Table of contents
Top stories
Conversion into law of the so-called “August Decree”
The so-called “August Decree” (see our NL of August 2020) has been recently converted into law, with amendments, providing as measures to support and relaunch the Italian economy:
- the possibility for enterprises that have been admitted to the arrangement procedure with creditors on a going concern basis or have entered into debt restructuring agreements to access the State guarantee fund for SMEs, as long as at the time of application their exposures are not classified as non-performing and do not have any amounts in arrears; and
- bureaucratic and administrative simplifications for the establishment of start-ups by entrepreneurs under 30 years old.
Banking law
EBA‘s public consultation concerning guidelines on major incidents reporting under PSD2
EBA has recently launched a public consultation (which will end on 14th December 2020), which has as object a proposed revision of its own guidelines on major incidents reporting under PSD2, aimed at optimising and simplifying such reporting process. The main proposals concern:
- the introduction of a new incidents classification criterion with regard to the breach of security measures;
- the use of a standardised reporting file;
- the reduction of the reporting burden currently envisaged for PSPs; and
- the elimination of the regular updates on the intermediate report, as well as the extension of the deadline for submitting the final report.
Commission Notice on the transposition of BRRD
In order to assist NCAs in the transposition of BRRD (by 28th December 2020), the European Commission has recently issued a notice so as to answer to the questions raised by such authorities with regard to the interpretation of certain BRRD provisions, as well as on the interactions of the latter with the SRMR, CRR and CRD.
ECB’s guide on the assessment of banks’ internal models
ECB has recently published a guide on the methodology it uses to assess how European banks calculate their exposure to counterparty credit risk (CCR) and advanced credit valuation adjustment (CVA) risk, by focusing on the compliance of internal models used by the banks with regulatory requirements. ECB points out that the guide does not intended to anyhow replace, overrule or affect currently applicable EU and national laws.
ECB’s Guide on assessment methodology (EGAM) of 18th September 2020.
Updated BoI’s Supervisory Provisions for Banks on outsourcing
The BoI has recently updated its Supervisory Provisions for Banks so as to implement EBA’s guidelines on outsourcing. Among the main novelties, it should be noted:
- the obligation for intermediaries to keep an up-to-date register of outsourced transactions;
- the inclusion in outsourcing contracts of detailed clauses on access and audit rights and data security and integrity; and
- the obligation of prior notification in case of outsourcing of essential or important functions.
In implementing EBA’s guidelines on internal governance, the BoI has also clarified some the approval procedures for new products, employee communications, and whistelblowing.
On the interpretation of the European Court of Justice’s “Lexitor” judgment by an Italian judge
According to the Civil Court of Turin, when applying article 125-sexies of the Consolidated Banking Act on early repayment to consumer credit agreements, the same must be interpreted in accordance with the reading that the European Court of Justice has given to Directive no. 48/2008/EU in the well-known “Lexitor” judgment (issued on 11th September 2019 in case C 383/18), due to the immediate effects of the European Court of Justice’s decisions in all EU Member States.
Civil Court of Torino, decision of 22nd September 2020.
Surety agreement containing IBA’s clauses: only claims for damages are admitted
The declaration of nullity as anticompetitive of a clause of an agreement entered into between companies does not automatically imply the nullity of a surety agreement entered into by the same companies involved in the cartel and containing clauses taken from the Uniform Banking Rules issued by IBA. Indeed, despite the fact that the latter were declared null and void for violation of Antitrust Law, the above agreement continues to be valid, with the consequence that the interested party is entitled solely for damages.
Court of Roma, decision no. 12588 of 21st September 2020.
Financial law
Published the Commission’s technical standards for the implementation of MAR
The European Commission has recently laid down the technical standards necessary to implement MAR’s provisions, which require NCAs to cooperate and exchange information among each-other and with ESMA, as well as with the Commission itself (in relation to agricultural products), with ACER and national regulatory authorities (for the wholesale energy products), and, finally, with the relevant national and non-EU regulatory authorities supervising spot markets.
Published ESMA’s guidelines on CRAs’ internal control system
ESMA has recently published some guidelines on CRAs’ internal controls (applicable from 1st July 2021), which have as object the components and characteristics necessary to demonstrate a strong framework for internal controls, and the effectiveness of internal control functions within such framework.
ESMA’s Final Report of 30th September 2020, “Guidelines on internal control for CRAs”.
Amendments to Issuers Regulations
Some provisions of the Issuers Regulations regarding the admission to trading and marketing of open-ended reserved AIFs have been recently amended, in respect of:
- cases in which Consob can recognise a listing prospectus drawn up in accordance with the provisions of another EU Member State by additionally requiring the publication of a document for listing;
- cases where marketing and admission to trading are simultaneous;
- the review of the content of the prospectus and listing document schedule;
- the provisions on information that open-ended UCITS admitted to trading on a regulated market must publish on the same fund’s website, as well as on the market managers’ one; and
- products other than securities.
Consob’s parameters to identify issuers subject to supervision
In order to identify listed issuers whose documents are to be made subject to its own control, Consob has recently determined the risk parameters necessary to check correctness and completeness of the financial information to be communicated on financial markets. In addition, Consob will review the above parameters each year, taking into account, among others:
- the economic and financial data of the interested issuers;
- the reports received from each issuer’s control body and statutory auditor;
- the activity on securities; and
- significant information received from other directors or stakeholders of the same issuer.
As far as 2020 is concerned, the risk representative parameters have been identified in light of the impact of the health emergency on the listed issuers’ financial reporting.
Consob’s Resolution no. 21507 of 22nd September 2020 (text available in Italian only).
Interest rate swap agreement: nullity for lack of indication of the initial MtM
According to the Civil Court of Pavia, an interest rate swap contract, entered into by a municipality with a qualified financial intermediary, which does not specify the MtM, probabilistic scenarios, and hidden costs, is to be held null and void due to the indeterminateness of its object.
Civil Court of Pavia, decision of 16th September 2020.
On the intermediary’s obligations towards the client in the provision of investment services
Before providing an investment service, the intermediary must obtain from the client all information relating to his/her personal characteristics and financial situation in order to assess the suitability of the proposed transaction with regard to such client. Accordingly, the intermediary cannot carry out transactions deemed unsuitable for that client, unless it receives a specific order from the latter, which explicitly refers to the information received.
Civil Court of Cassation, decision no. 18121 of 31st August 2020 (text available in Italian only).
Financial services/FinTech
ECB’s report on a “digital euro”
ECB has recently published a report on the possible issuance of a digital currency (the so-called “digital euro”), which would complement cash and deposits currently available, and could be used by retail clients and entrepreneurs for their retail payments. In addition, a “digital euro” could provide for state-of-the-art payment services and increase choice, competition and accessibility of digital payments, thereby supporting financial inclusion within the whole EU.
ECB’s Report on a digital euro of 2nd October 2020.
Towards a digital Europe
The European Commission has recently adopted a Digital Finance Package, aimed at boostering EU’s competitiveness and innovation in the financial sector, as well as giving European consumers more opportunities in financial services and virtual payments, while ensuring investor protection and financial stability within EU.
The Package consists of:
- a digital finance strategy, aimed at removing fragmentation in the digital single market, thereby favouring consumers and entrepreneurs;
- a retail payments virtual strategy, in order to make them safe and reliable;
- legislative proposals on crypto-assets, providing that the latter – already governed by European financial legislation – be subject to a so-called “pilot” regime, while those unregulated would have to comply with stringent capital, supervision and investor rights’ requirements; and
- a proposal for a regulation on digital operational resilience, aimed at protecting financial operators from cyber attacks.
European Commission’s Communication of 24th September 2020, “Digital finance package”.
BIS’ data on alternative financing
BIS has recently published a working paper, which puts together and updates available data on fintech and big tech credit volumes for 79 countries around the world, in the period 2013-2019. According to BIS, such credit is more developed where the ease of doing business is greater and the investor protection and the efficiency of the judicial system are more advanced, as well as where bond and equity markets are more developed. Moreover, BIS points put that alternative financing is progressively complementing other forms of credit, rather than substituting itself for them.
BIS Working Papers no. 887 of 22nd September 2020, “Fintech and big tech credit: a new database”.
Compliance
Data protection
EDPB’s guidelines on the concept of relevant and reasoned objection
With reference to the cooperation mechanism between the “lead” supervisory privacy authority and the other authorities concerned, whereby all privacy supervisory authorities have a duty to exchange information and cooperate among each-other to reach a joint decision, EDPB has recently issued some guidelines on the concept of relevant and reasoned objection. By means of them, EDPB provides for a common interpretation of the above concept, which can be raised, within a certain time-limit, by each authority involved in drafting decision.
39th EDPB meeting of 7th October 2020.
Corporate criminal law
The sale of bitcoin may amount to an unauthorised financial trading offence
The sale of bitcoin advertised as an investment proposal on a website, containing information that enable the target audience to assess whether or not to adhere thereto, may amount to an unauthorised financial trading offence, in case it does not comply with the applicable provisions governing the solicitation to public savings.
Procedural law
Bank condemned for vexatious action
According to the Civil Court of Venezia, the bank, that has opposed to an action with gross negligence, by submitting documentation relating to the client’s current account for the balance of which it had claimed an injunction, must be condemned for vexatious action. Indeed, the lack of a complete set of statements of account (to be provided by the bank) implies the application of the so-called “zero balance” principle in favour of the current account holder.
Civil Court of Vicenza, decision of 6th October 2020.
List of abbreviations
ACER: Agency for the Cooperation of Energy Regulators.
AIFs: Alternative Investment Funds.
Antitrust Law: Law no. 287/90.
August Decree: Law Decree no. 104 of 14th August 2020.
BIS: Bank of International Settlements.
BoI: Bank of Italy.
Consob: The national financial markets Authority.
Consolidate Banking Act: Legislative Decree no. 385 of 1st September 1993.
CRAs: Credit rating agencies.
CRD: Directive 2013/36/EU of the European Parliament and of the Council, as amended by Directive (EU) 2019/878 of the European Parliament and of the Council on capital requirements.
CRR: Regulation (EU) no. 575/2013 of the European Parliament and of the Council, as amended by Regulation (EU) no. 2019/876 of the European Parliament and of the Council on capital requirements.
EBA: European Banking Authority.
ECB: European Central Bank.
EDPB: European Data Protection Board.
ESMA: European Securities and Markets Authority.
EU: European Union
IBA: Italian Banking Association.
Issuers Regulation: Consob Regulation no. 11971/1999.
MAR: Regulation (EU) no. 596/2014 of the European Parliament and of the Council on market abuse.
MtM: Market to market. This is the discounted summation of expected future differentials based on the conditions of the benchmark index at the time of its quantification.
NCAs: National Competent Authorities.
PSD2: Directive (EU) 2015/2366 of the European Parliament and of the Council of 25th November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) no. 1093/2010, and repealing Directive 2007/64/EC.
PSPs: Payment Service Providers.
SMEs: Small and Medium Enterprises.
Supervisory Provisions for Banks: BoI Circular no. 285 of 17th December 2013.
UCITS: Undertakings for Collective Investment Schemes.