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Borsa Italiana S.p.A.
Privatisation of the stock markets in 1998 led to the creation of Borsa Italiana, a joint stock company whose main activity concerns the organisation and management of the regulated markets in financial instruments. Its primary objective is to guarantee the development and maximise the liquidity, transparency, competitiveness and efficiency of the markets in question. With the creation of Borsa Italiana, parliament’s intention was to assign to it the functions of regulation and management of the markets, distinctly separating same from the supervisory duties which are now performed exclusively by CONSOB and the Bank of Italy.
Borsa Italiana’s is mainly responsible for:
- Defining the organisation and functioning of the markets;
- Defining the conditions and procedures for admission of intermediaries and financial instruments to trading, and exclusion and suspension therefrom;
- Defining the requirements and procedures for the admission and continued inclusion of issuers on the market;
- Managing the information communicated by the listed companies;
- Supervising and managing the market so as to allow the correct course of trading.
The market is managed via approximately 130 Italian and International intermediaries who operate in Italy and abroad using a completely electronic trading system to execute trades in real time.
The company also performs organisational, commercial and promotional activities to enhance the competitiveness and growth of the markets under its management, its goal being to maximise over time the possibility for the various players to trade under the best conditions of liquidity, transparency and competitiveness, and to develop high value-added services for the financial community through four subsidiaries:
- Cassa di Compensazione e Garanzia (clearing and guarantee system), a company set up in 1992 and in which Borsa Italiana acquired a controlling stake in 2000. This company performs activities designed to ensure the integrity of the markets, interposing itself as central counterparty and acting as guarantor for the execution of deals
- Monte Titoli, the central depositary and manager of the clearing and settlement services, is responsible for custody, administration and accounting settlement of the deals executed.
- BIt Systems, technology company responsible for the management, maintenance and development of the Group information systems, was incorporated in 2001 as a joint venture between Borsa Italiana (65%) and SIA (35%). BIt Systems also provides Project Management services, and services relating to the development of IT solutions for private and public sector operators, financial institutions and market management companies.
- Piazza Affari Gestione & Servizi, wholly owned by Borsa Italiana since its incorporation in 2000, is responsible for the management of Palazzo Mezzanotte, headquarters of the stock exchange and location of its Congress & Training Centre.
Borsa Italiana’s main shareholders are Italian banking Institutions, domestic intermediaries and issuing companies.
The following diagram sets out the Borsa Italiana markets, the financial instruments traded on them and the group’s structure.
CONSOB
The Commissione Nazionale per le Società e la Borsa (National Commission for Listed Companies and the Stock Exchange), created by way of law 216 of 7 June 1974, is an independent administrative authority, having legal personality and full autonomy. This institution handles regulation, authorisation, supervisory and control activities in relation to the Italian financial markets, its main objectives being to safeguard the investors, and the efficiency and transparency of the Italian stock market.
CONSOB regulates:
- The performance of investment services;
- The minimum capital requirements for the regulated market management companies and the centralised management companies;
- The preparation and publication of prospectuses and offering circulars;
- The procedures for carrying out offerings;
- The listed company disclosure obligations, including periodic information (approval of financial statements, half-yearly and quarterly reports) and information on significant events.
authorises:
- The operation of regulated markets;
- The publication of prospectuses;
- The performance of activities concerning the centralised management of financial instruments;
- Registration with the Lists.
controls:
- The information contained in the accounting documents of listed companies;
- The information that the companies provide to the market;
- Operations for the solicitation of public savings (investment solicitations and public purchase and swap offers).
supervises:
- The market management companies;
- The regulated markets;
- The organised trading of financial instruments;
- The regular course of trading in the regulated markets
- The centralised management companies and the clearing, settlement and guarantee systems, together with the Bank of Italy;
- The authorised intermediaries;
- The financial salesmen;
- The listed companies;
- The parties promoting financial instrument investment solicitations;
- The auditing companies.
and, of course, in case of any infringement of the rules, it has the power to sanction the parties subject to supervision.
CONSOB also cooperates and collaborates with other significant operators from a public law standpoint involved in the regulation of the financial markets (Ministry of Finance, Bank of Italy, judicial authority and trade associations) and, as a member of IOSCO (current participants include stock market supervisory authorities from over 100 Countries) and CESR (current participants are from 17 Countries of the European economic area), takes part in international task forces on matters pertaining to financial services, such as for example those organised by the EU, the OECD and the WTO.
Bank of ItalyThe Bank of Italy (Banca d’Italia) was created by way of law 449 of 10 August 1893, which authorised the merger of Banca Nazionale nel Regno with Banca Nazionale di Toscana and Banca Toscana di Credito per le Industrie e il Commercio d’Italia, with a view to setting up a new issuing institution. In 1926 the Bank of Italy became the sole institution authorised to issue banknotes in Italy; however, the major change that occurred during the same year concerned the fact that, much earlier than in other legal systems, the bank was assigned formal powers of supervision over domestic banks.
The Central Bank’s most visible activity is the issuance of banknotes: from January 2002 it has been responsible for the circulation of euros, distributed via the Bank’s Branches, which introduce the currency into the exchange circuit. The Bank also arranges the withdrawal and distribution of damaged notes.
Following the institution of the monetary union, the traditional functions of monetary policy and exchange control are no longer managed independently, but in coordination with the other countries of the Union:
- The Bank participates, through the Governor’s presence on the governing Council of the European Central Bank (ECB), in the determination of monetary policy decisions for the entire euro area;
- It introduces to the domestic market, in keeping with the principles of decentralisation and subsidisation established at European level, the decisions taken by the governing Council;
- It takes part, through its representatives at various levels, in the numerous Committees and Task Forces set up within the ambit of the ESCB to analyse the issues pertaining to the System’s institutional duties.
The Bank’s supervisory action is jointly regulated by the Consolidated banking law (Legislative Decree 385 of 1 September 1993) and the Consolidated law on finance (Legislative Decree 58 of 24 February 1998) which, respectively, govern banking activity and the sector of financial intermediation. The supervisory function is based on authorisation powers, prudential regulations, analysis of corporate situations, interventions, inspections and management of corporate crises.
The Consolidated law on finance assigns to the Bank of Italy major supervisory responsibilities, particularly as regards the wholesale markets of Government securities and trading of interbank funds, as well as the financial trading support structures, such as for example those responsible for clearing and definitive settlement of deals, centralised management of securities or guaranteeing of contracts and their settlement.
The Bank of Italy is also the antitrust Authority for the credit sector with specific instruments at its disposal for preventing or authorising mergers that create dominant positions in the domestic and local markets, also intervening in cases of collusion between intermediaries.
Other functions of the Bank of Italy include: the fight against money-laundering through the banking and financial system (in cooperation with the Italian Exchange Office); the surveillance of payment systems and advising Parliament, the Government and other constitutional bodies with regard to economic and financial policy.
In keeping with the process of privatisation of the financial markets, the Government securities centralised management service, traditionally performed by the Bank of Italy, is now carried out by the company Monte Titoli spa, which since 2003 has been called upon to also manage the securities clearing and settlement service, except for the final cash settlement guaranteed by BI-REL.
Bibliography
- Law 281 of 4 June 1985 on CONSOB reorganisation
- Consolidated law on financial intermediation (Legislative Decree 58 of 24 February 1998)
- Consolidated banking law (Legislative Decree 385 of 1 September 1993)
- Bank of Italy Statute, 2002 version
(Ratified by Royal Decree 1067 of 11 June 1936 and amended by Presidential Decrees 482 of 19 April 1948, 369 of 12 February 1963, 593 of 14 August 1969, 607 of 20 July 1973, those of 6 March and 18 July 1992, and by the resolution approved by the extraordinary Shareholder’s Meeting of 19 March 1998 and ratified by Presidential Decree on 24 April 1998.)
