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Studio Legale Beltramo Rome

The Bank of Italy dopted on September 20 1999 a regulation on SGRs - companies entrusted with the management of savings.

The Regulation sets forth the limits on the activities and on the investments for open investment funds and closed investment funds. An open investment fund may invest its patrimony in:

  • listed financial instruments;
  • quotas of EU investment funds;
  • bank deposits with banks having its registered office in a EU member State or belonging to the G-10;
  • not listed financial securities; and
  • derivatives.

An SGR is expressly prohibited in the management of an open investment fund to enter into short sale transactions of financial instruments, invest in financial instruments issued by the SGR or buy metals or precious stones or certificates representing them.

The Bank of Italy has also set forth specific limits as to the concentrations of risks and in particular limits on the investments in financial instruments of the same issuer, of the same group of issuers and in bank deposits.

The investments in financial derivatives are permitted to the extent that in the internal regulation of the open investment fund the criteria for their use and the purposes of the transactions (eg hedging) are expressly identified and the investment does not alter the risk profile indicated among the objectives of the investment funds.

The SGR may, in the interest of the open fund, enter into cash against forward transactions, repos, securities lendings provided that such transactions are finalized on a standardized system, managed by a recognized settlement system or alternatively with primary intermediaries under the supervision of a public authority subject to the specific provisions and requirements indicated in the Regulation.

Prudential criteria are also introduced in the Regulation and are to be followed by SGRs which include among other things limits on the holding of voting rights, subscription of financial instruments of the group of belonging of the SGR, the purchase of structured securities and the entering into loan agreements.

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