MiFID

The Market in Financial Instruments Directive (known as MiFID) went into effect in November 2007, and is aimed at: ensuring greater protection to investors; fortifying the efficiency and integrity of the financial markets; and creating a competitive and harmonized financial market environment in Europe.

The directive's regulations having the greatest impact regard:

  • the abolition of the concentration rule for trading in regulated markets
  • pre- and post-trade transparency standards
  • classification of retail clients, professional clients, and eligible counterparties
  • best-execution requirements

The best-execution obligation requires intermediaries to take all necessary steps to obtain, when executing orders on behalf of clients, the best possible result for their clients.
Banca IMI seeks the best execution of client orders through Market Hub, a multi-asset, multi-market platform capable of identifying - for fixed income instruments and equities - the best execution venue for the client, based on the information supplied by the client and the criteria of total consideration, speed of execution, and probability of execution.

For additional information please contact MIFID2@bancaimi.com

EMIR

The European Market Infrastructure Regulation (EMIR) went into effect in Italy and in every European country on 16 August 2012.
The objectives of the regulation are to be pursued through specific obligations applicable to Financial Counterparties and Non-Financial Counterparties, with different means and dates of effectiveness.
The most significant obligations refer to:

  • Clearing through a central counterparty (CCP) of all standardized OTC derivatives contracts, as evidenced in a special public register set up by the European Securities and Markets Authority (ESMA)
  • Reporting to the Trade Repository of all transactions effected in financial derivatives, including exchange traded derivatives (ETD) and OTC transactions (and any amendment to or termination of the same)
  • Application of risk-mitigation techniques for OTC derivatives contracts not subject to the obligation for clearing through a CCP:
    • Timely confirmation
    • Portfolio reconciliation
    • Portfolio compression
    • Dispute resolution
    • Daily mark-to-market valuation of derivatives contracts
    • Adoption of risk-management procedures

Banca IMI is member of the following CCPs:

REMIT

The EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) (Regulation No. 1227/2011 of the European Parliament and of the Council of 25 October 2011) entered into force on 28 December 2011, for all members Countries of the European Union.
The Regulation is aimed at guaranteeing integrity and transparency in wholesale energy markets. In particular, REMIT’s purpose is to prevent market abuse in wholesale electricity and gas markets, which also affects retail prices to consumers and enterprises.

REMIT establishes two prohibitions and two obligations on market participants. Prohibitions concern (1) the use of inside information for one’s own advantage and (2) market manipulation. Obligations refer (1) to the activity of reporting details of transactions concluded on energy markets to the relevant Authority (ACER – Agency for the Cooperation of Energy Regulators) and (2) to the publication of inside information – on market participants’ websites or through authorised service providers – concerning the physical status and efficiency of the facilities for production, consumption, transmission and storage of electricity or natural gas. In particular, equal access to information is necessary to enable all market participants to assess the overall demand and supply situation and identify the reasons for fluctuations in the wholesale price.

For the purpose of fulfilling the obligation to disclose inside information (art.4 – REMIT), Banca IMI will communicate it in this section.

BRRD

THE FOLLOWING IS A SUMMARY, FOR FURTHER INFORMATION PLEASE DOWNLOAD THE FULL DOCUMENT AT BELOW LINK.

The implementation of the Directive 2014/59/EU (the so-called Banking Resolution and Recovery Directive, “BRRD”) establishes a harmonised regime within the EU for the prevention and management of crisis in banks and investment companies and it aims to manage banking crises in order to ensure the continuity of their critical financial and economic functions, while minimising the impact of their failure on the economy and financial system, as well as the costs for taxpayers, through the use of resolution tools headed by the private sector.

The Italian national regulation implementing the BRRD briefly states that, when the conditions are met for the initiation of crisis management procedures for an institution which is failing or likely to fail, the Bank of Italy, in its capacity as Italian Resolution Authority, can provide for:

  1. the write down or conversion of shares, other holdings and capital instruments issued by the relevant institution;
  2. when the measure stated in point (a) does not allow the failure or risk of failure to be remedied, the adoption of resolution tools concerning the institution or its administrative compulsory winding-up.

Among the resolution tools there is the so-called bail-in, which is the mechanism for effecting the exercise by a resolution authority of the write down and conversion powers in relation to liabilities of an institution, according to the hierarchical order stated in the information letter at the link here below.

All liabilities (including derivatives) of an institution under resolution are subject to bail-in, other than the liabilities excluded from the scope of the bail-in.

The provisions of the BRRD are also applicable to parties under the supervision of other Resolution Authorities of the European Union, as well as to the banks and investment companies with registered offices in third countries and branches in the European Union, in accordance with the rules as implemented into the relevant national legal systems. Therefore, the provisions of the BRRD and related resolution tools, including the bail-in, are also applicable to capital securities and liabilities of these parties in accordance with the relevant national regulations implementing the BRRD and as applied by the relevant national Resolution  Authorities. Appropriate knowledge of the legal framework of the BRRD also through appropriate advisors is therefore highly recommended and customers are expressly advised to proper assess all relevant risks, which may vary depending on the relevant local jurisdiction into which the BRRD has been or will be implemented.