July 28, 2021, | AtoZ Markets – Unlike the Netherlands Financial Markets Authority (AFM) that has decided to restrict retail clients' access to investment products known as turbo certificates from October 1, 2021, the Italian financial regulator CONSOB has been monitoring the local high-risk turbo certificate market for some time in order to select the optimal tactics to protect the interests of investors.
CONSOB sees no need to restrict turbo certificates
According to the Italian regulator's announcement, first of all, attention was paid to how fully the intermediary complies with the compliance requirements stipulated by the provisions of the MiFID II directive.
“Given the complexity and risk of such products, protective measures are particularly relevant,” the department noted.
In particular, meeting product management requirements helps you better evaluate the tool and offer it only to the right customers.
CONSOB believes that such products should not function exclusively in runtime. An intermediary or brokerage company should evaluate the acceptability of transactions carried out by investors with these products.
“The intermediary must ensure that the client is informed before investing, as well as in the process of maintaining a position, including about contingent liabilities and other features of margin financial instruments,” the regulator said in a statement.
If resellers receive payments or compensation from third parties (for example, from market makers) for the distribution of such products, they must comply with requirements for potential conflicts of interest.
Based on the above, CONSOB concluded that at this stage there is no need to impose restrictions such as those implemented by the Dutch counterpart AFM.
At the same time, the regulator stressed that it will monitor changes in the market and will take measures to intervene in the product if the situation or market conditions so require.
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