* Central bank seeks data for improved monitoring
* Regulation at odds with rest of Europe
* Market participants rush to meet October deadline
By Helene Durand
LONDON, Sept 9 (IFR) - 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
"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
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
"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
But while the consultation process for the new rules has
been ongoing since late 2013, there are plenty of hurdles still
to be overcome.
"As people start to prepare, it's given rise to a number of
questions and further guidance is something that people are
hoping for," said Charlotte Bellamy, director, market practice
and regulatory policy at the International Capital Market
Association. "While the rules are better than they were for
managers, they will represent an additional administrative
Italian issuers, as well as issuers with an Italian parent,
need to file general information on the instruments one day
after settlement, while other items such as placement
information need to be provided within 20 days.
Managers or distributors selling or offering non-Italian
securities into Italy have 20 days to file an almost identical
series of data points.
There are additional requirements for non-vanilla products.
That might include, for instance, details of the bond and
derivative components of a structured trade, or an ongoing
obligation to report the amount of a particular security in
circulation each quarter.
While the provisions kick in next month, the Bank of Italy
has given market participants a testing period to familiarise
themselves with the new procedures.
Distributors will need to meet the first reporting
obligation on January 1 2017, according to Bellamy.
"Managers will need to get to grips with the platform on
which they need to report; it's going to be important that the
platform and any related information and guidance is made
available in English," said Bellamy.
(Reporting by Helene Durand, Additional Reporting by Alex
Chambers, Editing by Julian Baker, Ian Edmondsson)