b) the system operating rules;

c) the supervisory procedures adopted to guarantee system integrity and orderly trading;

d) information pursuant to article 13.

2. At least once a year, authorised persons and management companies that manage multilateral trading facilities shall submit the audit plan relating to auditing of the main ITC structures for the provision of investment services offered, with particular reference to ITC security measures implemented and planned business continuity procedures.

3. Articles 12.3 and 12.4 shall apply.

4. Authorised persons and management companies that manage multilateral trading facilities shall inform Consob without delay of the results of audits pursuant to subsection 2, together with the measures adopted or to be adopted to remedy any malfunction discovered, and specifying the related implementation times.

5. Authorised persons and management companies that manage multilateral trading facilities shall inform Consob without delay of any significant infringement of the rules of the facilities managed and of any abnormal trading terms. Articles 15.1, 15.2, 15.3 and 15.4 shall apply.

6. Management companies that manage multilateral trading facilities shall fulfil the obligations pursuant to articles 13, 14.3 and 14.4.

7. In order to avoid duplicate controls, Consob and the Bank of Italy shall take into account the supervision of systems pursuant to article 14.3 by the competent supervisory authorities of other EU member states.

8. Management companies that manage multilateral trading facilities may reach agreements with companies managing central counterparty, clearance and settlement systems of non-EU countries provided that equivalent supervisory measures to those applicable under Italian law are practiced and subject to stipulation of agreements with the corresponding foreign authorities for the exchange of information. Operations under the terms of the agreement shall be subordinate to verification of the existence of terms pursuant to article 70-bis, subsection 2 of the Consolidated Law. For this purpose, management companies shall provide the information indicated in article 14.3.

Article 21
(Start-up and termination of systematic internaliser activities)

1. Without prejudice to obligations pursuant to the regulation adopted by Consob by Resolution no. 16190/2007, persons who, in compliance with the provisions of Regulation no. 1287/2006/EC, intend to perform systematic internaliser activities shall provide to Consob at least 15 days prior to the start-up of operations as a systematic internaliser:

a) all useful documentation from which it clearly emerges that:

i) the activities play an important commercial role and are conducted on the basis of non-discretional rules and procedures;

ii) the activities are performed by personnel or automatic technical system authorised for such purposes, regardless of the fact that the personnel or system in question are used exclusively for this purpose or not;

iii) the activities are accessible to customers on a regular and continuous basis;

b) the financial instruments on which activities are to be performed, with a breakdown of liquid shares, other shares and financial instruments other than shares;

c) the start-up date of activities for each financial instrument;

d) the investors that may access listings;

e) the information distribution channel used to publish listings and contracts concluded at the trading venue managed.

2. Systematic internalisers shall immediately inform Consob of any change in the information submitted pursuant to subsection 1.

3. Systematic internalisers shall inform Consob without delay of the publication, through the information distribution channel indicated in subsection 1e), of the decision to cease systematic internaliser activities on one or more financial instruments. Where the use of such a channel is not possible, the systematic internaliser may use a channel equally accessible to its customers and other market investors, informing Consob immediately.

4. Systematic internalisers shall establish electronic procedures to record transactions on financial instruments included in the systems managed. Electronic records, to be archived for not less than 5 years, shall allow Consob to perform searches at any time and on any financial instrument, any type of transaction and any user of the system.

Article 22
(Systematic internalisers on shares)

1. Consob shall maintain and publish a list of systematic internalisers on shares admitted to trading on a regulated market and shall fulfil obligations envisaged under Community regulations.

2. Systematic internalisers, based on their commercial policy and on clear, non-discriminatory rules, shall identify investors that may access their listings. Such rules and any subsequent change shall be notified immediately to Consob. On request, systematic internalisers shall inform Consob of the list of persons that gain access to listings on the system managed.

3. Systematic internalisers may refuse to launch or suspend commercial relations with investors based on considerations of a commercial nature, such as the credit rating of the investor, counterparty risk and the final settlement of the transaction.

4. Consob shall supervise the observance of persons providing systematic internaliser activities on shares admitted to listing on regulated markets of obligations relating to:

a) regular updating of buy and sell prices published pursuant to article 27 and the maintenance of prices that reflect prevailing market conditions;

b) observance of conditions regarding price improvements pursuant to article 27.

Title IV
Transaction reporting obligations and transparency

Chapter I
Reporting obligations to Consob of transactions concluded on financial instruments

Article 23
(Reporting obligations to Consob of transactions concluded on financial instruments admitted to trading on regulated markets)

1. The reporting obligations indicated under this article shall apply to authorised persons executing transactions on financial instruments admitted to trading on a regulated market.

2. Authorised persons shall inform Consob of the details of such transactions as quickly as possible and at the latest by the end of the next working day. Said obligation shall also apply to transactions executed outside a regulated market.

3. Reports pursuant to subsection 2 shall include the following information:

a) the identification code of the person issuing the report;

b) date and time of execution of the transaction;

c) whether the transaction was a purchase or sale;

d) an indication as to whether the transaction was executed on own account or on behalf of a customer;

e) the identification code of the financial instrument involved in the transaction;

f) the unit price, net of any commissions, and an indication of the currency in which the price is expressed;

g) the quantity;

h) the transaction counterparty, with an indication of the customer type.

4. Authorised persons shall be exempt from obligations pursuant to subsection 2 for transactions on financial instruments admitted to listing on Italian regulated markets and included therein.

5. Consob shall maintain and publish a list of identification codes of regulated markets and multilateral trading facilities for which Consob acts as the competent authority and of persons operating as central counterparties to such regulated markets and multilateral trading facilities.

6. The information pursuant to subsections 2 and 3 shall be transmitted to Consob:

a) by the authorised persons or a third party acting on their behalf;

b) by an order comparison or notification system approved by Consob;

c) by the regulated market or multilateral trading facilities on whose systems the transaction is concluded.

7. Consob shall verify that the systems referred to in subsection 6b) satisfy the conditions of Regulation no. 1287/2006/EC and shall publish a list of said systems.

8. Authorised persons shall fulfil the obligations of this article in compliance with the criteria and provisions of Regulation no. 1287/2006/EC.

9. Consob shall establish by communication the technical and IT requirements of authorised persons or persons referred to under subsection 6 in order to correctly fulfil obligations pursuant to this article.

Article 24
(Issue and exchange of information by Consob)

1. Consob shall establish the devices necessary to ensure that the competent authority for the most relevant market for financial instruments in terms of liquidity shall also receive the information pursuant to article 23.2.

2. Pursuant to article 23, Consob shall forward the information received from EU banks and investment firms with branches in Italy to the competent authorities of the home member state, unless the latter should inform Consob that they do not wish to receive such information.

Chapter II
Pre- and post-trading transparency on shares admitted to trading on regulated markets

Article 25
(Pre-trading transparency requirements for regulated markets and multilateral trading facilities)

1. Management companies and managers of multilateral trading facilities shall make public, for each share admitted to trading on a regulated market, at least the information pursuant to Regulation no. 1287/2006/EC. A summary of the information to be published in compliance with EU regulations on this subject is contained in table 1, Annex II to Regulation no. 1287/2006/EC.

2. For the application of transparency regulations pursuant to subsection 1, management companies and managers of multilateral trading facilities shall provide Consob, at the time of definition of the regulated market rules or at the time of submission of the multilateral trading facilities operating rules, respectively, with adequate information on:

a) the type of trading system to which transparency obligations pursuant to table 1, annex II to Regulation no. 1287/2006/EC are attributable;

b) the existence of a hybrid system that does not fall within the categories pursuant to paragraph a). In such cases, the management companies and persons authorised to manage multilateral trading facilities shall illustrate the specific transparency rules adopted and guarantee the observance of relevant EU obligations.

Article 26
(Cases of inapplicability of pre-trading transparency obligations for regulated markets and multilateral trading facilities)

1. Obligations pursuant to article 25 need not apply in cases in which:

a) the system managed is based on a trading method in which the price is established in relation to a reference price generated by another system and provided that said reference price has a widespread publication and is generally considered reliable by market users;

b) the system managed formalises agreed transactions, each in observance of the conditions specified in the rules for regulated markets and multilateral trading facilities.

2. For the purpose of application of subsection 1b), agreed transactions shall mean transactions that satisfy the requirements and conditions of Regulation no. 1287/2006/EC.

3. Obligations pursuant to article 25 need not apply where the size of the order is equal to or greater than the minimum volume of orders specified in table 2, annex II to Regulation no. 1287/2006/EC.

Article 27
(Pre-trading transparency requirements for systematic internalisers)

1. Authorised persons shall publish irrevocable prices of shares admitted to trading on regulated markets for which:

a) a liquid market exists in compliance with relevant EU provisions;

b) they are systematic internalisers, according to the notification to Consob pursuant to article 21;

c) the transaction is characterised as of a size equal to or lower than the standard market size in compliance with the provisions of table 3, annex II to Regulation no. 1287/2006/EC.

2. In the case of shares for which no liquid market exists, the systematic internalisers shall issue their prices to customers on request.

3. For the purposes of this article, shares admitted to trading on a regulated market shall be considered to have a liquid market if they are subject to daily trading, with a float of not less than five hundred million euro and if one of the following conditions is satisfied:

a) the average number of transactions per day for the share in question is not less than five hundred;

b) the average value of trading per day for the share in question is not less than two million euro;

4. Systematic internalisers shall decide on the quantity or quantities of their listed prices. For a particular share, each listed price must include an irrevocable purchase and/or sale price or prices for a quantity or quantities that could correspond to the standard size of the market for the relevant category of shares. The price or prices shall reflect prevailing market conditions for that share, in compliance with the provisions of Regulation no. 1287/2006/EC.

5. Systematic internalisers may:

a) update their listed prices at any time;

b) in exceptional market conditions and in compliance with relevant EU provisions, withdraw their listed prices.

6. Systematic internalisers shall execute orders received from their customers in relation to the shares for which they act as systematic internalisers, at the prices listed at the time of receipt of the order. They may execute orders received from their own professional customers:

a) at a better price in justified cases, provided that the price falls within the range of a scissor effect published as close to market conditions and orders exceed seven thousand five hundred euro;

b) prices other than those listed and without compliance with conditions established under paragraph a), when the execution in several securities forms part of a single transaction or the orders are subject to conditions other than the current market price.

7. Where the systematic internaliser, producing a single price or the higher price of which is less than the market size, receives a customer order of a greater consistency than the listed price, but less than the standard market size, the systematic internaliser may decide to execute the part of the order in excess of the listed price provided that the order is executed at the listed price, except in cases otherwise permitted under the terms of subsection 6.

8. Where the systematic internaliser issues a diversified price and receives an order of interim size and decides to execute that order, the order is executed by applying one of the prices listed, in observance of the provisions of article 49 of the regulation adopted by Consob by Resolution no. 16190/2007, except in cases otherwise permitted under the terms of subsection 6.

9. To limit the risk of exposure to multiple transactions by the same customer, systematic internalisers may limit, in a non-discriminatory manner, the number of transactions for a given customer for which conclusion is effected under the published terms. Systematic internalisers may also limit, in a non-discriminatory manner pursuant to article 49 of the regulation adopted by Consob by Resolution no. 16190/2007, the total number of transactions by different customers at the same time and only when the number and/or volume of orders sought by customers significantly exceeds the standard.

10. Systematic internalisers shall fulfil the obligations of this article in compliance with the criteria and provisions of Regulation no. 1287/2006/EC.

Article 28
(Management of limit orders)

1. Authorised persons shall be exempt from reporting obligations pursuant to article 49, subsection 2 of the regulation adopted by Consob with Resolution no. 16190/2007 in the case of limit orders regarding a high volume if compared with standard market sizes, in observance of the conditions of Regulation no. 1287/2006/EC.

Article 29
(Post-trading transparency requirements for regulated markets, multilateral trading facilities and authorised persons)

1. This article shall apply, unless otherwise indicated, to authorised persons, management companies of regulated markets and managers of multilateral trading facilities.

2. For transactions concluded on their systems and in relation to shares admitted for listing on regulated markets, management companies for regulated markets and managers of multilateral trading facilities shall publish the information pursuant to article 27 of Regulation 1287/2006/EC.

3. Authorised persons shall publish information pursuant to article 27 of Regulation no. 1287/2006/EC only for transactions on shares admitted to listing on regulated markets and concluded outside a regulated market or multilateral trading facilities.

4. A systematic internaliser that has notified Consob pursuant to article 21 may use the abbreviation "SI" rather than the trading venue, provided that:

a) the transaction, the details of which are published, was executed as systematic internaliser on the share concerned;

b) the systematic internaliser, in compliance with relevant EU provisions, makes available to the public the aggregate quarterly data on transactions executed as systematic internaliser per share and for each trading day in the financial quarter.

5. For transactions executed outside regulated markets or multilateral trading facilities, the obligation to publish information pursuant to subsection 3 shall be fulfilled by the seller unless otherwise agreed between the parties.

6. Persons referred to in subsection 1 may, in accordance with the indications of table 4, annex II to Regulation no. 1287/2006/EC, differ the publication of information pursuant to subsections 2 and 3 provided that:

a) the transaction is between an authorised person acting on his own account and his customer;

b) the size of the transactions are equal to or greater than the minimum size permitted, as specified in table 4, annex II to Regulation no. 1287/2006/EC.

7. Consob shall approve the proposed measures, and any amendment thereto, from management companies and managers of multilateral trading facilities for the deferred publication of transactions concluded on regulated markets and managed systems, at the time of approval of the market regulations or at the time of launch of system operations, respectively. Such measures shall be clearly communicated to market operators and the investor public.

8. The persons referred to in subsection 1 shall fulfil the obligations of this article in compliance with the criteria and provisions of Regulation no. 1287/2006/EC.

Article 30
(Publication and public accessibility of information)

1. The pre- and post-trading information pursuant to articles 25, 27 and 29 shall be made public at reasonable commercial terms and in a manner that is easily accessible.

2. Management companies, managers of multilateral trading facilities and systematic internalisers shall publish the information pursuant to articles 25 and 27 in normal trading hours, in compliance with the provisions and criteria established in Regulation no. 1287/2006/EC. The obligations referred to in this subsection shall be considered fulfilled if the information is published as soon as it is accessed during trading hours of the trading venue and remain accessible until updated.

3. The pre- and post-trading information shall be made available to the public as far as possible in real time.

4. The pre- and post-trading information shall be made public and accessible to investors through one of the following channels:

a) the structures of a regulated market or multilateral trading facilities;

b) third party structures;

c) own means.

5. Management companies, managers of multilateral trading facilities and authorised persons shall inform Consob within 15 days of the entry into force of this regulation, and thereafter within 7 days of any change, of the distribution channel used for pre- and post-trading information in order to comply with the obligations pursuant to articles 25, 27 and 29.

6. Management companies may provide access, under reasonable commercial terms in a non-discriminatory manner, to devices said companies use to disclose pre- and post-trading information to authorised persons obliged to publish the details of transactions on shares admitted to trading on regulated markets, pursuant to articles 27 and 29.

Article 31
(Calculations and estimates applied in pre- and post-trading transparency on shares admitted to trading on regulated markets)

1. For the purpose of application of transparency pursuant to articles 25, 27 and 29, Consob shall publish information in accordance with Regulation no. 1287/2006/EC or shall provide such information to the Committee of European Securities Regulators (CESR).

Chapter III
Pre- and post-trading transparency on financial instruments admitted to trading on regulated markets

Article 32
(Pre- and post-trading transparency requirements for regulated markets and multilateral trading facilities)

1. Management companies and managers of multilateral trading facilities shall establish and maintain their own adequate rules on pre- and post-trading transparency with regard to financial instruments other than shares admitted to trading on the systems managed, taking into account the structural characteristics of the market, the type of financial instrument traded, the size of the transactions and type of operators, and with particular regard to the market share of retail investors.

2. The pre- and post-trading information pursuant to subsection 1 shall be made public under reasonable commercial terms and in a manner that is easily accessible.

3. The provisions of this article shall not apply to the wholesale trading of government securities.

Article 33
(Pre- and post-trading transparency requirements for systematic internalisers)

1. Persons intending to perform systematic internaliser activities on financial instruments other than shares admitted to trading on regulated markets, in compliance with the definition and criteria of Directive 2004/39/EC and Regulation no. 1287/2006/EC, shall establish and maintain transparency rules in reference to said financial instruments, also differentiated according to the structural characteristics of the market, the type of financial instrument traded, the size of the transactions and the type of operator, and with particular regard to the market share of retail investors.

2. The pre- and post-trading information pursuant to subsection 1 shall be made public under reasonable commercial terms and in a manner that is easily accessible.

3. The provisions of this article shall not apply to the wholesale trading of government securities.

Article 34
(Post-trading transparency requirements for authorised persons)

1. Authorised persons, for transactions concluded, shall make public the following information:

a) the date and time of the transaction;

b) the identification details of the financial instrument;

c) the price and quantity of the transaction concluded.

2. The obligations pursuant to subsection 1 shall to transactions:

a) concluded outside a regulate market, multilateral trading facilities or systematic internaliser, on financial instruments other than shares admitted to trading on Italian regulated markets;

b) with a value of less than or equal to 500,000 euro.

3. For transactions exceeding the threshold indicated in subsection 2b), authorised persons shall make public at least the information relating to the date and time of the transaction, financial instrument identification details and the price, together with an indication that the transaction exceeds the threshold of subsection 2b).

4. The information pursuant to subsection 1 shall be published with reference to each transaction by the end of the working day following conclusion of the transaction. These shall be made public under reasonable commercial terms and in an easily accessible manner.

5. Articles 29.5, 30.4, 30.5 and 30.6 shall apply.

6. The provisions of this article shall not apply to the wholesale trading of government securities.

Title V
Implementation of links with foreign markets and extension of operations
to other EU member states

Article 35
(Reports to Consob on the implementation of links with foreign markets and extension of operations to other EU member states)

1. Management companies shall inform Consob of the implementation of links with foreign markets, issuing the report pursuant to annex 1 within five days of start-up of the aforementioned links.

2. Authorised persons shall inform Consob of the implementation of links with foreign markets, issuing the report pursuant to annex 2 within five days of start-up of operations on said markets.

3. Using the methods and terms indicated in subsections 1 and 2, Consob shall be informed of the termination of operations of links with foreign markets and of all other changes in data provided previously.

4. Management companies shall inform Consob of the extension of operations to other EU member states pursuant to article 65, subsection 5 of the Consolidated Law. The specific reporting of the member states to which operations are expected to extend shall be completed 30 days prior to the start-up of such operations.

Title VI
Conditions for listing of certain companies

Article 36
(Conditions for listing of shares of parent companies of companies instituted and regulated by the laws of non-European Union Member States)

1.  The shares of parent companies of companies instituted and regulated by the laws of non-European Union Member States may be admitted for trading on a regulated Italian market, as long as the parent companies:

a)  make the accounting positions of the subsidiaries available to the public, prepared for the purpose of drafting the consolidated financial statements and comprising at least the balance sheet and profit and loss account. These accounting positions are made available to the public through filing at the company's offices or publishing on the website of the parent company;

b)  acquire the articles of association and structure and powers of the corporate bodies from the subsidiaries;

c)  ensure that the subsidiaries:

i)  provide the auditor of the parent company with all information it requires to audit the annual and interim accounts of the parent company;

ii)  have an administrative-accounting system that is suitable to ensuring that the management and auditor of the parent company can regularly obtain the economic, equity and financial data necessary to prepare the consolidated financial statements. The auditing body of the parent company notifies Consob and the market management company without delay of any events or circumstances making the system unsuitable to compliance with the above conditions.

2. The provisions of subsection 1 shall not apply to subsidiaries deemed to be of no material significance, identified pursuant to the provisions of Title VI, Chapter II of the regulation adopted by Consob resolution no. 11971/1999, as amended2.

Article 37
(Inhibitory conditions to the listing of shares of companies subject to management and coordination by other companies)

1. The shares of subsidiaries subject to management and coordination by another company or entity may not be admitted to trading on an Italian regulated market if the subsidiaries:

a) have not fulfilled publication obligations pursuant to article 2497-bis of the Italian Civil Code;

b) do not have independent decision-making powers in relations with customers and suppliers;

c) have a centralised treasury, with the company exercising sole control or another company of the group, that does not satisfy the interests of the company. The satisfaction of interests of the company shall be confirmed by the board of directors by an analytically justified statement and verified by the board of statutory auditors;

d) do not have an internal control committee composed of independent directors as defined in subsection 1-bis. Where established, other committees recommended in codes of conduct on corporate governance, issued by regulated market management companies or sector or financial associations, shall also be composed of independent directors. For companies subject to management and coordination by another Italian or foreign company with shares listed on regulated markets, a board of directors in which the majority of members are independent directors is also required. For the purpose of this paragraph, persons appointed as director in the company or entity with management and coordination or in listed subsidiaries of that company or entity cannot qualify as independent directors. For companies adopting the two-tier administration and control system, however, an internal control committee must be set up within the supervisory board that satisfies the following requirements: i) at least one member is a director appointed by minority interests, where present; ii) all committee members are independent pursuant to subsection 1-bis 3 .

1-bis. For the purpose of this article, “independent directors” and “independent supervisory board members” shall mean:

- directors and board members meeting the independence requirements envisaged in article 148, subsection 3 of the Consolidated Law on Finance, and any other requirements in the procedures specified in article 4 of the regulation adopted by Resolution no. 17221 of 12 March 2010 on related party transactions or in sector regulations that may be applicable on the basis of the company's business activities;

- if, pursuant to article 123-bis, subsection 2 of the Consolidated Law on Finance, the company declares adoption of a code of conduct promoted by a regulated stock exchange company or sector association envisaging independence requirements at least equivalent to those of article 148, subsection 3 of the Consolidated Law on Finance, its independent directors and board members of that company shall be recognised as independent by that company in accordance with the code of conduct concerned 4 .

1-ter. Companies with listed shares that are subject to management and coordination of another company shall adapt to the provisions of article 37, subsection 1, paragraph d) within thirty days of the first shareholders' meeting called to renew the board of directors or supervisory board 5.

2. Subsidiaries with listed shares that do not feel they should fulfil the publication obligations pursuant to subsection 1a) shall provide a detailed indication in the management report pursuant to article 2429 of the Italian Civil Code of the reasons why they do not consider they are subject to the management and coordination of the parent company.

Article 38
(Conditions for listing of shares of companies with equity composed entirely of equity investments)

1. The shares of finance companies the sole purpose of which is equity investments, including minority interests, according to pre-established limits and related instrumental activities, may be admitted to trading on an Italian regulated market where such companies 6:

a) make public qualitative and quantitative information on their investment policy, specifying the criteria adopted in investment management and the diversification of risk. Said information must allow the investor to assess investment opportunities and identify the means by which the risk diversification objectives are pursued;

b) invest and manage own assets in compliance with the published investment policy.

2. Companies pursuant to subsection 1 shall inform the public without delay of any change in their investment policy under the terms indicated in Part III, Title II, Chapter I of the regulation adopted by Consob with Resolution no. 11971/1999 as amended 7.

3. After admission to listing, the companies pursuant to subsection 1 shall indicate in the directors' report on operations and half-yearly report:

a) information on the investment method used in relation to own assets in compliance with the adopted investment policy, with particular reference to the diversification of risk, for this purpose also providing a quantitative analysis, and

b) a complete and meaningful analysis of the investment portfolio.

Article 39
(Transitional and final provisions)

1. The provisions of this Chapter shall apply to companies requesting admission to listing of their own shares on an Italian regulated market as from 1 January 2008.

2. Companies with shares listed pursuant to articles 36 and 37 shall adapt to the provisions contained therein by 16 November 2008. Listed companies acquiring control of a foreign company pursuant to article 36 after 1 January 2008 shall adapt to the provisions contained therein by 16 November 2008, if the deadline indicated in subsection 3 above is prior to that date. Such companies shall notify Consob without delay of the adopted adaptation plan and expected implementation schedule, shall disclose essential elements of the plan to the public and include information on the implementation status of the plan in periodic financial statements published pursuant to the regulation adopted by Consob Resolution no. 11971/1999, as amended. Companies with shares listed pursuant to article 38 shall adapt to the provisions contained therein by the date of approval of the financial statements for the year ending or in progress as at 31.12.2007 8.

3. Companies with listed shares that acquire control over foreign companies pursuant to article 36.1 shall adapt to the provisions contained therein within six months of conclusion of the acquisition. Companies with listed shares that are subject to the management and coordination of another company shall adapt to the provisions contained in article 37 within eighteen months of the entry into force of such a position.

4. Companies pursuant to subsection 3 shall inform Consob and the public by the methods referred to in subsection 2.

5. For companies with registered office abroad, Consob shall resolve on a case by case basis on the application of obligations referred to in this chapter, with due regard to regulations in force in the home country and any admission to listed on regulated markets or markets recognized pursuant to article 67, subsections 1 and 2 of the Consolidated Law, financial instruments issued by the company and taking into account any restrictions deriving from EU regulations9 .

6. Foreign issuers with financial instruments admitted to trading on an Italian regulated market without the consent of said issuer are excluded from the application of obligations pursuant to articles 36 and 38 10.

7. Also excluded from the application of obligations pursuant to article 36 subsection 1 paragraph a) , article 38 subsection 1 paragraph a) and article 38 subsection 3 are issuers with registered office in another EU member state or issuers of non-EU countries that have adopted another EU member state as their home member state for the purposes of Directive 2004/109/CE 11.

Title VII
Market integrity

Chapter I
Admitted market practices

Article 40
(Criteria for the admission of market practices)

1. For the purposes of application of article 181, subsection 2 and article 187-ter, subsection 4 of the Consolidated Law, Consob shall assess the admissibility of a market practice pursuant to article 180, subsection 1, paragraph c) of the Consolidated Law, taking into account the following sample criteria:

a) the level of transparency of the relevant market practice to the whole market;

b) the need to safeguard the operation of market operations and the regular interaction of the forces of supply and demand;

c) the degree to which the relevant market practice has an impact on market liquidity and efficiency;

d) the degree to which the relevant practice takes into account the trading mechanism of the relevant market and enables market operators to adequately and readily react to the new market situation created by that practice;

e) the risk inherent to the relevant practice for the integrity of directly or indirectly-related markets, whether regulated or not, on which the same financial instrument is traded throughout the Community;

f) the outcome of any investigation of the relevant market practice by any competent authority or other authority pursuant to Article 12, subsection 1 of Directive 2003/6/EC, and in particular whether the relevant market practice has contravened rules or regulations designed to prevent market abuse, or codes of conduct, be it on the market in question or on directly or indirectly-related markets within the Community;

g) the structural characteristics of the relevant market including whether or not it is regulated, the types of financial instruments traded and the type of operator, including the share of retail investors in the relevant market.

2. In taking into account the terms of subsection 1b), Consob shall in particular analyse the practice with respect to the main market parameters, i.e. the specific market conditions prior to the implementation of said practice, formation of the average weighted price of a single trading session or the closing price for the day.

3. Market practices, particularly new practices emerging merely because they have not yet been admitted, shall be considered inadmissible.

4. Consob shall regularly review the admitted practices, also taking into account any significant changes in the market context concerned, such as amendments to trading rules or the market infrastructure.

Article 41
(Procedures for the admission of market practices)

1. For the purpose of admission of a market practice or the review of admissibility of a previously admitted practice, Consob shall implement a consultation procedure, also at the request of the interested parties, to obtain opinion from:

a) the relevant organisations, such as the representatives of issuers, authorised persons, consumers, other authorities and market management companies;

b) competent foreign authorities where comparable markets exist, e.g. in terms of structure, trading and type of transaction.

2. Consob shall publish its decisions, accompanied by an appropriate description of the practice assessed. Said publication shall include a description of criteria taken into consideration in making the decision, in particular whether different conclusions were reached by other EU member states.

3. Consob shall submit adopted decisions, without delay, to the Committee of European Securities Regulators (CESR).

4. Consob shall publish, indicating the reference market, an updated list of practices admitted in Italy pursuant to article 180, subsection 1, paragraph c) of the Consolidated Law and practices admitted in other EU member states identified on the basis of the list published by the Committee of European Securities Regulators (CESR). The list published by Consob shall also contain a section on the practices that Consob has considered inadmissible.

5. Where investigations are launched into alleged infringement of the provisions of Title I-bis, Part V of the Consolidate Law in relation to the practice in question, the consultation procedure referred to under this article shall be deferred until conclusion of the investigations or related sanctions.

6. A practice admitted after the consultation procedure pursuant to this article may be amended only after a similar consultation procedure.

Chapter II
Market practices on derivatives

Article 42
(Inside information in relation to derivatives on commodities)

1. Without prejudice to the provisions of articles 40 and 41, for the purpose of application of article 181, subsection 2 of the Consolidated Law, information directly or indirectly related to one or more derivatives on commodities on which users of the market on which such instruments are traded expect to receive information, in compliance with market practices, shall be:

a) routinely made available to the users of those markets, or

b) required to be disclosed in accordance with legal or regulatory provisions, market rules, contracts or customs on the relevant market or markets for the underlying commodities.

Chapter III
Market manipulation

Article 43
(Elements and circumstances to be assessed in the identification of market manipulation)

1. In order to assess whether conduct may be considered market manipulation pursuant to article 187-ter, subsection 3, paragraphs a) and b) of the Consolidated Law, the following elements and circumstances shall be taken into account:

a) the extent to which buy and sell orders issued or transactions executed represent a significant share of the daily volume of financial instruments traded relevant to the regulated market concerned, in particular when such orders or transactions lead to a significant change in the price of the financial instrument.

b) the extent to which buy and sell orders issued or transactions executed by persons with significant buying or selling power for a given financial instrument lead to a significant change in price of the financial instrument or related derivative or underlying asset admitted to trading on a regulated market.

c) whether the transactions executed lead to a change in ownership or actual transfer of ownership of a financial instrument admitted to trading on a regulated market;

d) the extent to which buy and sell orders issued or transactions executed involve inversion of the short-term buy or sell position and represent a significant share of the daily volume of the financial instrument traded on the regulated market concerned and may be associated with significant changes in price of a financial instrument admitted to trading on a regulated market;

e) the extent to which buy and sell orders are issued or transactions executed are concentrated in a short period of time during the trading session and lead to a change in price that is later inverted;

f) the extent to which buy and sell orders issued modify the best prices of buy and sell proposals of a financial instrument admitted to trading on a regulated market or, more generally, the extent to which they modify the trading book available to market users, later cancelled prior to execution;

g) the extent to which orders are issued and transactions are executed at times or close to times used for the calculation of opening or closing call auctions, price controls, reference prices, regulatory prices or the assessment of financial instruments, leading to variations in said prices.

2. In order to assess whether conduct may be considered market manipulation pursuant to article 187-ter, subsection 3, paragraph c) of the Consolidated Law, the following elements and circumstances shall be taken into account:

a) whether the buy and sell orders issued or transactions executed are preceded or followed by the disclosure of false or misleading information by the persons issuing said orders or executing the transactions, or by third parties attributable to said persons;

b) whether buy and sell orders are issued or transactions are executed by persons before or after said persons, or third parties attributable to said persons, have processed or disclosed incorrect investment studies or recommendations or tendentially or manifestly influenced by significant interest.

3. The elements and circumstances referred to under subsections 1 and 2 are mere examples and shall not necessarily constitute market manipulation per se pursuant to article 187-ter, subsection 3 of the Consolidated Law.

4. The examples provided under article 1 of Directive 2003/6/EC and in annex IV, section 1 shall constitute conduct considered suitable for configuration as market manipulation.

5. Investigations into conduct considered to constitute market abuse shall be performed, also taking into consideration the examples provided at European level.

Chapter IV
Suspect transactions

Article 44
(Persons obliged to report suspect transactions)

1. Persons referred to under article 187-nonies of the Consolidated Law shall submit reports as specified therein to Consob in relation to suspect transactions executed by them or concluded on regulated markets, alternative trading systems or trading platforms managed by them with regard to financial instruments specified in article 180, subsection 1, paragraphs a) and b) of the Consolidated Law. Transactions and orders not executed shall also be included in the report.

2. EU investment firms, EU banks and harmonised management companies freely providing services in Italy shall not be obliged to apply the provisions of subsection 1.

Article 45
(Identification of suspect transactions)

1. The assessment of conduct appropriate for consideration as suspect transactions is performed on a case by case basis, taking into account:

a) elements configurable as market abuse indicated in Title I-bis, Part V of the Consolidated Law;

b) the definition and public disclosure of inside information pursuant to article 114 of the Consolidated Law and regulatory enactment legislation;

cb) the definition and public disclosure of inside information pursuant to article 181, subsection 2 of the Consolidated Law and article 42;

d) the elements and circumstances indicated under article 43;

e) the examples of market manipulation provided in Annex 3 and other examples provided at European level;

f) examples indicating the presence of suspect transactions identified by Consob, also on the basis of those processed at European level.

2. Authorised persons with reporting obligations and stockbrokers shall adopt measures and action as required to identify and report suspect transactions without delay.

3. Authorised persons and market management companies that operate alternative trading systems or other trading platforms shall adopt measures and action as required to prevent market abuse and to identify and report suspect transactions without delay.

Article 46
(Reporting deadlines)

1. The assessment pursuant to article 45, subsection 1 shall be performed also taking into account the circumstances, information or facts obtained subsequent to the transaction.

2. Persons specified under article 44, subsection 1 shall arrange reporting without delay when they become aware of facts or information that provide reasonable motive for consideration of the transaction concerned as suspect.

Article 47
(Report content)

1. The report shall contain the following elements of information:

a) a description of the transactions, including details of the orders and execution markets;

b) reasons for suspicion that the transactions may constitute market abuse;

c) details to identify the persons involved in the transactions;

d) capacity in which the person subject to reporting obligations operates (e.g. on own account or on behalf of third parties);

e) any information that may be useful to investigation of the suspect transactions.

2. Where the information indicated in the above subsection is not available at the time of the report, the report should at least indicate the reasons for treating the transaction as suspect. All other information is reported as soon as it becomes available.

Article 48
(Reporting methods)

1. The report to Consob may be submitted by mail, e-mail, fax or telephone except, in the latter case, at the request of Consob to confirm the report in writing. The report must be issued in accordance with Consob instructions.

Article 49
(Confidentiality obligations and official secrecy)

1. In implementation of European law:

- the persons issuing the report pursuant to article 187-nonies of the Consolidated Law shall not inform any other person of issue of the report, including the persons on behalf of whom the transactions were executed;

- Consob shall not inform third parties of the identity of persons issuing the report.

2. The exception shall be with regard to court relations pursuant to article 187-decies of the Consolidated Law and in cases prescribed by law for investigations into infringements subject to financial penalties.

Article 50
(Transactions relating to foreign markets)

1. Consob shall immediately inform the competent foreign authorities of reports received and relating to regulated markets based in other EU member states.

Title VIII
Final and transitional provisions

Article 51
(Entry into force and final and transitional provisions)

1. This Regulation shall enter into force on the day of its publication in the Italian Gazzetta Ufficiale.

2. On first application, intermediaries intending to take up systematic internaliser activities on financial instruments other than shares may issue notification pursuant to article 21, subsection 1 by 31 March 2008.

3. Persons who as at 31 October 2007 are entered on the list of alternative trading systems and who have not issued notification pursuant to article 21, subsection 1 shall fulfil the obligations of pre- and post-trading transparency identified in the Consob Communication of 17 April 2003, adopted by resolution no. 14035.

4. Authorised persons shall fulfil the obligations of article 34 by 1 January 2008.

5. The provisions of the regulation containing enactment provisions of Italian Legislative Decree no. 58 of 24 February 1998 and Italian Legislative Decree no. 213 of 24 June 1998 on markets, adopted by Consob with resolution no. 11768 of 23 December 1998 as amended, shall be repealed, except for those contained in Title II Chapter IV, Title III and Title IV. Annexes 1, 2 and 4 of said regulation are also repealed.

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Footnotes:

1. The resolution and annexed regulation were published in ordinary section no. 222 of Official Gazette no. 255 of 2.11.2007 and in CONSOB, Fortnightly Bulletin 10.2, October 2007. Resolution 16530 of 25/06/2008 is published in the Official Gazette 151 of 30.06.2008 and in CONSOB, Fortnightly Bulletin 6.2, June 2008; it entered into force on the day after its publication in the Official Gazette.   Resolution No. 16850 of 1 April 2009 was published in ordinary section no. 45 of Official Gazette no. 83 of 9 April 2009 and in CONSOB, Fortnightly Bulletin no. 4.1, April 2009; it shall be in force as from the fifteenth day following its publication in the Official Gazette. Resolution no. 17221 of 12 March 2010 and related regulation were published in Official Gazette no. 70 of 25 March 2010 and in CONSOB Fortnightly Bulletin no. 3.1, March 2010. Resolution no. 17389 of 23 June 2010 was published in Official Gazette no. 152 of 2 July 2010 and in CONSOB Fortnightly Bulletin no. 6.2, June 2010, regarding the entry into force of the provisions of Resolution no. 17221 of 12 March 2010 as amended by Resolution no. 17389 of 23 June 2010. Resolution no. 18079 of 20 January 2012 was published in Official Gazette no. 31 of 7 February 2012 and in CONSOB, Fortnightly Bulletin no. 1.2, January 2012; it shall be in force as from the fifteenth day following its publication in the Official Gazette. Resolution no. 18214 of 09.05.12 is published in Official Gazette no. 118 of 22 May 2012 and in CONSOB fortnightly bulletin no. 5.1, May 2012; this entered into force from the fifteenth day following its publication in the Official Gazette, except where otherwise envisaged by the provisions of paragraph 2 of Article 3 of said Resolution.

1-bis Paragraph introduced by Consob Resolution 18079 of 20.1.2012.

2. Article first replaced by resolution no. 16530 of 25.06.08 and then amended by resolution no. 18214 of 09.05.12 which has replaced the subsection 1. 
 
3. Subsection amended by Resolution  no. 17221 of 12.3.2010 which after the words: “another company” added the words: “or entity”; replaced the words: “such companies” with the words: “the subsidiaries” and replaced paragraph d). Point IV.2 of Resolution no. 17221 of 12.3.2010 states that, as amended by Resolution no.17389 of 23.6.2010 provides that, on first application: “Companies with listed shares that are subject to management and coordination at the time of entry into force of this resolution, or which become so by 1 October 2010, shall adapt to the text, as amended by this resolution,  of article 37, subsection 1, paragraph d) within thirty days of the first shareholders’ meeting called after 1 October 2010 to renew the board of directors or supervisory board. For companies applying for admission to listing by 1 October 2010, the text as amended by this resolution of article 37, subsection 1, paragraph d) shall apply from the thirtieth day after the first shareholders’ meeting called after 1 October 2010 for renewal of the board of directors or supervisory board.”
 
4. Subsection first of all added by Resolution  no. 17221 of 12.3.2010 and later amended by resolution no. 17389 of 23.6.2010 which after the words: “For the purpose of this article, “independent directors” and “independent supervisory board members” added the words: “shall mean”; in the first indent, after the words “envisaged in Article 4” added the words: “of the regulation adopted by Resolution no. 17221 of 12.3.2010 on related party transactions”; in the second indent removed the words: “are independent directors and independent board members”.  
 
5. Subsection added by Resolution no. 17221 of 12.03.2010. Point IV.2 of Resolution 17221 of 12.3.2010 states that, on first application: “ Companies with listed shares that are subject to management and coordination at the time of entry into force of this resolution, or which become so by 1 October 2010, shall adapt to the text, as amended by this resolution, of article 37, subsection 1, paragraph d) within thirty days of the first shareholders’ meeting called after 1 October 2010 to renew the board of directors or supervisory board. For companies applying for admission to listing by 1 October 2010, the text as amended by this resolution of article 37, subsection 1, paragraph d) shall apply from the first shareholders’ meeting called after 1 October 2010 for renewal of the board of directors or supervisory board .”
 
6. Introduction replaced by Consob Resolution 16530 of 25.06.2008.

7. Subsection amended by resolution 16850 of 1.4.2009 which replaced the words: “article 66, subsections 2 and 3” with the words: “in Part II, Title II, Chapter I”.

8. Subsection replaced by Consob Resolution 16530 of 25.06.2008.
 
9. Subsection added by Consob Resolution 16530 of 25.06.2008.
 
10. Subsection added by Consob Resolution 16530 of 25.06.2008.
 
11. Subsection added by Consob Resolution 16530 of 25.06.2008.

ANNEX 1

Model for link reporting by management companies

1. Declarant (management company).

2. Name of the regulated market managed by the declarant and to which the declaration relates.

3. Foreign market with which the link specified in the declaration has been created.

4. Description of the technical methods for implementation of the link.

5. Start (end) date of link operations.

6. Manager of the foreign market with which the link has been created.

7. Category of financial instruments traded on the foreign market with which the link has been created.

8. Competent supervisory authority in the home state of the foreign market with which the link has been created.

9. Any measures adopted by the authority referred to in the previous point in relation to implementation of the link.

10. Any foreign markets with indirect access by members of the regulated market indicated under point 2 as a result of the links implemented by the foreign market pursuant to point 3.

11. List of persons with indirect access to the foreign markets as indicated under the previous point, with an indication for each person of the start (end) date of the corresponding trading activity.

 

ANNEX 2

Model for link reporting by authorised persons

 

1. Declarant (authorised persons pursuant to article 1, subsection 1r) of the Consolidated Law).

2. Regulated markets for financial instruments and foreign markets of which the declarant is a member by means of links.

3. Foreign market with which the link specified in the declaration has been created.

4. Description of the technical methods for implementation of the link.

5. Start (end) date of link operations.

6. Start (end) date of trading through the link.

7. Manager of the foreign market with which the link has been created.

8. Category of financial instruments traded on the foreign market with which the link has been created.

9. Competent supervisory authority in the home state of the foreign market with which the link has been created.

10. Any measures adopted by the authority referred to in the previous point in relation to implementation of the link.

11. Any foreign markets to which the declarant has access through the link referred to under point 3.

 

ANNEX 3

Examples of market manipulation

Section I

Examples of market manipulation pursuant to article 1, Directive 2003/6/EC

1. The following examples derive from the definitions pursuant to article 187-ter, subsection 3 of the Consolidated Law:

a) conduct by a person, or persons acting in concert, to secure a dominant position over the supply of or demand for a financial instrument which has the effect of fixing, directly or indirectly, purchase or sale prices or creating other unfair trading conditions;

b) the buying or selling of financial instruments at the close of the market with the effect of misleading investors acting on the basis of closing prices;

c) taking advantage of occasional or regular access to traditional or electronic media by voicing an opinion about a financial instrument (or indirectly about its issuer) while having previously taken positions on that financial instrument and profiting subsequently from the impact of the opinions voiced on the price of that instrument, without having simultaneously disclosed conflict of interest to the public in a proper and effective manner.

Consob Regulation 16191/2007
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