Acepi has responded to the public consultation launched by the Italian regulator Consob on the manufacturing and distribution of complex structured products.
In collaboration with Associazione fra le Banche Estere in Italia (AIBE), the European Structured Products Association (Eusipa), and the Joint Associations Committee on Retail Structured Products (JAC), Acepi reaffirmed the industry’s commitment to promote and deliver effective and appropriate protection for retail investors in the country, citing the public consultation process as a welcome opportunity to reflect on the reforms proposed by Consob as well as wider issues in the Italian market.
Moratorium
However, concerning the regulator’s proposed voluntary moratorium on the distribution of “highly complex” products (arguably the most controversial measure proposed by the regulator), Acepi and its partners came up with several major points to consider.
According to Acepi, there is no evidence, precedent or otherwise significant example of serious failure in the market to date.
“The absence of any systemic problem in the retail market, coupled with the fact that existing EU regulation has established more than adequate guidelines for the industry, does not warrant intervention along the lines proposed by Consob,” said Acepi.
Product intervention
Acepi said that the regulator’s proposals are not in line with the approach set out by the European Securities and Markets Authority (Esma) and that in fact both exceed the parameters established in the Mifid directive and ignore rules currently governing the concept of product intervention.
“Exceeding the terms of European directives – known as goldplating – actually puts the regulator at risk of infringing EU law,” said Acepi.
The Italian trade body added that Consob’s classification of “highly complex” products is arbitrary and not based on objective and impartial criteria universally accepted by other EU member states. “Not only does this cast doubt on the ability of the market to regulate itself efficiently, it also risks reducing the range of products on offer, ultimately taking choice away from investors,” it said.
Impact
According to Acepi, the impact of the proposed reforms could be significant. Aside from limiting choice and opportunity in the market, it said, the costs to compliance departments that would have to enforce the new rules would no doubt get passed on to retail investors in the form of higher fees.
One foreseeable outcome, said Acepi, is that retail investors in Italy will simply look for investment opportunities in other, often underdeveloped (and less secure) markets, which in itself defeats the regulator’s stated intentions.
Acepi also warned of the potential impact on market competitiveness, arguing that Italian institutions – issuers, distributors and third parties – could all lose out to foreign competitors, operating in both Italy and other markets, which would be exempt from such regulation.
“This would have a negative impact on Italy’s ability to retain home-grown investors as well as attract foreign investors and institutions,” said Acepi.
Acepi urged Consob to provide careful and exhaustive cost-benefit analysis for its proposals “if the market is to remain a fair and attractive proposition to investors and institutions at all levels”.
Consob was unavailable for comment, but is expected to publish its own results of the consultation by the end of October.
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