CONSOB, the Italian regulator, is granted by LD No. 415/96 (enacted to implement the ISD Directive) the power to regulate trading of listed financial instruments in official markets. On December 10 1996 CONSOB approved Resolution 10358 which, in some cases, imposes trading of listed financial instruments in official markets and, in other cases, lays down the conditions for over-the-counter (OTC) transactions.
The basic rule is that the trading of financial instruments negotiated on Italian official markets must be done by authorized intermediaries (investment companies and banks) exclusively on the official markets regulated by LD No. 415/96. OTC transactions are admitted only if:
- the intermediary has been authorized in advance by its customer; and
- the transaction satisfies the best execution principle.
However, the basic rule imposing trading on the official regulated markets does not apply to negotiations which have been ordered by investors not resident in Italy, or which relate to state bonds or bonds guaranteed by the state, or 'blocks' of financial instruments. Subsequently, by Resolution 10386, CONSOB provided for automatic registration in the list of the authorized, official markets held by it the following markets: in Italy, the Italian Stock Exchange, third market, Idem, MTS and MIF, and further to specific notices from the competent European authorities, a further 26 European regulated markets located in other member states (such as the London Stock Exchange, Liffe, the Berliner Wertpapierbörse and others).
The framework of the markets that have been recognized as official markets in Italy is now complete. Resolution 8469 issued by CONSOB in 1994 allowing the institution of 'local' markets (that is, national markets for the trading of non-listed securities) should therefore be deemed as automatically abrogated, as CONSOB made clear recently in a reply to a question submitted to it.