Global menu

Our global pages


CONSOB clarifies communication on complex financial products

  • Italy
  • Financial services and markets regulation
  • Financial institutions


Following the publication of the long awaited Communication on the distribution of complex financial products for retail clients, on 23 June 2015 the Italian Companies and Stock Exchange Commission (CONSOB) published the Q&As clarifying certain aspects of the Communication.


CONSOB Communication on the distribution of complex financial products follows the ESMA Opinions of 7 February 2014 (MiFID practices for firms selling complex products) and 27 March 2014 (Structured Retail Products - Good practices for product governance arrangements). The Communication identifies a list of "complex financial products" (including asset backed securities, convertible, structured and credit linked products) and advises intermediaries not to offer such products to retail investors.

The Communication also:

  • recommends that intermediaries duly evaluate the consistency of the products with the target clients during the entire intermediation process (from manufacturing to distribution)
  • recommends that intermediaries prevent conflict of interests in relation to the distribution of complex financial products issued by intermediaries for their own capital purposes
  • invites the intermediaries to remove inducements that may increase conflict of interests
  • recommends that intermediaries use the valuation and simulation methods applied internally in risk management for the information given to retail clients when distributing complex financial products.


The Q&As published by CONSOB provide certain guidelines for the intermediaries to help ensure compliance with the new regulatory framework.

As to the scope of application, the Q&As specify that the Communication applies with respect to (i) financial products offered to retail clients, as defined by MiFID and professional clients due to be reclassified as retail clients and (ii) transactions entered into by a client on its initiative (either on primary or secondary market). The Communication does not apply to redemptions or to asset managers providing collective portfolio management only. Certain measures apply to Italian asset managers (SGRs) who provide investment advice and AIFMs providing reception and transmission of orders. The Communication highlights the need for a diversification of the whole portfolio of the client.

Also in light of the Q&As, the following products fall under the scope of the Communication:

  • financial products linked to securitizations (e.g. Asset Backed Securities)
  • (convertible financial instruments (e.g. Contingent Convertible Notes or financial products qualifying as additional tier 1 pursuant to article 52 of Regulation UE 575/2013)
  • credit linked products
  • derivatives which are not traded on trading venues (not including hedging derivatives)
  • structured products which are not traded on trading venues (where the pay-off does not provide for 100% capital repayment), including covered warrants and certificates
  • other derivatives (including for hedging purposes)
  • financial products linked to indices that do not comply with ESMA guidelines on ETFs;
  • perpetual bonds (even if in plain vanilla form)
  • Alternative Investment Funds
  • structured products traded on trading venues (where the pay-off does not provide for 100% capital repayment), including covered warrants and certificates
  • leveraged financial products (which means that the product cannot provide for mechanisms triggering an exposure greater than 1)
  • structured UCITS under Regulation EU 583/2010.

If a product falls under more than one category the intermediary is required to apply the strictest recommendations.

With regard to the protections and measures to put in place, the Q&As specify that the intermediary is responsible for the mapping of the products and must verify the need to provide additional information (including information which supplement those provided in the KIID) to the clients both in primary and secondary market transactions. Moreover the Q&As clarify how intermediaries must inform the client as to the non-suitability of complex products.

The intermediaries shall inform CONSOB of the specific resolutions adopted in relation to the measures put in place to comply with the Communication and the ESMA Opinions of 7 February 2014 and 27 March 2014 within 30 days from the approval of the 2014 financial statement (or in the periodic report on the provision of investment services if the same resolutions are adopted thereafter).

For more information contact

< Go back

Print Friendly and PDF
Subscribe to e-briefings