Regulation EU/2014/600 (MiFIR), which entered into force on 3 January 2018, gave national supervisors, and in some cases ESMA and the EBA, the power to prohibit or limit:
- the marketing, distribution or sale of financial instruments and structured deposits (i.e. deposits whose return is linked to indicators such as indices, financial instruments, commodities or exchange rates; variable rate deposits whose yield is directly linked to an interest rate are excluded);
- certain related financial activities and practices (e.g. how the placement is made, distribution strategies, incentive mechanisms relating to the distribution of financial products).
For the list and definitions of the individual financial instruments analysed by the Banca d'Italia within the scope of its intervention power, see the Glossary.
Article 7-bis of the Consolidated Law on Finance (TUF) assigns this 'intervention power' to:
- Banca d'Italia in order to safeguard the stability of the domestic financial system;
- CONSOB to protect investors and the smooth functioning and integrity of financial markets and commodities markets.
Banca d'Italia and CONSOB have signed a memorandum of understanding governing the procedures for coordinating their action and exchanging information regarding the exercise of the product intervention power, in accordance with the division of powers laid down in the TUF.
It is important to point out that, before exercising this power, authorities are required to verify that it is not possible to address the risks identified through other supervisory measures and that the measure is proportionate and non-discriminatory. The intervention power may be exercised by national authorities through temporary or permanent measures in respect of banks, investment firms and market operators; entities other than those specifically indicated by European legislation, such as asset management companies and financial intermediaries on the dedicated register provided for in Article 106 of the Italian Consolidated Law on Banking (TUB), do not fall within the scope of the intervention power.
As already known, Banca d'Italia already carries out controls on the transparency of the contractual conditions and the fairness of intermediaries in customer relations. However, these relate exclusively to banking and financial products and services (such as current accounts, deposits, financing, payment services), while, as mentioned, Banca d'Italia's intervention power concerning financial instruments is exclusively intended to preserve the stability of the national financial system.
In order to exercise any intervention powers, Banca d'Italia regularly carries out analyses of the risks to financial stability that may arise from financial instruments circulating in Italy based on a specific legal, analytical and methodological framework, which is constantly updated and refined.
Banca d'Italia provides the public with a summary of the results of the most recent analyses and assessments, usually once a year.
Summary of the results of the most recent analyses and assessments (data as at 31 December 2024)
Based on the most recent analyses, conducted using data up to 31 December 2024, Banca d'Italia continues to focus on certificates and structured bonds, due to their complexity and to the rise in the volumes of them in circulation observed last year1. An increase in the amount of some derivative instruments in circulation, specifically credit default swaps (CDS), swaptions and non-plain vanilla options, was also observed.
The risks to financial stability connected with the volume of these instruments in circulation are not high.
The full results of the analyses and assessments of risks to financial stability are available at this link.
[1] For the list and definitions of all the individual financial instruments analysed as part of the intervention power, see the Bank's website: 'Glossary of the types of financial instruments analysed by Banca d'Italia within the scope of its intervention power'.
