Italy: EU Legislation on Strengthening of Investment Companies Implemented

On December 2, 2021, Legislative Decree No. 201 (L.D. No. 201) entered into effect in Italy, implementing EU Directive 2019/2034 and other related European Union legislation on the prudential supervision of investment firms.

Single Surveillance Mechanism

L.D. No. 201 defines the EU’s “Single Surveillance Mechanism” as the financial surveillance system made up of the European Central Bank and the national authorities of the participating member states. (L.D. No. 58 of February 24, 1998, art. 1, para. 1(d-ter.1), added by L.D. No. 201, art. (1)(a)(1).) The “Single Resolution Mechanism” is defined as the resolution system created in accordance with EU Regulation 806/2014, which is composed of the Single Resolution Committee and the national authorities of the participating member states. (L.D. No. 58, art. 1, para. 1(d-ter.2), added by L.D. No. 201, art. (1)(a)(1).)

In accordance with the new legislation, for purposes of EU Directive 2019/2034 and related EU legislation, the Italian national financial authorities are the Banca d’Italia and the Consob  (National Commission for Stock Companies). (L.D. No. 58, art. 7-undecies, added by L.D. No. 201, art. (1)(e).)

Broadened Powers for Italian Financial Authorities

The Banca d’Italia received reinforced powers to supervise the performance of the financial markets to identify any factors that may compromise their liquidity and the stability of the EU financial system, in particular, concerning any financial emergency situation. (L.D. No. 58, art. 4, para. 9-bis, added by L.D. No. 201, art. (1)(b)(4).) Both the Consob and the Banca d’Italia are empowered to request, within their respective competences, the periodic transmission of data and information from investment holdings and mixed financial participation companies headquartered in Italy. (L.D. No. 58, art. 12-bis, para. 1, added by L.D. No. 201, art. (1)(g).) Both authorities may also, upon request from the financial authorities of other EU member states, carry out inspections of such companies. (L.D. No. 58, art. 12-bis, para. 3, added by L.D. No. 201, art. (1)(g).)

Authorization of New Banking Activities

New banking activities in EU territory are tightly regulated, with the new Italian legislation providing that new investment activities through securities firms (società di intermediazione mobiliare, SIM) require compliance with stringent criteria, and must, when such activities are headquartered in Italy, obtain final authorization from the EU Central Bank when the Banca d’Italia submits the requests for such authorization. (L.D. No. 58, art. 20-bis, para. 1, added by L.D. No. 201, art. (1)(j).)  

Monetary Penalties

The new legislation establishes monetary administrative penalties for the violation of the newly implemented EU regulations concerning the prudential supervision of investment firms. (L.D. No. 58, art. 194-ter.1, para. 1, added by L.D. No. 201, art. (1)(w).)

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