News of the week:
Abusive financial services: Consob blacks out 5 new websites
MiFID2: Consob Recommendation on the transparency of costs of investment services
Covid-19: ESMA statement on the conduct of business obligations of intermediaries pursuant to MiFID II in relation to retail trading during the pandemic crisis
List of information needed to carry out the assessment prescribed in Article 32 of Regulation (EU) no. 648/2012 (EMIR)
Updating of the lists of companies for which the enhanced transparency regime applies
ESMA consultation on the market regime for the growth of small and medium-sized enterprises and on amendments to the Market Abuse Regulation (MAR)
Investor protection warnings from other supervisory authorities
- NEWS OF THE WEEK -
Consob has ordered the black-out of 5 new websites that offer financial services illegally.
The commission availed itself of the powers resulting from the 'Decreto Crescita' ('Growth Decree'; Law no. 58 of 28 June 2019, article 36, paragraph 2-terdecies), on the basis of which Consob can order internet access providers to block access from Italy to websites offering financial services without the proper authorisation.
The companies and websites are listed below:
- Cnbsfin Ltd (website www.cnbsfin.com);
- "BitFxMarkets" (website www.bitfxmarkets.com);
- StsRoyal Ltd and Capital Letter Gmbh (website www.stsroyal.com);
- Game Capital Ads (website www.24proinvestors.com);
- One Thousand One Ltd (website www.daxcfd.com).
The number of sites blacked out since July 2019, when Consob got the power to order that the websites of fraudulent financial intermediaries be blacked out, has thus risen to 199. The measures adopted by Consob can be consulted on the website www.consob.it. The black-out of these websites by internet service providers operating on Italian territory is ongoing. For technical reasons, it can take several days for the black-out to come into effect.
Consob draws investors' attention to the importance of adopting the greatest diligence in order to make informed investment choices, adopting common sense behaviours, essential to safeguard their savings: these include, for websites that offer financial services, checking in advance that the operator with whom they are investing is authorised, and, for offers of financial products, that a prospectus has been published.
To this end, Consob would remind you that there is a section on the homepage of its website entitled "Be aware of fraud!" which provides useful information to warn investors against financially abusive initiatives.
Following the consultation with the financial market (see "Consob Informa" no. 7/2020) Consob has adopted a "Recommendation on the ex post reporting of costs and charges related to the provision of investment and ancillary services" (Recommendation no. 1/20 of 7 May 2020).
The Consob initiative is part of the regulatory framework outlined in the MiFID II (Markets in financial instruments) directive and the related delegated provisions, which requires intermediaries to provide more transparent information on the costs and charges associated with the provision of investment and ancillary services, in order to enable investors to make an informed assessment of the investments made.
In this vein, the Recommendation - in promoting the principles and contents of the current EU harmonisation regulations - proposes to indicate, with reference to specific areas of attention, behavioural guidelines that can protect the investors' interest to receive clear, correct and not misleading information and, at the same time, encourage the alignment of the conduct of the intermediaries with the requirements of the regulations.
Consob's instructions, to be taken into account starting from the preparation of the upcoming reports, regard the structure and content of the aggregated information, the relationship between the aggregated and analytical information, and the timing of dissemination of the report.
The reports for 2019, where not yet sent, given the current healthcare situation, should be sent to clients as soon as possible, in accordance with the general principle that information addressed to clients "must be correct, clear and not misleading" and in compliance with current legislation.
The results of the consultation, the contributions of industry operators and the opinion of the COMI (Market Operators and Investors Consultation Committee) are available on the website at the following link www.consob.it/web/area-pubblica/consultazioni?viewId=consultazioni_concluse.
COVID-19: ESMA STATEMENT ON THE CONDUCT OF BUSINESS OBLIGATIONS OF INTERMEDIARIES PURSUANT TO MIFID II IN RELATION TO RETAIL TRADING DURING THE PANDEMIC CRISIS
On 6 May, the European Securities and Markets Authority, ESMA, published a Public Statement addressed to intermediaries that provide investment services, specifying their conduct of business obligations and the organisational requirements they must meet to comply with MiFID II in the context created by the Covid-19 pandemic crisis.
This is also due to the increase in trading operations and activities by retail investors in the current situation of highly volatile financial markets and high risks for the retail investors themselves when trading complex or risky products noted by the NCAs (national competent authorities) of some countries.
In particular, the ESMA considers that the obligations of firms offering investment or ancillary services to investors are even greater in the case of new clients or clients with limited investment knowledge/experience.
The ESMA therefore recommends that the firms themselves comply with the obligations of (i) product governance, (ii) transparency of information and (iii) adequacy/appropriateness in offering their services. With regard to the first, the ESMA reminds intermediaries that they are obliged to institute adequate safeguards in the interest of their retail clients and potential clients (the target market and distribution strategy for financial instruments, whether produced or distributed).
With regard to transparency, the ESMA reiterates the need for intermediaries to inform their clients, in good time and in an appropriate manner, about the firm, its services and the financial instruments, distinguishing between retail and professional clients.
Finally, the ESMA recommends that intermediaries providing investment or portfolio advice should profile the client with an eye to the possible consequences of the Covid-19 pandemic crisis on the client's financial situation, also in relation to their assessment of the appropriateness of the portfolio held by the client, given the situation brought about by the crisis.
In accordance with the provisions of Article 79-sexies, paragraph 6, of the Consolidated Law on Finance, Consob and the Bank of Italy have identified the list of minimum information required to carry out the assessment provided for in Article 32 of Regulation (EU) no. 648/2012 (European Market Infrastructure Regulation - EMIR) for proposed acquisitions of a qualifying shareholding in a central counterpart in Annex I of the "Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector", issued by the European competent authorities on 20 December 2016 and available at the link https://esas-joint-committee.europa.eu/Publications/Guidelines/JC_QH_GLs_IT.pdf.
This list of information provides an exhaustive framework, which is also subject to harmonisation at European level as a result of the guidelines referred to above.
Consob and the Bank of Italy may still request further information in accordance with the terms of Article 31, paragraph 3, of EMIR Regulation.
In order to avoid undue delays in the process of notification and assessment of significant or complex transactions, in line with the recommendations of the aforementioned guidelines, proposed acquirers are invited to contact the Bank of Italy and Consob before the notification of proposed acquisitions.
With Resolution no. 21352 of 6 May 2020, Consob updated the lists of listed issuers with Italy as home Member State with a particularly broad-based share ownership, for which the reduction of the initial disclosure percentage thresholds applies, pursuant to Article 120, paragraphs 2-bis and 4-bis, of Legislative Decree no. 58 of 1998 (Consolidated Law on Finance) annexed to Resolutions no. 21326 and no. 21327 of 9 April 2020.
Following the issue of Decree Law no. 23 of 8 April 2020 ("Businesses Decree"), the Commission adopted Resolutions no. 21326 and no. 21327 of 9 April 2020, which prescribed a strengthened transparency regime with regard to both the obligation to disclose significant shareholdings and the "declaration of intentions" in the event of the acquisition of shareholdings in listed companies (as provided for by the "anti-raid rule").
Both measures apply for three months (unless revoked earlier), from 11 April until 11 July, to the companies listed in Italy named in the lists annexed to the resolutions of 9 April (104 at that time), identified by, among other things, the criterion of a broad-based share ownership structure, represented by the circumstance that such companies are not subject to (individual) control de jure, pursuant to Article 2359, paragraph 1), letter 1, of the Italian Civil Code, as referred to in Article 93, paragraph 1, of the Consolidated Law on Finance.
The updating of the two lists became necessary following the communication of significant shareholdings transmitted by Giovanni Agnelli B.V. on April 29 last, with reference to its stake of 60.897% of the voting rights in Gruppo Editoriale l'Espresso Spa ("GEDI"), whereby which GEDI can no longer be qualified as a company with a particularly broad-based share ownership structure and has therefore been removed from the above lists (which now include 103 companies).
On 6 May last the ESMA, the European Union's securities markets regulator, launched a consultation with stakeholders on the functioning of the market regime for the growth of small and medium-sized enterprises (SMEs) in the European Union (EU), and on two draft technical standards in connection with amendments to the Market Abuse Regulation (MAR) to promote the use of growth markets for SMEs.
The two projects are, respectively, a technical standard on liquidity contracts and a list of insiders of issuers on the SME growth markets, with the aim of reducing the administrative burden on trading, while safeguarding the integrity of the markets.
The ESMA will take into account all comments received by 15 July 2020 and will develop the final reports under MiFID II and MAR, taking account of the feedback received in this consultation document. The final report on MiFID II will be submitted to the European Commission by the end of the year, while the final report for the MAR part will be submitted in the autumn.
The consultation document is available at the following link:
The supervisory authorities of the United Kingdom (Financial Conduct Authority - FCA), Austria (Financial Market Authority - FMA), Belgium (Financial Services and Markets Authority - FSMA), Ireland (Central Bank of Ireland - CBI) and Hong Kong (Securities and Futures Commission - SFC) report companies and websites offering investment, financial and insurance services without the required authorisations.
Reported by the FCA:
- Platinum Forex Signals (www.platinumforexsignals.com);
- Quantom Capital / Protiviti International Limited (www.quantomcapital.com), with stated address in London;
- Wyelands Bank (https://wyelands.online; http://wyelands.eonlnbn.com), clone of the authorised company Wyelands Bank Plc (www.wyelandsbank.co.uk), based in London;
- BOIB Finance Investment Management (www.boib-finance.com), with stated address in London, a clone of the authorised company Bank of Ireland Business Finance Limited;
- London Fixed Bonds (www.londonfixedbonds.com), with stated address in London.
- Cryptozone24 (https://web.cryptozone24.com), with stated address in London, a clone of the authorised company Crypto Facilities Ltd (www.cryptofacilities.com), based in London. The website, used in Italy by a subject called FAH Investment LTD, was the subject of Consob Resolution no. 21246 of 28.01.2020 and subsequently Consob ordered internet service providers to block access to the site from Italy;
- Pierre Lafont Brokerage (www.pierrelafontbrokerage.com, www.lafont-brokerage.com), with stated address in London, a clone of the authorised company Pierre Lafont, based in Perpignan (France);
- Ledbury Plc (https://ledburyplc.com) with stated addresses in London, New York and Zelzate (Belgium), a clone of the authorised company Ledbury SICAV Plc (www.arlington-cap.com/home), based in Malta;
- Savone Pierre Brokerage (www.savonepierrebrokerage.com), with stated address in London, a clone of the authorised company Savone Pierre, based in Brussels (Belgium);
- SLBE BVBA (www.slbe-bvba.com), with stated address in London, a clone of the authorised company Solvas Life BVBA;
- Alpstone Capital Services Limited (www.alpstonecapital.co.uk, www.alpstone-capital.co.uk), clone of the authorised company Alpstone Capital Services Limited (email firstname.lastname@example.org);
- South West Capital Partners LLP (https://www.southwestcapitalpartners.co.uk/index.html), clone of the authorised company of the same name, South West Capital Partners LLP;
- One Crypto Trade (www.onecryptotrade.com), clone of the authorised company First Equity Limited (www.firstequitylimited.com), based in London;
- Universal Leasing Limited (www.universal-leasingltd.co.uk), clone of the authorised company Universal Leasing Limited (www.ullgroup.com, www.admiral-leasing.co.uk), based in Manchester;
- Deutsche Bank UK / DB UK (email email@example.com), clone of the authorised company Deutsche Bank AG (www.db.com), based in London.
Reported by the FMA (Austria):
- Finanzen Kredit (www.finanzen-kredit.at).
Reported by the FSMA:
- Marketsx.fr, a clone of the authorised company Safecap Investment Ltd, based in Cyprus. The Belgian supervisory authority also warns savers that the company was using the website www.marketsx.co.uk (currently inactive) and bank accounts opened in Portugal, Greece, Bulgaria.
Reported by the BCI:
The Irish supervisory authority alerts savers to the risks associated with buying or investing in virtual currencies or cryptocurrencies. These are unregulated digital currency that can also be used as forms of payment. However, the authority explains that they are not legal tender and are not guaranteed by the Central Bank of Ireland or any central bank in the European Union.
Reported by the SFC:
- American Vertex Trading Corporation Ltd (www.american-vertex.com), with stated address in Hong Kong;
- Capital Markets (www.capital-markets.com), with stated addresses in New York and Hong Kong;
- Hangtung International Wealth (www.htcfhk.com);
- https://scksecurities.com, with stated address in Hong Kong, a clone of the company authorised by the SFC, SCK Securities Limited;
- https://web.winnabao.com, clone of the company authorised by the SFC, Saxo Capital Markets HK Limited;
- www.hwsecurities.io, clone of the company authorised by the SFC, Hing Wong Securities Ltd;
Order, pursuant to art. 7-octies, letter b) of Italian Legislative Decree no. 58 of 24 February 1998 (Consolidated Law on Finance) to cease infringement of art. 18 of the said Legislative Decree, put in place by:
- Cnbsfin Ltd, through the website www.cnbsfin.com (Resolution no. 21355 of 6 May 2020);
- "BitFxMarkets", through the website www.bitfxmarkets.com (Resolution no. 21354 of 6 May 2020);
- StsRoyal Ltd and Capital Letter Gmbh, through the website www.stsroyal.com (Resolution no. 21357 of 6 May 2020);
- Game Capital Ads, through the website www.24proinvestors.com (Resolution no. 21353 of 6 May 2020);
- One Thousand One Ltd, through the website www.daxcfd.com) (Resolution no. 21356 of 6 May 2020).
The lists of listed issuers with a particularly broad-based share ownership structure, with Italy as home Member State, for which the reduction of the initial disclosure percentage thresholds is applied, pursuant to Article 120, paragraphs 2-bis and 4-bis, of the Consolidated Law on Finance have been updated (Resolution no. 21352 of 6 May 2020).
Intermediaries - Investment services
- Recommendationon the ex post reporting of costs and charges related to the provision of investment and ancillary services (Recommendation no. 1/20 of 7 May 2020).
- The registration document of GVS Spa for the company's ordinary shares to be traded on the MTA organised and managed by Borsa Italiana Spa has been approved (decision of 6 May 2020).