ITALY: Memorandum of Understanding between Italian regulators on Italy short selling published

Friday April 26 2013

Consob has published on its website (in Italian) the Memorandum of Understanding on the division of competences on Italy short selling. The agreement regulates the following:

• Calculation of the notification thresholds for net short positions in relation to sovereign debt
• Notifications to the Competent National Authority
• Notifications to ESMA
• Temporary suspension of restrictions on short sales and credit default swaps
• Exemptions for market makers and authorized primary dealers
• Measures of national regulatory authorities in exceptional circumstances
• Powers of investigation
• Sanctions

Consob is the competent Italian authority for the notification of net short positions in shares, while the Bank of Italy is the competent authority for the notification of positions in debt and for credit default swaps.

The Ministry for the Economy and Finance has been designated as competent authority for the exercise of the “extraordinary” powers envisaged by the Regulation (e.g. ban on assuming net short positions on sovereign debt; removal of the ban on naked short sales on government securities) and exercises these powers on the proposal of the Bank of Italy, having first consulted with Consob.

The protocol establishes the ways by which cooperation and the mutual exchange of information will take place, in order to coordinate the exercise of the ordinary and extraordinary powers envisaged by the Regulation in relation to government securities and CDS on sovereign issuers.

Click on the above link for the Memorandum in Italian. Click here for an unofficial translation.