ROME: Banks and issuers are scrambling to get to grips with new trade reporting requirements set by the Bank of Italy, potentially leaving them exposed to sanctions if they do not comply.
Under Article 129 of the Italian Banking Act, Italian issuers placing securities domestically and non-Italian entities selling securities into the Italian market must file post-trade data with the central bank. The provision is due to come into force on October 1. The regulation – which is unique in Europe – adds to the raft of new rules set by regulators in the aftermath of the financial crisis that bank intermediaries and issuers are obliged to follow.
“We have argued to the Bank of Italy that imposing too heavy requirements could be detrimental to Italian investors, especially if only a negligible amount of securities were to be sold to Italian investors – people might not bother and sell elsewhere,” said Cristiano Tommasi, a partner at Allen & Overy in Rome. “The Bank of Italy listened to that, but still feels that the collection of information would be helpful to them and give them an observatory point on market trends, and also to interact with other domestic and EU authorities.”
Under the new post-trade reporting requirements, market participants will have to provide information such as the ISIN code, issuer name, settlement date, type of interest payment, and even hedging information to the central bank. Equity placements fall outside the new requirements. They will also have to disclose which category of investor bought an issue – whether retail, institutional or government entity.
Retail holders of subordinated debt in four Italian small lenders saw their investments wiped out at the end of 2015 after the banks went bankrupt, and the Bank of Italy has been particularly keen to clamp down on what is sold to that class of buyer. “The Bank of Italy is concerned about retail; it wants to know what’s going on that market and, for example, if a new type of security or structure becomes popular, it wants to know the volumes and probably also who the main players are,” said Tommasi.
