Table of contents
Top stories
Relaunch Decree published in the Official Gazette
Among many measures adopted, the so-called “Relaunch Decree” provides for (i) the granting of a non-repayable contribution in favor of entrepreneurs and measures to strengthen SMEs and innovative start-ups, (ii) new alternative individual savings plans aimed at fostering investments both in venture and debt capital in the real economy, and (iii) with regard to the entering into of a financial contract with a retail clients, the possibility that the latter can give his/her consent by email and the intermediary must provide him/her with a copy of the contract on a durable medium.
Main EU and Italian law provisions issued on the wake of the health emergency
- ESMA Statement, aimed at strengthening compliance by intermediaries with product governance, information disclosure, and suitability/appropriateness obligations vis-à-vis retail clients, as well as introducing a duty of communication of the consequences of the health emergency on the clients’ personal situation.
- EBA Statement on the prudential identification of defaulted loans, classification of forborne loans (i.e., those granted by banks) and their accounting treatment, so as to ensure the identification of credit impaired assets in banks’ balance sheets.
- BoI Communication granting an extension of the time limit for sending “harmonised” supervisory reports by less significant banks and investment firms.
- IBA Circular on the operating procedures to access bank guarantees related to loans to be granted to companies affected by the health emergency, which must be based on a self-declaration by the beneficiary made through the so-called “Guarantee Portal”.
- FIU Communication on the strengthening by intermediaries of anti-money laundering procedures, as well as on the (promptly) reporting of suspicious transactions, including alleged frauds related to fundraising in the health emergency.
- Consob-BoI’s Joint Communication, inviting UCIs to publish annual and semi-annual financial reports within the prescribed deadlines.
- Consob Communication warning on the risk of fraud related to fictitious online offers of financial products apparently linked to the health emergency.
- BoI Recommendation inviting intermediaries to (i) advertise the remedies adopted to manage the health emergency and facilitate retail clients’ access to the support measures provided by “Cura Italia” and “Liquidity” Decrees, and (ii) ensure compliance with anti-money laundering provisions.
- BoI Communication, inviting intermediaries to take into account, for the periodic reporting to the Central Credit Registered Data, of the financial support measures provided for by “Cura Italia” Decree, including those relating to the impossibility of a total or partial withdrawal from loans, the extension of no-installment loans, as well as to the temporary non-recovery of installment or leasing payments.
Corporate/Laws of contract
The illegitimacy of the compound interests capitalisation regime
The unlawful adoption of the compound interests capitalisation regime implies the nullity of the interest rate clause, with the consequent replacement ipso iure of the conventional rate with the legal one.
Court of Campobasso, decision no. 158 of the 26th March 2020.
Banking law
Recent amendments to the Consolidated Law on Banking and Legislative Decrees on payment services
Some changes have been recently introduced to the Consolidated Law on Banking concerning electronic money institutions, account information service providers, controls on contractual transparency, as well as pecuniary administrative sanctions for breach of the provisions contained therein. In addition, sanctions applicable to interchange fees on card-based payment transactions, as set out in the Legislative Decrees on payment services in the EU internal market, have also been amended.
The German Federal Constitutional Court rules on the ECB’s Quantitative Easing program
Ruling on a petition filed by a private individual, the German Constitutional Court has recommended that the Bundestag and the Federal Government ask the ECB to adequately assess, in compliance with the principle of proportionality, the measures adopted under the Public Sector Purchase Program (establishing, inter alia, large-scale purchases of public debt securities of highly indebted EU Countries, including Italy), with regard to their impact on the national public finance policy.
German Federal Constitutional Court, decision 2 BvR 859/15 of 5th May 2020.
BoI Instructions for implementing PSD2
In implementation of the PSD2, the BoI has recently specified how payment service providers can avail themselves of the exemption from the contingency procedure obligation (online interface for third-party service providers’ access), as well as from the strong client authentication one envisaged for corporate payments and from the reporting procedure of issues with dedicated interfaces.
BoI Instructions of 8th April 2020 on procedures relating to PSD2 (text available in Italian only).
BoI Supervisory Instructions on securitisations
The BoI has recently clarified that intermediaries carrying out securitisation transactions must apply the prudential supervision provisions set forth at national level, pending the identification of the competent national authority responsible for the supervision on risk retention, transparency requirements, prohibition of re-securitisation and compliance with the criteria for granting loans envisaged under EU law.
BoI Communication of 27th March 2020 on securitisation (text available in Italian only).
Financial law
Amendments to the Issuers Regulations
In implementation of the so-called Budget Law for 2020, which has raised to at least two-fifth the quota of seats reserved to the less represented gender in listed companies’ management and control bodies, Consob has recently amended the Issuers Regulations, confirming that, for bodies composed of three members, the afore-said ratio should be rounded down. Such a provision will apply for six consecutive terms of office, running from the first renewal of the corporate bodies following 1st January 2020.
Consob Recommendation on the transparency of costs of investment services
To protect the investor’s interests in receiving clear, correct and not misleading information, Consob has recently clarified the modalities by which carrying out the ex post reporting of costs and charges related to the provision of investment and ancillary services. Among others, it has pointed out structure and content of the aggregated information, relationship between the latter and the analytical one, and timing for dissemination of the report.
Consob Recommendation no. 1/20 of 7th May 2020 (text available in Italian only).
ESMA public consultation on SMEs’ growth markets
On 15th July 2020 will end a public consultation launched by ESMA to promote the use of SMEs’ growth markets. It contains some proposal to amend MIFID II and MAR, having as object, on the one hand, SMEs growth markets’ regime, and, on the other hand, technical standards on liquidity contracts and list of insiders of issuers on such markets.
ESMA Consultation Paper of 6th May 2020.
Joint ESAs consultation on ESG disclosure
To strengthen the protection of investors in relation to sustainable investments, EBA, EIOPA and ESMA (jointly referred to as the “ESAs”) have recently launched a public consultation, which will end on 1st September 2020, on regulatory technical standards having as object content, methodology and presentation of information on ESG factors, both at issuer and product level.
ESAs’ Consultation Paper of 23rd April 2020.
Enhanced transparency requirements for 104 Italian listed companies
In implementation of the so-called “Business Decree”, Consob has recently introduced an enhanced transparency regime, which applies for three months (running from 11th April 2020) to 104 Italian listed issuers having extensive shareholding structure. It is therein provided, inter alia, the obligation to report changes in major shareholdings and those to disclose investment objectives for the following six months when certain thresholds are exceeded.
Consob Resolutions nos. 21326 and 21327 of 9th April 2020 (text available in Italian only).
Consob market practice on liquidity support activity
Consob has recently adopted a new market practice on the market liquidity support activity, whereby the latter must be carried out by an intermediary on behalf of the issuer/manager, independently of any specialist activity carried out on the same financial instruments in the same trading venue.
Towards MIFID III
A public consultation, launched by the EU Commission last February on the review of the MIFIDII/MIFIR package, has recently ended. In particular, some areas have been identified that are likely to be amended (e.g., consumer protection, integrated reporting system of price and volume data for trades on financial instruments, and transparency of commodity derivative contracts).
The intermediary may oppose the good faith exception in an action for damages
The intermediary that has been sued by its client for damages for alleged breach of disclosure obligations can invoke the good faith exception for the purpose of recalculating the claimed damages, if the intermediary has assisted the client on his/her investments for about a decade and the afore-said legal action has been brought only after a significant period of time.
Irrelevance of the client’s risk tolerance
In order to prove the absence of a causation chain between the alleged breach of disclosure obligations and the actual damages suffered by the client, the intermediary cannot leverage upon the general risk tolerance of the same client, as the latter must be able to make each investment choice by comparing the investment at issue with the similar ones available on the market, taking also into account the risk factors to be highlighted to him/her by the intermediary.
“4YOU” loan agreement is null and void
The loan agreement named “4YOU” is null and void, as it is not suitable to achieve an interest capable of being protected by our legal system, due to the abnormal imbalance between the mutual performances of the parties to the agreement.
Court of Appeal of L’Aquila, decision no. 537 of 8th April 2020.
Financial services/FinTech
Blockchain’s operativity in Italy
“Tick Bank DLT”, a project promoted by IBA to transit from the traditional Tick system to one based on a distributed ledger technology, has been successfully tested. Consequently, banks operating in Italy can now rely on a sector blockchain for mutual accounts reporting.
European Consultation on “Fintech Action Plan”
On 26th June will end the EU Commission’s public consultation on a policy to support digital finance. It is therein pointed out the need to ensure that the EU financial services regulatory framework be fit for the digital age, in order to enable clients and investment firms to take advantage of the opportunities offered by the online financial market and enhance their operational resilience.
European Commission Consultation Paper of 3rd April 2020 on a new Fintech Action Plan.
New White Paper on Libra
Libra Association has recently published a white paper on the changes made to Libra (Facebook’s crypto-activity) so as to ensure that it integrates smoothly with national monetary and macroprudential policies, as well as with existing currencies. Among the main changes proposed, it is worth mentioning:
- the offer of “single-currency” stable coins in addition to “multi-currency” ones;
- an increased safety of the related payment system;
- the renunciation to a transition towards a “permissionless” system; and
- the strengthening of the Libra Reserve.
Libra Association Members’s White Paper on Libra of April 2020.
Compliance
Legislative Decree no. 231/2001
Administrative liability of foreign legal entities operating in Italy
A legal entity may be held liable pursuant to the Decree 231 for the predicate offences committed by its senior managers or employees in Italy, regardless of the country where it has its registered office or carries out its activities. The fact that such entity’s decision-making centre is abroad or the organisational gap, relevant pursuant to Decree 231, has not been committed in Italy, does not constitute an exemption from the related liability.
Data protection
Restrictions on the right to be forgotten
The right of information prevails over that to be forgotten of the interested person, whenever the public interest in being informed about the fact(s) contained in the news remains, regardless of the online newspaper’s obligation to update the news at issue in the course of the time. In order to ensure a fair balance amongst the afore-said interests and protect the dignity of the interested person, the news may also be deindexed, so as to make it available only through specific research carried out on the online newspaper’s website only and not also on general online browsers.
Civil Court of Cassation, order no. 7759 of 27th March 2020.
Capital Markets
Amendments to the Market Regulation
Consob has recently modified the Market Regulation in respect of trading ticks (i.e., minimum variations between two prices of a given security), with the aim of ensuring a level playing field between trading venues and systematic internalisers as far as large transactions concluded at the median point of current purchase and sale prices are concerned.
Consob’s Resolution no. 21339 of 29th April 2020 (text available in Italian only).
Procedural law
Unlawful reporting to the Central Credit Registered Data
A client reported by a bank to the Central Credit Registered Data, who has not been informed beforehand, may sue the bank pursuant to Article 700 of the Italian Code of Civil Procedure in order to obtain the deletion/rectification of his/her name, as the above reporting implies per se a lack of creditworthiness of the person reported.
Court of Venice, decree of 26th March 2020.
List of abbreviations
BoI: Bank of Italy
CONSOB: The national financial markets authority
Decree 231: Legislative Decree no. 231/01
DLT: Distributed Ledger Technology
EBA: European Banking Authority
ECB: European Central Bank
EIOPA: European Insurance and Occupational Pensions Authority
ESAs: European Supervisory Authorities
ESMA: European and Securities Market Authority
FIU: Financial Intelligence Unit for Italy
IBA: Italian Banking Association
MAR: Regulation no. 596/2014/EU on market abuse
MIFID II: Directive no. 2014/65/EU on markets in financial instruments
MIFIR: Regulation no. 600/2014/EU on markets in financial instruments
PSD2: Directive no. 2015/2366/EU on payment services in the internal market
SMEs: Small and medium enterprises
UCIs: Undertakings for Collective Investment