The Italian regime on digital financial instruments is finally ready to kick-off

For a snapshot on this act and the regulatory status of the Register Supervisors, please refer to our previous publications available here and here.

The CONSOB Regulation plays a pivotal role in the digital financial instruments space as it marks the last pending step for the full kick-off of the Italian digital native financial instruments’ regime. Notably, the CONSOB Regulation governs the registration procedure to be undertaken before CONSOB  for enrolment in the Registry of the Register Supervisors (the Registry) as the entity legally responsible inter alia for the management and functioning of the issuer’s register which is used to issue and transfer the digital financial instruments.

As of the date of its entry into force, entities which are seeking registration will be asked to file with CONSOB via PEC an application to obtain prior clearance from the regulator. The application, whose content may vary slightly depending on the regulatory status of the applicant, should include a de minimis set of information and certain accompanying documents including, among others, a technical report. In particular, this report shall be drafted in accordance with the criteria identified under Annex II of the CONSOB Regulation and is primarily aimed at providing the Italian regulator with a comprehensive and detailed overview of the characteristics and features of the technological infrastructure which the applicant intends to rely on to act as and/or which will underpin its activity as Register Supervisor.

Once the application is received, CONSOB will grant or deny the registration through the administrative procedure set out in the CONSOB Regulation. Among the various provisions, the CONSOB Regulation provides that, to the extent deemed necessary, CONSOB may decide to appoint an independent expert at the applicant’s expense to assess the applicant’s capacity to ensure compliance with the requirements provided for by law (i.e. both by the Digital Financial Instruments Law and the CONSOB Regulation) to act as Register Supervisor.

The Public Consultation

The publication of the final version of the CONSOB Regulation was preceded by a public hearing procedure launched by CONSOB early this summer. First of all, the public consultation gave the opportunity to collect comments and requests about the convenience of Consob issuing a further regulation concerning matters on which the Authority has the power to legislate.

In addition in order to clarify certain grey areas which would have rendered the practical enforceability of the regime more difficult, Allen & Overy participated in the public consultation setting forth certain considerations as to the provisions laid down by the draft CONSOB Regulation from a market participant perspective. In particular, from an operative perspective, the main concerns relate inter alia to:

• The appointment of the independent expert by CONSOB in the context of the review of the registration application, with specific regard to the aspects and issues the Authority may ask the independent expert to further investigate.
• Amendments and changes to be made to the registration procedure as a whole to make it less onerous and straightforward for the market operators opting to file the registration application.
• Certain clarifications were needed as to the content of the technical report accompanying the registration application; and
• The categories of information the authority is entitled to request.

The report submitted by Allen & Overy is publicly available here.

The public consultation recently ended and certain remarks raised by Allen & Overy have been taken into account (and the text of the CONSOB Regulation has been reviewed accordingly).

The results of the public consultation including the feedback to our comments are available here.