ITALY: Monte Titoli Publish New Rules and Instructions of the CSD Service

Monday March 20 2017

On 17th March 2017, Monte Titoli published new texts of the Rules and Instructions of the Central Security Depository Service. The Rules and Instructions of the Service are amended in view of the extension of the fiscal services offered by Monte Titoli to the fiscal representation pursuant to legislative decree 461/1997.

Regarding the Rules, the provisions governing the services will thus be arranged as follows:

• “Fiscal Assistance” Services with or without representation;
• FTT Service.

As a consequence, the Instructions are updated to further detail the operation of the fiscal assistance services.

In contrast, the current regulatory arrangement is confirmed, based on which the provisions governing the fiscal services contained in the Rules include also the fiscal services offered in relation to foreign markets, as specified in the Instructions.

New fiscal representation services

Within the framework of the fiscal representation services, Monte Titoli essentially carries out the activities below:

• payment of the substitute tax on behalf of the intermediary or application of any exemption pursuant to the applicable legislation;
• communication to the tax authority of the periodic declarations regarding applied taxes and the identification data of the exempt subjects.

In line with the principles of European Regulation no. 909/2014 regarding Central depositories, the regulatory provisions governing the new services have been defined by following a risk based approach with special focus on the monitoring regarding operating, credit and liquidity risk.

Therefore, the requirements for participation in the fiscal assistance services contained in the Rules have been reviewed and the specific conduct regulations that can be applied on the basis of the activities carried out by Monte Titoli on behalf of participants have been introduced.

Specifically, in order to entirely mitigate the liquidity risk and/or the credit risk connected to the payment of taxes, participants are requested:

• under the conduct obligation, to have the necessary funds to pay the tax as of the 12th business day of the month for which the payment of the tax is required; and
• under the participation requirement, to offer the provision of a guarantee to cover the risk of failed replenishment, which Monte Titoli will enforce in case of default.

As regards the monitoring covering the operating risk, the Instructions describe the essential procedures followed by Monte Titoli to manage the main processes connected with taxation (i.e. acquisition of important information for tax purposes, methods of applying, calculating and paying taxes).

Basic elements of the contracts between Monte Titoli and Participants

Relations between Monte Titoli and Participants concerning the provision of the Central Securities Depository Service for financial instruments and the related and instrumental activities shall be governed by the general conditions of contract established by Monte Titoli in accordance with Articles 1341 and 1342 of the Civil Code. Such general conditions shall comprise these CSD Rules, the Instructions and the General Conditions for the Provision of Services, including the related annexes, which Participants accept on signing the request for services.

Among other things, contracts between Monte Titoli and Participants shall govern:

a) the duration of the contract and the procedures and time limits for withdrawal;
b) the procedures for Monte Titoli to send communications to Participants;
c) the rules for amending the general conditions;
d) the liability of Monte Titoli;
e) the fees for the services;
f) the rules for resolving litigations.

The services concerning the related and instrumental activities may also be offered by Monte Titoli, under the same conditions, to parties other than those listed in paragraph 1 of this section. In this case, the related service contracts shall include the provisions of the Rules and those of the Instructions applicable from time to time to individual services.

The amendments will enter into force on the 3rd April 2017.

The amendments both in Italian and English are available at the following link.

Click on the link above for further details.