The Commissione Nazionale per le Società e la Borsa, also known as the CONSOB, is a regulatory body set up in Italy. It is responsible for regulating the Italian financial markets. It also includes the regulation of the Italian stock exchange, Borsa Italiana.
The CONSOB, also referred to as the Italian Companies and Exchange Commission was created in 1974. The company was created by merging the functions and jurisdictions previously part of the Italian Ministry of Treasury. In Italy, this was the main power to overlook financial matters. With time, however, CONSOB’s responsibilities have increased greatly.
A new law came about in 1983 that extended the CONSOB’s jurisdiction to protect the public savings. In addition, in 1985, CONSOB received judicial personality and autonomy. Finally, in 1991, the company was given powers to audit securities brokerage and monitor insider trading.
What is the CONSOB responsible for?
The company carries out several responsibilities. Since it is involved in a risky business, the company must pay attention to many factors simultaneously. CONSOB regulates the investment services as well as the operations of the intermediaries. The obligations of companies listed on regulated markets and the solicitation of investment from the public are also part of the CONSOB’s responsibilities.
CONSOB authorizes the operations of the regulated markets, the publication of prospectuses, the centralized management of financial instruments, and enrolment in registers. Such things show how many responsibilities the CONSOB carries.
As a regulatory body, it is the company’s job to fire anyone who might be breaking the law or crossing any boundary. To keep a check on that, CONSOB penalizes any unfair or unethical conduct by the parties involved. The company also checks the information provided to the market by the entities that are dealing with the public. Along with this, they also go through the accounting documents of the companies that are listed.
CONSOB monitors the operations of market management companies. It also keeps an eye on the transparency of the people working and whether they follow the proper code of conduct. In addition, the company must also keep a check on the transparency and fairness of the conduct of intermediaries and financial representatives.
Structure of the Organization
CONSOB is headed by a body consisting of the chair and four other members appointed by a decree of the President on the proposal of the President of the Council of Ministers. The tenure for each one of them is seven years, and the contract is non-renewable.
The organizational structure includes a central management committee under which eleven departments are operating. These include the issuers, intermediaries, markets etc.
There are also thirty-nine divisions: company controls, public tender offers and ownership structure, financial representatives monitoring and register, insider trading, and derivatives markets.
CONSOB’s offices are located in Rome and Milan, which is the heart of Italy. The current chairman of the regulatory body is Paolo Savona, who started in November 2019.
Activities of CONSOB
The company is responsible for monitoring the financial markets of Italy. The main aim of CONSOB is to protect the investors and also improve the company’s efficiency.
The company has some activities that it is involved in. For example, it regulates the provision of investment services and also the reporting of obligations of the listed companies.
CONSOB keeps an eye on the market management companies and makes sure that there is a proper form of negotiations. In addition, CONSOB makes sure that the people involved follow the correct code of conduct.
It can also sanction the entities that are being monitored by the company. The company checks the information disclosed to the market by the entities working under their supervision, launching appeals for public investment and information contained in the accounting documents of listed companies.
All this comes under the company’s activities.
Along with this, CONSOB also communicates with the operators and investors to provide more effective services to their clients and develop a financial awareness of the investors.
Contribution System
CONSOB has a contribution system. The company manages its expenses used to operate based on the annual budget of the commission that comes out every year. The annual accounts have to be approved by the end of April every year, and they are audited by the State Audit Office.
Since 1995, however, CONSON has been funded partly through the central government that has allocated a specific amount to it and partly through fees collected directly from the markets and participants for the activities it carries out.
By the end of July every year, CONSOB informs the Ministry of Treasury of whatever it needs regarding funding and forecast revenues. Once they get all the information, the Ministry of Treasury starts planning out the annual budget allocation.
The company then fixes the types and amounts of fees signed by the Prime Minister and rendered effective after their legitimacy is checked and consulted with the Ministry of Treasury.
Strategic Plan
The strategic plan of the company identifies the goals and priorities of the company. It also considers the risks that come from the economic scenario changes and the regulatory framework that could impact CONSOB’s institutional objectives.
Bottom line
CONSOB is a regulatory body set up in Italy to monitor its financial markets. Since it is a risky business, the company has to overlook several factors, so it does not suffer any damages itself, nor do its clients.
The company aims to make continuous efforts to avoid any kind of backlash or monetary damage.