The Commissione Nazionale per le Società e la Borsa (CONSOB) is Italy's primary financial market regulator.As an independent public authority, it seeks to protect the interests of investors, provide a fair and transparent market, and ensure fairness in all business undertaken in the market.In this regard, it monitors the specifics of the Italian Stock Exchange, as well as the conduct of an intermediary, CONSOB, which is core to protecting the Italian financial system.
Brief Historical Context
CONSOB was established in 1974 and commenced complete regulation in 1975.It ushered in a new era in the Italian financial landscape, when regulation and oversight of the market were removed from the authority of the Ministry of Finance and assigned to the independent body of CONSOB, thereby providing independence and standards of objective judgment.
Over the years, CONSOB's powers expanded through various reforms, including further reforms in 1983, 1985, 1991, and again in 1998, when the TUF law was established.
CONSOB holds both administrative and financial autonomy, which enables it to lead the financial regulatory body independently of political influence, yet within the framework of Italian law.
Structure and Composition
The organization is based on a governing body of Commissioners, consisting of a Chairperson and a board of four other members.The Chairperson and other members of the commission are appointed by the President of Italy, upon the recommendation of the Prime Minister, for a non-renewable term of seven years.
This allows for musical chairs and potential shifts in opinions between existing and newly appointed members.Currently, Paolo Savona serves as the Chairman of CONSOB, and Luca Giuseppe Filippa serves as Director General.The agency has its headquarters located in Rome and Milan, and it comprises approximately 11 departments and 39 specialized divisions, offering a wide range of regulatory functions.
Principal Functions
CONSOB operates similarly to the U.S.Securities and Exchange Commission (SEC), albeit within Italy's unique legal and economic framework.Its role covers a few principal areas:
• Regulation of investment services: CONSOB issues rules for the intermediaries and institutions that provide financial services, ensuring they adhere to established standards and protect the interests of clients.
• Transparency and disclosure: CONSOB monitors companies whose shares are listed on regulated markets.Companies are required to issue timely, accurate, and complete information for the benefit of investors, including verifying the accuracy of the financial statements and the prospectus used to sell new issues to the public.
• Market supervision: CONSOB ensures that trading is conducted in accordance with fair and orderly processes.It also observes market trends and employs an interventionist methodology when unusual trading activity occurs that raises suspicions.
• Investor protection: CONSOB maintains trust and integrity in Italy's financial system, ensuring that intermediaries also conduct themselves appropriately and adequately sanction inappropriate dealing.They aim to protect consumers from fraud and malpractice.
• Market abuse: CONSOB investigates matters of insider trading, interfering with prices, and/or disseminating misleading information.The organization can impose sanctions when legislation is violated.
• Blocking unauthorized financial services: In collaboration with internet service providers, CONSOB may block access to sites providing investment products that are not authorized in Italy.
Communication and Collaboration
CONSOB aims to be more than just an enforcement agency, but also an educational and advisory one for investors (all while regulating the markets).
It regularly communicates to the public and with market operators to improve financial literacy and awareness.
Internationally, CONSOB collaborates closely with other domestic and international regulatory authorities to promote integrity within the framework of financial markets worldwide, while coordinating responses to emerging risks and cross-border issues.
Adoption of Technology
In recent years, CONSOB has implemented artificial intelligence systems that improve its monitoring capabilities.The AI can identify suspicious transactions and find irregularities in prospectuses at remarkable speed (within seconds, as opposed to several minutes for human analysts).
The organization has advocated for increased collaboration with the European Central Bank (ECB), especially regarding merger and acquisition activity in large banks.
The objective is to ensure that authorities supervise organizations in a manner that reflects the increasing complexity of the financial system.
