The central securities depository came into being in Italy in 1978 with the creation of Monte Titoli SpA as a service to support trading in financial instruments. Law 289/1986 gave Monte Titoli the monopoly of central safekeeping and administration services for shares and private-sector bonds,, leaving government bond management to the Bank of Italy.
In 1998 the Testo unico della finanza (TUF – Consolidated Law on Finance) introduced central depository companies, recognising their entrepreneurial nature and subjecting them to authorisation requirements and to supervision.
In the same year, the sector underwent a major innovation with the adoption of the the ‘euro decree’ containing provisions for the introduction of the single currency in national legislation. The decree made the dematerialisation of financial instruments compulsory and established that their issuance and circulation could only take place through the central depository in the form of book entries.
The central depository service was entrusted to Monte Titoli by ministerial decree, passed in 2000, regarding government securities and by a resolution of Consob issued in 2001 regardingfinancial instruments in general.
The TUF gives the Bank of Italy and Consob powers to issue regulations, grant authorisations and carry out monitoring of the central depositories. Supervision is conducted ‘according to purpose’, with Consob responsible for transparency and investor protection and the Bank of Italy responsible for stability and the containment of systemic risk.
In 2008 the two authorities decided to issue a single regulation, call the Provvedimento Unico, grouping together the numerous measures in force at the time regarding: operations of central depository, pledge and settlement services; confirmation of transfer orders relating to financial instruments; settlement of market insolvencies; supervisory instructions for post-trading companies; and guidelines on business continuity and outsourcing of strategic activities.
The ‘Regulation governing central depository, settlement services, pledging systems, and the related managing companies’ was issued by the Bank of Italy and Consob on 22 February 2008. It served to simplify the rules and reduce the number of provisions and regulations and also reflected the situation of enhanced coordination between the authorities.
At the European level a regulation came into force in September 2014, designed to bring order to securities settlement in the EU and to the central securities depositories. The CSD Regulation serves the dual purpose of creating a single market for centralised securities holding and settlement and helping to minimise the risks associated with the settlement of transactions in financial instruments.
The central depository service was entrusted to Monte Titoli by a Consob resolution for financial instruments in general and by a ministerial decree as regards government securities specifically.
The legislative framework for central depository companies was completed with the provisions on the dematerialization of financial instruments.