## Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code — Securities Regulation ## Source details **Canonical URL:** [Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code — Securities Regulation](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0680.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0680.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0680.pdf.json) --- ### General - Assessment carried out in the context of the FSAP for Italy; based on self-assessments provided by Consob and BI, discussions with senior staff of both institutions, and legal sources including the Consolidated Law on Financial Intermediation. - Mission took place in November 2004; assessment was carried out by José Manuel Portero and Laurent Bouscharain. - Authorities cooperated fully and provided the necessary information and documentation. ### Institutional and market structure overview - Legislative basis: Legislative Decree 58 of 24 February 1998 (Consolidated Law on Financial Intermediation). - Two supervisory authorities and primary responsibilities: - Consob (Commissione Nazionale per le Società e la Borsa): - Responsible for transparency and proper conduct of business by intermediaries (Article 5(3)). - Responsible for orderly functioning of regulated markets (Articles 73 and 74). - “Investor protection, market transparency and proper functioning and corporate control” (Article 91). - Competent for regulating and supervising financial intermediaries (including financial salespersons), market management companies, auditing firms, issuers of financial instruments and secondary markets. - BI (Banca d'Italia): - Responsible for risk limitation and financial stability of intermediaries (Article 5(2)). - Supervises wholesale markets in government securities with regard to overall efficiency and orderly conduct of trading (Article 76(1)); further specified in Ministerial Decree 219/99. - Monitors efficiency and proper operation of organized trading of interbank funds (Article 79(1)). - Consulted by Consob and the Ministry for Economy and Finance when they exercise regulatory and authorization powers. - Cooperation and information exchange: - Consolidated Law requires Consob and BI to cooperate, minimize costs on supervised entities, and not invoke professional secrecy in mutual relations. - Practical modalities for exchanging information with other domestic institutions noted as an area where further clarity may be warranted. - Transparency and accountability mechanisms: - Regulatory framework publicly disclosed via publications program, communication strategy, consultation presumptions, regular reporting and testimony before the Ministry of Economy and Finance and/or Parliament. - Internal governance arrangements, audited financial statements and rules on staff conduct provide assurances of integrity. ### V. Clarity of roles, responsibilities and objectives — practice-by-practice assessments - Assessment methodology: Five-part system: observed; broadly observed; partly observed; not observed; not applicable. Assessments are qualitative, based on laws, regulations and practices. - Practice 5.1 — Broad objectives and institutional framework publicly defined - Assessment: Observed - Practice 5.1.1 — Broad objectives publicly disclosed and explained - Assessment: Observed - Practice 5.1.2 — Responsibilities and authority publicly disclosed - Assessment: Observed - Practice 5.1.3 — Modalities of accountability publicly disclosed - Description highlights: - Consob must submit a report at least once a year to the MoF (Article 1(13) of Law 216/1974); annual report in Italian and abridged English version posted on Consob’s Web site. - Chairman of Consob presents activity once a year; must keep MoF informed (Article 1(12) of Law 216/74). - BI publicly reports through its annual report and parliamentary hearings; annual report in Italian and abridged English version posted on BI Web site; Governor’s concluding remarks at general shareholder meetings (no later than 31 May each year). - Assessment: Observed - Practice 5.1.4 — Procedures for appointment, terms, criteria for removal publicly disclosed - Assessment: Broadly Observed - Comment: Practice 5.1.4 “is fully observed as far as Consob is concerned, there is lack of clarity as far as the criteria for dismissal of the Governor and the Board of Directors of the for BI. The recently adopted Savings Law explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.” - Practice 5.2 — Relationship between financial agencies publicly disclosed - Assessment: Observed - Practice 5.3 — Role with regard to payment systems publicly disclosed - Assessment: Non applicable - Practice 5.4 — Relationship with self-regulatory organizations publicly disclosed - Assessment: Non applicable - Practice 5.5 — Self-regulatory organizations guided by same transparency practices - Assessment: Non applicable ### VI. Open process for formulating and reporting of financial policies — practice-by-practice assessments - Practice 6.1 — Conduct of policies should be transparent while preserving confidentiality and effectiveness - Assessment: Broadly Observed - Description highlights: - All rules and regulations issued by Consob and those governing Consob’s operation published in Consob’s Official Journal and on Consob’s Web site; main regulations implementing the Consolidated Law available in English. - Article 4(2) of the Consolidated Law on banking: BI establishes and gives prior public notice of principles and methods used under its supervisory activity and publishes an annual report including developments in the regulation and structure of the Italian financial system, risks, profitability and capital adequacy of intermediaries, and inspections. - Comments: - Transparency of exchange of information and consultation between financial agencies could be improved. - Law requires cooperation and broadly defines objectives, but protocols defining practical modalities of cooperation and information sharing are not made public. - Italian authorities intend to make protocols public following completion of ongoing revision of the protocol. - Practice 6.1.1 — Regulatory framework and operating procedures publicly disclosed - Assessment: Observed - Practice 6.1.2 — Regulations for financial reporting to agencies publicly disclosed - Assessment: Observed - Description highlights: - Reporting requirements to Consob established in Regulation no.15222/1998 and Resolution no.14015/2003. - Procedures and manuals for statistical reports published on BI's Web site. - Practice 6.1.3 — Regulations for operation of organized financial markets publicly disclosed - Assessment: Observed - Description highlights: - Regulations laid down in Regulation no.11768/1998 and implementing resolutions; issuers regulated by Regulation no.11971/1999. - Practice 6.1.4 — Fee structures publicly disclosed - Assessment: Observed - Description highlights: - Since 1995 (Article 40 of Law 724/1994) Consob funded partly through central government allocation and partly through fees. - By July 31st of each year Consob informs the MoF about projected revenues and funding needs; MoF sets annual allocation. - Fee schedule for the 2004 financial year set out in Resolutions 14376 and 14377 of 30 December 2003. Resolution 14381 of 12 January 2004 lays down time limits and procedures for payment of fees. - BI does not charge any fee to financial institutions as a government securities regulator. - Practice 6.1.5 — Formal procedures for information sharing and consultation publicly disclosed - Assessment: Partially Observed - Comments: - International MOUs are public; protocols defining modalities and extent of information sharing between Italian regulators were not made public at the time of assessment. - Subsequent to the assessment, the MOU governing cooperation and exchange of information between BI and Consob was made public on the Web sites of the two institutions. ### 6.2 Significant changes in financial policies — communication and reporting - Communication practices and channels: - Consob publishes a weekly newsletter (available in English) summarizing main activities and decisions and calling for responses to consultations. - New draft regulations are published on Consob’s Web site; issuance of regulations announced and explained through public releases and communications to supervised entities. - BI communicates interpretative recommendations, guidance or instructions via seminars, conferences, and meetings with market participants; BI’s annual report includes description of supervisory activities on market infrastructures. - Assessment: Observed ### 6.3 Periodic public reports on pursuit of policy objectives - Reporting obligations and practices: - Consob must submit a report at least once a year to the Minister for the Economy and Finance (Article 1(13) of Law 216/1974) explaining activities and indicating policy orientations for the following year. - Chairman of Consob presents the activity once a year to market participants. - BI reports supervisory activities on intermediaries and wholesale markets of government securities in sections of its annual report. - Assessment: Observed ### 6.4 Presumption in favor of public consultations for substantive technical regulatory changes - Consultation practices: - Consob consults with market participants before adopting new regulations; new drafts published on Consob’s Web site. - As a CESR member, Consob organizes consultation on CESR documents before adoption. - BI commonly consults with market, associations and external experts; consultations may include open periods for written comments or meetings. - Practice used for drafting the Consolidated Law and implementing measures. - Assessment: Observed ### VII. Public availability of information on financial policies (selected provisions 7.1–7.7, 7.3.1, 7.4.1–7.4.2) - 7.1 Periodic public reports on major sector developments - Consob and BI publish regular reports on major developments; Consob issues weekly notes; BI issues a Monthly Bulletin. - Assessment: Observed - 7.2 Public reporting of aggregate data (consistent with confidentiality) - Consob publishes data on its Web site, in the annual report and other documents; publishes information on persons holding significant shares (2 percent and above) naming shareholders. - BI maintains an extensive database on wholesale government securities markets; some aggregate data disseminated through annual report and Economic and Statistical Bulletin. - Assessment: Observed - 7.3 Disclosure of agency balance sheets and aggregate market transactions - Consob’s budget and financial statements made available on Consob’s Web site and Official Journal. - BI publishes its aggregate balance sheet in the Annual Report; does not prepare disaggregated financial accounts for securities regulation function. - Assessment: Observed - 7.3.1 Aggregate disclosure of emergency financial support - Consob and BI cannot provide emergency financial support. - Assessment: Not applicable - 7.4 Public information services and investor education - Consob: Relations with the Public unit; investor education initiatives; “Investors’ corner,” “Dos and Don’ts,” “Warnings section,” and tools for assessing risks of complex financial products. - Consob publishes lists of persons authorized to offer investment services and tender offers (from 9 May 2000 onward). - BI: structured public information system disseminating statistics, bulletins, legal publications, supervision rules, lists of authorized intermediaries, annual report and speeches. - Assessment: Observed - 7.4.1 Publications program and annual report - Consob: weekly newsletter published on Friday (available in English); all rules and regulations published in Official Journal and on Web site; main regulations implementing the Consolidated Law available in English; annual report in Italian and abridged English version posted on Web site. - BI: comprehensive publication program; annual report in Italian and abridged English version posted on Web site. - Assessment: Observed - 7.4.2 Senior officials’ public statements - Senior officials of Consob and BI appear before Parliamentary Commissions and take part in conferences; texts published on respective Web sites. - Assessment: Observed - 7.5 Availability of texts of regulations and guidelines - All relevant Consob regulations available on Consob’s Web site (including English versions of implementing regulations). - BI published a regularly updated compendium of relevant regulations for securities markets and market infrastructures; BI’s regulations and general measures never enter into force before publication on the Gazzetta Ufficiale. - Assessment: Observed - 7.6 Disclosure of investor protection and guarantee schemes - Detailed rules set by Articles 59 and 60 of the Consolidated Law; Decree of the Ministry of Treasury no.485 of 14.11.1997; Operating Regulation of the Fondo nazionale di garanzia (FNG); FNG bylaws published in the Gazzetta Ufficiale. - Regulations and list of intermediaries that are members of the FNG available on the Fondo’s Web site (www.fondonazionaledigaranzia.it). - Intermediaries must inform clients about participation in the FNG (Article 2 of Decree no.485 and Article 2(2) of the FNG bylaws). - Assessment: Observed - 7.7 Oversight of consumer protection dispute settlement processes - Consob and BI do not oversee securities market dispute settlement processes. - Assessment: Not applicable ### VIII. Accountability and assurances of integrity by financial agencies (selected provisions 8.1–8.3, 8.2.1–8.2.2) - 8.1 Senior officials’ appearance before designated public authorities - Chairman of Consob presents Commission’s activity once a year; required to keep Minister of Economy and Finance informed (Article 1(12) of Law 216/74). - Minister can request confidential information (Article 4(4) of the Consolidated Law) except information obtained through international cooperation. - BI publicly reports in parliamentary hearings; testimonies generally by the Governor, Director General and Deputies. - From 1998 till now 11 parliamentary hearings on matters relating to the evolution of the financial and supervisory system took place. - Assessment: Observed - 8.2 Public disclosure of audited financial statements on a pre-announced schedule - Consob publishes its budget and financial statements on Consob’s Web site and Official Journal; changes require a budget modification procedure. - BI publicly discloses its audited financial statement in its annual report, issued no later than five months after the end of its financial year; BI’s securities regulator activities not separated from other activities. - Assessment: Observed - 8.2.1 Independent audit and accounting disclosures - Consob’s annual accounts must be approved by 30 April of each year and are audited by the Court of Auditors (Corte dei Conti). - BI accounts are audited by independent external auditors recommended by the Governing Council of the European Central Bank and approved by the European Council; auditor mandate duration of three years and renewable. - Assessment: Observed - 8.2.2 Internal governance and internal audit arrangements - Consob: internal organization and procedures published; special Internal Control Office established. - BI: Internal Inspectorate Department drafts an Annual Report on audit activity; audit data released in BI’s Annual Report. - Assessment: Observed - 8.3 Disclosure of operating expenses and revenues - Consob’s budget and audited financial statements published with explanatory notes; Annual report provides information about annual income and expenditures. - BI’s activities as securities regulator not separated from other activities for reporting purposes. - Assessment: Observed ### 8.4 Standards for the conduct of personal financial affairs of officials and staff of financial agencies - Description — Consob rules and BI internal rules: - Consob Regulation 13859/2002: Articles 19 and 20 — notification of interests and transaction reporting; prohibition on misuse of information; limits on external activities. - Article 20: employees cannot perform other activities unless authorized; obliged to notify Consob of transactions involving financial instruments different from securities issued by the State; must refrain from exploiting information and prohibited from misuse. - Article 19: employees obliged to notify Consob of any interests—financial or nonfinancial in nature—that they and their relatives may have with respect to matters falling within their Office and which can generate potential conflicts of interest. - Broader obligations for Consob employees: - Must abstain from taking part in any decisions that may entail a conflict of interest; must report irregularities exclusively to Consob; violation of official secrecy punishable as a criminal offence. - BI rules: - BI’s statute defines general rules of conduct; detailed rules in internal staff regulation (Regolamento del Personale) deposited with CNEL. - Rules not publicly disclosed in full; summarized on BI web site and available upon request from CNEL. - Title III, Part I contains obligations, prohibitions, incompatibilities and responsibility; Article 12 (4.d) — notification of interests and abstention from conflicted decisions. - Assessment — Observance and applicability: - Overall assessment for 8.4: Observed - 8.4.1 (Information about legal protections for officials and staff of financial agencies in the conduct of their official duties should be publicly disclosed): - Articles 22-30 of Decree of the President of the Republic no.3/1957 applicable to Consob staff. - Consob staff regarded as public officials (Article 4(11) of the Consolidated Law); liability engaged only in cases of serious/gross negligence, fraud, deceit or willful wrong. - For BI staff: no legal protection offered to BI and its officers against legal action for measures adopted in good faith; in practice BI will pay defense costs where staff actions were legitimate, and BI pays its own legal costs. - Assessment for 8.4.1: Not Applicable - Key regulatory obligations and protections (exact references preserved): - Regulation 13859/2002: Articles 19 and 20. - Internal staff regulation (Regolamento del Personale): Title III, Part I; Article 12 (4.d). - Decree of the President of the Republic no.3/1957: Articles 22-30. - Consolidated Law: Article 4(11). - BI practice: BI pays defense costs where staff actions were legitimate; BI bears its own legal costs. - Criminal consequences: Violation of official secrecy is punishable as a criminal offence. ### Recommended actions (selected) - V. Clarity of Roles, Responsibilities and Objectives - 5.1.4 Recommended Action: - Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards the dismissal of the Governor and the general criteria for removal of the heads and members of the governing bodies in the absence of such provisions in the BI Statute. - Note: The recently adopted Savings Law explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures. - VI. Open Process for Formulating and Reporting Financial Policies - 6.1.5 Recommended Action: - Publicly disclose the details on protocols that define the practical modalities of cooperation between domestic financial agencies, and the actual procedures that are followed for information sharing. - Note: Further to this recommendation, the MOU governing the cooperation and exchange of information between BI and Consob was made public on the Web sites of the two institutions. ### Authorities’ response (summary) - BI and Consob consider the assessment recognizes a very high degree of compliance of the Italian supervisory system with the IMF Code of Good Practices on Transparency in Monetary and Financial Policies (MFPT Code) for securities supervision. - The assessment indicates: - Objectives and responsibilities of the two supervisory authorities and modalities of cooperation are clearly established in the 1998 Consolidated Law. - The regulatory framework is publicly disclosed and explained. *Source: _cr0680 - Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code — Securities Regulation* ### 1. Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code ### Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code — Securities Regulation ### General - Assessment carried out in the context of the FSAP for Italy; based on self-assessments provided by Consob and BI, discussions with senior staff of both institutions, and legal sources including the Consolidated Law on Financial Intermediation. - Mission took place in November 2004; assessment was carried out by José Manuel Portero and Laurent Bouscharain. - Authorities cooperated fully and provided the necessary information and documentation. ### Institutional and market structure overview - Legislative basis: Legislative Decree 58 of 24 February 1998 (Consolidated Law on Financial Intermediation). - Two supervisory authorities and their primary responsibilities: - Consob (Commissione Nazionale per le Società e la Borsa): - Responsible for transparency and proper conduct of business by intermediaries (Article 5(3)). - Responsible for orderly functioning of regulated markets (Articles 73 and 74). - “Investor protection, market transparency and proper functioning and corporate control” (Article 91). - Competent for regulating and supervising financial intermediaries (including financial salespersons), market management companies, auditing firms, issuers of financial instruments and secondary markets. - BI (Banca d'Italia): - Responsible for risk limitation and financial stability of intermediaries (Article 5(2)). - Supervises wholesale markets in government securities with regard to overall efficiency and orderly conduct of trading (Article 76(1)); further specified in Ministerial Decree 219/99. - Monitors efficiency and proper operation of organized trading of interbank funds (Article 79(1)). - Consulted by Consob and the Ministry for Economy and Finance when they exercise regulatory and authorization powers. - Cooperation and information exchange: - Consolidated Law requires Consob and BI to cooperate, minimize costs on supervised entities, and not invoke professional secrecy in mutual relations. - Practical modalities for exchanging information with other domestic institutions noted as an area where further clarity may be warranted. - Transparency and accountability mechanisms: - Regulatory framework publicly disclosed via publications program, communication strategy, consultation presumptions, regular reporting and testimony before the Ministry of Economy and Finance and/or Parliament. - Internal governance arrangements, audited financial statements and rules on staff conduct provide assurances of integrity. ### Practice-by-practice assessment — V. Clarity of roles, responsibilities and objectives - Assessment methodology: - Five-part system: observed; broadly observed; partly observed; not observed; not applicable. - Assessments are qualitative, based on laws, regulations and practices. - Practice 5.1 — Broad objectives and institutional framework publicly defined - Description: Broad objectives and institutional framework defined in Consolidated Law. - Assessment: Observed - Practice 5.1.1 — Broad objectives publicly disclosed and explained - Description: Broad objectives of Consob and BI defined by the Consolidated Law. - Assessment: Observed - Practice 5.1.2 — Responsibilities and authority publicly disclosed - Description: Jurisdiction, responsibilities and powers of Consob set out in Law 216/1974 (as amended) and the Consolidated Law. BI’s jurisdiction and responsibilities disclosed in BI bylaws (Decree no.1067/1936, as amended), Legislative Decree no.385/1993 (Consolidated Law on Banking) and the Consolidated Law. - Assessment: Observed - Practice 5.1.3 — Modalities of accountability publicly disclosed - Description: - Consob must submit a report at least once a year to the MoF which must present it to Parliament (Article 1(13) of Law 216/1974). Annual report in Italian and abridged English version posted on Consob’s Web site. - Chairman of Consob presents activity to market participants once a year; must keep MoF informed (Article 1(12) of Law 216/74). Minister may communicate views to Commission and inform Parliament. - Parliament and parliamentary commissions may call the Chairman or other Commissioners for hearings. - BI publicly reports through its annual report and parliamentary hearings; annual report in Italian and abridged English version posted on BI Web site. Governor’s concluding remarks at general shareholder meetings (no later than 31 May each year) include analysis of financial markets and intermediation. - Assessment: Observed - Practice 5.1.4 — Procedures for appointment, terms, criteria for removal publicly disclosed - Description: - Consob board: Chairman and four members (5 in total), appointed by Decree of the President of the Republic on Prime Minister proposal and Council of Ministers approval; five years mandate; possible confirmation for a further five years. - Special Parliamentary Commissions must issue an opinion on nominees after a hearing (opinion not legally binding, but government has conformed in practice). - Selection criteria in Law 216/1974: expertise, experience, unquestionable integrity and independence; must cease previous activities to work exclusively for Consob; Commissioners obliged to resign if requisites cease; revocation of full Commission possible only for proven nonfunctioning, malfunctioning or inactivity with procedure established by law; dissolution followed by appointment of administrator and new Commission within 45 days. - Rules on incompatibility set out in Law 216/1974, Law 14/1978 and Consob’s internal regulations. - BI procedures for appointment, terms and criteria for removal laid down in its statute (Royal Decree R.D. 11 June 1936, no.1067, subsequently modified by Presidential Decrees); updated statute available on BI's web-site. BI governing bodies: General Meeting of Shareholders, Board of Directors, Board of Auditors and the Governor (Article 5 of the Statute). - Assessment: Broadly Observed - Comment: Practice 5.1.4 “is fully observed as far as Consob is concerned, there is lack of clarity as far as the criteria for dismissal of the Governor and the Board of Directors of the for BI. The recently adopted Savings Law explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.” - Practice 5.2 — Relationship between financial agencies publicly disclosed - Description: - Consolidated Law defines respective responsibilities. - Article 4(1) of Consolidated Law: Consob, BI, ISVAP, UIC and COVIP must cooperate by exchanging information. - Article 5(4): BI and Consob must operate in coordinated manner to minimize costs, notify each other of measures adopted and irregularities discovered. - Article 10: BI and Consob must notify each other of inspections; each can request the other to carry out on-site inspections. - Assessment: Observed - Practice 5.3 — Role with regard to payment systems publicly disclosed - Description: Consob and BI have no responsibility in payment systems as securities regulators. - Assessment: Non applicable - Practice 5.4 — Relationship with self-regulatory organizations publicly disclosed - Description: Self regulation is non existent in Italy to date. - Assessment: Non applicable - Practice 5.5 — Self-regulatory organizations guided by same transparency practices - Description: See 5.4 - Assessment: Non applicable ### Practice-by-practice assessment — VI. Open process for formulating and reporting of financial policies - Practice 6.1 — Conduct of policies should be transparent while preserving confidentiality and effectiveness - Description: - All rules and regulations issued by Consob and those governing Consob’s operation published in Consob’s Official Journal and on Consob’s Web site; main regulations implementing the Consolidated Law available in English. - Article 4(2) of the Consolidated Law on banking: BI establishes and gives prior public notice of principles and methods used under its supervisory activity and publishes an annual report including developments in the regulation and structure of the Italian financial system, risks, profitability and capital adequacy of intermediaries, and inspections. - Assessment: Broadly Observed - Comments: - Transparency of exchange of information and consultation between financial agencies could be improved. - Law requires cooperation and broadly defines objectives, but protocols defining practical modalities of cooperation and information sharing are not made public. - Italian authorities intend to make protocols public following completion of ongoing revision of the protocol. - Practice 6.1.1 — Regulatory framework and operating procedures publicly disclosed - Description: Principles and methods guiding Consob’s and BI’s supervisory activities published in regular publications and available on the internet. - Assessment: Observed - Practice 6.1.2 — Regulations for financial reporting to agencies publicly disclosed - Description: - Reporting requirements to Consob established in Regulation no.15222/1998 and Resolution no.14015/2003. - Consolidated Law and Consolidated Law on Banking define modalities of data collection by BI. Procedures for completing statistical reports provided to each supervised institution and available on BI's Web site. Manuals explaining data to be reported to BI and compilation methods are published. - Assessment: Observed - Practice 6.1.3 — Regulations for operation of organized financial markets publicly disclosed - Description: - Regulations laid down in Regulation no.11768/1998 and implementing resolutions. - Issuers regulated by Regulation no.11971/1999. - Assessment: Observed - Practice 6.1.4 — Fee structures publicly disclosed - Description: - Since 1995 (Article 40 of Law 724/1994) Consob funded partly through central government allocation and partly through fees collected from markets and participants. - By July 31st of each year Consob informs the MoF about projected revenues and funding needs for the following year; MoF sets annual allocation. - Consob fixes types and amounts of fees in resolutions rendered effective by a decree signed by the Prime Minister after consulting the MoF. - Fee schedule for the 2004 financial year set out in Resolutions 14376 and 14377 of 30 December 2003. Resolution 14381 of 12 January 2004 lays down time limits and procedures for payment of fees. Texts available on Consob’s Web site and Official Journal. - BI does not charge any fee to financial institutions as a government securities regulator. - Assessment: Observed - Practice 6.1.5 — Formal procedures for information sharing and consultation publicly disclosed - Description: - Articles 4(2) and 4(3) of the Consolidated Law: Consob and BI may exchange confidential information held in their archives or provide information to a foreign regulator. - Consob has signed IOSCO MOU, CESR MOU, and bilateral MOUs. - Assessment: Partially Observed - Comments: - International MOUs are public; protocols defining modalities and extent of information sharing between Italian regulators were not made public at the time of assessment. - Subsequent to the assessment, the MOU governing cooperation and exchange of information between BI and Consob was made public on the Web sites of the two institutions. *Source: _cr0680 - 1. Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code* ### 6.2 Significant changes in financial policies should be publicly announced and explained in a ### 6.2 Significant changes in financial policies should be publicly announced and explained in a timely manner. ### Communication practices and channels - Consob publishes a weekly newsletter (available in English) summarizing main activities and decisions taken during the week and calling for responses to consultations related to significant policy or regulatory changes. - New draft regulations are published on Consob’s Web site. - Issuance of regulations (including subsequent changes) is announced and explained through public releases to the media and communications to supervised entities. - BI communicates interpretative recommendations, guidance or instructions for application of regulations under its jurisdiction, and provides clarifications on technical issues via seminars, conferences, and meetings with market participants. - BI’s annual report includes description of supervisory activities on market infrastructures. ### Assessment - Observed --- ### 6.3 Financial agencies should issue periodic public reports on how their overall policy objectives are being pursued. ### Reporting obligations and practices - Consob must submit a report at least once a year to the Minister for the Economy and Finance (Article 1(13) of Law 216/1974); the Minister is requested to present it (with any comments) to Parliament. The annual report should explain activities performed and indicate policy orientations for the following year. - Once a year the Chairman of Consob presents the activity of the Commission to market participants in an official ceremony; the document discusses present activities and prospects. - BI reports supervisory activities on intermediaries and wholesale markets of government securities in sections of its annual report, explaining modalities through which policy objectives are pursued. ### Assessment - Observed --- ### 6.4 Presumption in favor of public consultations for substantive technical regulatory changes ### Consultation practices - Before adopting new regulations or policy changes, Consob consults with market participants and concerned entities; new draft regulations are published on Consob’s Web site. - As a CESR member, Consob organizes consultation on CESR documents and standards (including “Technical Advices”) before adoption. - BI commonly consults with the market on major regulatory changes, normally involving relevant associations and, if necessary, external experts (such as academics). Consultations may include open periods for written comments or meetings with interested parties. - This practice was particularly useful for drafting the Consolidated Law and its implementing measures. ### Assessment - Observed --- ### VII. Public availability of information on financial policies (Selected provisions 7.1–7.7, 7.3.1, 7.4.1–7.4.2) ### 7.1 Periodic public reports on major sector developments - Consob and BI publish regular reports on major developments in the securities market available on their Web sites. - Consob issues weekly notes; BI issues a Monthly Bulletin to complement annual publications. ### Assessment - Observed ### 7.2 Public reporting of aggregate data (consistent with confidentiality) - Consob publishes data on its Web site, in the annual report and other documents. - Consob publishes information on persons holding significant shares in listed Italian companies (i.e., 2 percent and above), naming shareholders rather than presenting data in aggregate form. - BI maintains an extensive database on activity of market operators in wholesale government securities markets and management companies in post-trading; some aggregate data are disseminated through BI’s annual report, the Economic and Statistical Bulletin, and supplements. ### Assessment - Observed ### 7.3 Disclosure of agency balance sheets and aggregate market transactions - Consob’s budget and financial statements (detailed information on resource use) are made available on Consob’s Web site and Official Journal. - BI does not prepare disaggregated financial accounts for its function as a securities regulator; BI publishes its aggregate balance sheet in the Annual Report. ### Assessment - Observed ### 7.3.1 Aggregate disclosure of emergency financial support - Consob and BI, as securities market regulators, cannot provide emergency financial support. ### Assessment - Not applicable ### 7.4 Public information services and investor education - Consob has a special unit for Relations with the Public to respond to investor information requests. - Consob’s strategic objectives include investor education; a special section of Consob’s Web site is devoted to investor protection, including “Investors’ corner,” “Dos and Don’ts,” investor education initiatives, a “Warnings section,” and tools for assessing risks of complex financial products (e.g., “covered warrants” and “reverse convertible bonds”). - Consob publishes lists of persons authorized to offer investment services and of tender offers on its Web site, allowing access to offer documents for transactions dating from 9 May 2000 onward. - Consob applied the standards of “The Law on the web” project to structure and mark legal documentation. - BI has a structured public information system disseminating statistics, economic bulletins and papers, legal publications, supervision rules, lists of authorized intermediaries, annual report, regional economic reports, speeches, texts of key testimony to Parliamentary committees, and press releases. ### Assessment - Observed ### 7.4.1 Publications program and annual report - Consob: all decisions taken during the week are published on Friday in Consob’s newsletter (available in English on Consob’s Web site). All rules and regulations are published in Consob’s Official Journal and on Consob’s Web site. Main regulations implementing the Consolidated Law are available in English. The Consob annual report in Italian and an abridged English version are posted on Consob’s Web site. - BI: comprehensive publication program covering securities market regulation; BI’s annual report in Italian and an abridged English version are posted on BI’s Web site. ### Assessment - Observed ### 7.4.2 Senior officials’ public statements - Senior officials of Consob and BI appear before Parliamentary Commissions and take part in conferences; texts of their statements are published on their respective Web sites. ### Assessment - Observed ### 7.5 Availability of texts of regulations and guidelines - All relevant Consob regulations are available on Consob’s Web site (including an English version of regulations implementing the Consolidated Law). - BI published a regularly updated compendium of relevant regulations for securities markets and market infrastructures, available on BI’s Web site. BI’s regulations and general measures never enter into force before publication on the Gazzetta Ufficiale. ### Assessment - Observed ### 7.6 Disclosure of investor protection and guarantee schemes - Detailed rules on investor protection, operating procedures and financing are set by legal provisions including Articles 59 and 60 of the Consolidated Law on financial intermediation; Decree of the Ministry of Treasury no.485 of 14.11.1997; Operating Regulation of the Italian investor protection scheme (Fondo nazionale di garanzia - FNG); and bylaws of the FNG, all published in the Gazzetta Ufficiale della Repubblica Italiana. - The regulations and the list of intermediaries that are members of the FNG are available on the Fondo’s Web site (www.fondonazionaledigaranzia.it). - Intermediaries must provide information about participation in the FNG to clients pursuant to Article 2 of Decree no.485 and Article 2(2) of the FNG bylaws, and must indicate FNG membership in official documents and correspondence. ### Assessment - Observed ### 7.7 Oversight of consumer protection dispute settlement processes - Consob and BI do not oversee securities market dispute settlement processes. ### Assessment - Not applicable --- ### VIII. Accountability and assurances of integrity by financial agencies (Selected provisions 8.1–8.3, 8.2.1–8.2.2) ### 8.1 Senior officials’ appearance before designated public authorities - Once a year the Chairman of Consob officially presents the Commission’s activity to market participants; the document summarizes activities carried out and highlights policy orientations for the following year. - The Chairman of Consob is required (Article 1(12) of Law 216/74) to keep the Minister of Economy and Finance informed about major market developments and the operation of the Commission; the Minister may communicate views to the Commission and inform Parliament about these initiatives and may comment at any time to Parliament about Consob’s activities. - The Minister can ask Consob for confidential information needed to perform statutory functions; this provision does not apply to information obtained through international cooperation (Article 4(4) of the Consolidated Law). - BI publicly reports on issues within its authority in parliamentary hearings when Parliament needs technical advice; testimonies are generally held by the Governor, the Director General and the Deputies of the Director General, occasionally by other senior officials. - From 1998 till now 11 parliamentary hearings on matters relating to the evolution of the financial and supervisory system took place. ### Assessment - Observed ### 8.2 Public disclosure of audited financial statements on a pre-announced schedule - Consob publishes its budget and financial statements on Consob’s Web site and Official Journal; these give information on use of resources. - Any change in use of resources relative to the approved budget requires modification of that budget, subject to a special internal procedure; decisions adopting amendments are published in the same ways as the budget. - BI publicly discloses its audited financial statement (balance sheet, income statement, notes to the accounts) in its annual report, issued no later than five months after the end of its financial year. BI’s activities as securities regulator are not separated from its other activities. ### Assessment - Observed ### 8.2.1 Independent audit and accounting disclosures - Consob’s annual accounts (including internal accounting procedures) must be approved by 30 April of each year and are audited by the Court of Auditors (Corte dei Conti). - BI accounts are audited by independent external auditors recommended by the Governing Council of the European Central Bank and approved by the European Council; auditors are chosen from a restricted list of companies; the mandate of the external auditor has a duration of three years and is renewable. - Information on accounting policies and any qualification to the statements are an integral part of BI’s publicly disclosed financial statement. ### Assessment - Observed ### 8.2.2 Internal governance and internal audit arrangements - Regulations governing Consob’s operation (internal organization and procedures, expenditures and personnel) are published on Consob’s Web site and Official Journal; Consob set up a special Internal Control Office. - BI’s Internal Inspectorate Department drafts an Annual Report of its activity with an overview of internal organizational interventions and significant data on audit activity; data on auditing activity are released in BI’s Annual Report. ### Assessment - Observed ### 8.3 Disclosure of operating expenses and revenues - Consob’s budget and audited financial statements are published on Consob’s Web site and Official Journal, supplemented by explanatory notes; Consob’s Annual report provides information about annual income and expenditures. - BI’s activities as securities regulator are not separated from its other activities for reporting purposes. ### Assessment - Observed *Source: _cr0680 - 6.2 Significant changes in financial policies should be publicly announced and explained in a — IMF chapter/section.* ### 8.4 Standards for the conduct of personal financial affairs of officials and staff of financial ### 8.4 Standards for the conduct of personal financial affairs of officials and staff of financial ### Description — Consob rules and BI internal rules - Consob has adopted regulations on the behavior of employees: Regulation 13859/2002. - Article 20 of Regulation 13859/2002: - Consob’s employees cannot perform any other activity unless duly authorized and on condition that external activities (such as University lecturing) do not interfere with the normal course of work. - Employees are obliged to notify Consob of any transactions, carried out directly or indirectly, involving financial instruments different from securities issued by the State. - Article 20 requires employees to refrain from exploiting information that comes to their knowledge by virtue of the functions performed and prohibits misuse of information. - Article 19 of Regulation 13859/2002: - Employees are obliged to notify Consob of any interests—financial or nonfinancial in nature—that they and their relatives may have with respect to matters falling within the remit of the Office to which they are assigned and which can generate potential conflicts of interest. - Broader obligations for Consob employees: - Employees must abstain from taking part in any decisions that may entail (even potentially) a conflict of interest and from carrying out any act within the relevant administrative procedure. - When performing their functions, Consob’s employees must be regarded as public officials and are required to report any irregularities which they may discover exclusively to Consob, even when such irregularities appear to be criminal offences. - Violation of official secrecy is punishable as a criminal offence. - As a general rule, public officials are required to report directly to the public prosecutor when they are aware that a criminal offence has been committed; Consob evaluates information and if deemed necessary, submits it to the public prosecutor. - Availability: - The regulation is available on Consob’s Web site and on Consob’s Official Journal and was published on the Official Journal of the Italian Republic. - Banca d’Italia (BI) rules: - BI’s statute defines general rules of conduct for its staff. - Detailed rules are contained in the internal staff regulation (Regolamento del Personale), deposited with the CNEL (Consiglio nazionale dell'economia e del lavoro). - The rules are not publicly disclosed in full, but are summarized in a text on organization and operations on the BI web site and are available upon request from CNEL. - Title III, Part I of the internal staff regulation contains rules concerning obligations, prohibitions, incompatibilities and responsibility of BI's staff. - Article 12 (4.d) of the internal regulation: employees are obliged to notify BI of any interests—financial or non financial in nature—that they and their relatives may have with respect to matters falling within the remit of the Office to which they are assigned and which can generate potential conflicts of interest. - BI employees are obliged to abstain from taking part in any decisions which may entail (even potentially) a conflict of interest. ### Assessment — Observance and applicability - Overall assessment for 8.4: Observed - 8.4.1 (Information about legal protections for officials and staff of financial agencies in the conduct of their official duties should be publicly disclosed): - Description: - Articles 22-30 of Decree of the President of the Republic no.3/1957 (which regulates civil servants) are applicable to Consob staff (including members of the governing body). - When performing their functions, Consob’s staff are considered public officials (Article 4(11) of the Consolidated Law). Therefore, their liability may be engaged only in cases of serious/gross negligence, fraud, deceit or willful wrong. - Judicial authority is ultimately responsible to sanction misbehavior and provide for compensation of damages suffered by persons injured by Consob’s staff. Consob can also adopt administrative measures in case of misbehavior of its staff. - For BI staff: - According to the law, BI staff are performing their supervisory functions as public officials. - There is no legal protection offered to the BI and its officers against the possibility of legal action resulting from measures adopted in good faith in the exercise of their supervisory functions. - As a matter of practice, BI will pay the defense costs of a staff member subject to such legal action where the staff member’s actions were legitimate, and BI is responsible for the payment of its own legal costs. - Assessment for 8.4.1: Not Applicable ### Key regulatory obligations and protections (exact references preserved) - Regulation 13859/2002: Articles 19 and 20 — notification of interests and transaction reporting; prohibition on misuse of information; limits on external activities. - Internal staff regulation (Regolamento del Personale): Title III, Part I; Article 12 (4.d) — notification of interests and abstention from conflicted decisions. - Decree of the President of the Republic no.3/1957: Articles 22-30 — civil servants’ rules applicable to Consob staff. - Consolidated Law: Article 4(11) — Consob staff regarded as public officials. - BI practice: BI pays defense costs where staff actions were legitimate; BI bears its own legal costs. - Criminal consequences: Violation of official secrecy is punishable as a criminal offence. ### Recommended actions (from Table 2 — selected entries) - V. Clarity of Roles, Responsibilities and Objectives of Financial Agencies - 5.1.4 Recommended Action: - Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards the dismissal of the Governor and the general criteria for removal of the heads and members of the governing bodies in the absence of such provisions in the BI Statute. - Note: The recently adopted Savings Law explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures. - VI. Open Process for Formulating and Reporting Financial Policies - 6.1.5 Recommended Action: - Publicly disclose the details on protocols that define the practical modalities of cooperation between domestic financial agencies, and the actual procedures that are followed for information sharing. - Note: Further to this recommendation, the MOU governing the cooperation and exchange of information between BI and Consob was made public on the Web sites of the two institutions. ### Authorities’ response (summary) - BI and Consob consider the assessment recognizes a very high degree of compliance of the Italian supervisory system with the IMF Code of Good Practices on Transparency in Monetary and Financial Policies (MFPT Code) for securities supervision. - The assessment indicates: - Objectives and responsibilities of the two supervisory authorities and modalities of cooperation are clearly established in the 1998 Consolidated Law. - The regulatory framework is publicly disclosed and explained. *Source: _cr0680 - 8.4 Standards for the conduct of personal financial affairs of officials and staff of financial* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0680.pdf_