Italy Seeks to Curb Structured Note Sales to Retail Investors

Italian regulators are seeking to curb sales of structured notes and other complex financial products to individual investors on concern they don’t understand the risks involved in buying securities that package debt with derivatives.

The nation’s investors bought a record 2.5 billion euros ($3.4 billion) of the notes in the first three months of the year, according to data from the Italian Association of Certificates and Investment Products. Almost half would be unsuitable for sale under guidelines proposed by the Companies and Stock Exchange Commission.

“The first reaction was shock,” said Romeo Battigaglia, a partner at law firm Simmons & Simmons in Rome, who advises international banks on structured product sales in Italy. “It isn’t an outright ban, but if Consob formally adopts it, no one would dare sell these products to retail investors. Banks will have to close certain business lines in Italy.”

The Italian regulator is expanding rules set by the European Securities and Markets Authority in March that call for stricter oversight of financial products. Securities once reserved for professional and institutional clients are increasingly being marketed to people who may not be familiar with the complexities, Consob said in a report.

Issuers have been given until the end of the month to respond to the proposals, which advise against retail sales of non-capital protected securities, credit-linked notes, contingent convertible notes, collateralized debt obligations and asset-backed securities.

To contact the reporter on this story: Luca Casiraghi in London at

To contact the editors responsible for this story: Shelley Smith at Jennifer Joan Lee, Michael Shanahan

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