Following the entry into force of Regulation (EU) 2017/1129 (“Prospectus Regulation”) regarding the regulatory framework applicable to prospectuses, on the 25th of June 2018 it has been introduced in the MOT market (“screen-based bond market”) a new Professional Segment, reserved solely for qualified investors (“MOT Professional Segment”).
The aim of Prospectus Regulation is to allow issuers to draft a simpler prospectus which is intended to be more adherent to the information requirements of qualified investors. At the national level, the entry into force of the Prospectus Regulation entailed amendments to (i) the Italian Rules of the Market (the “Market Rules”) and (ii) the related Instructions (the “Market Instructions”).
- Major amendments
The major amendments are the following:
1) article 1.3 of the Market Rules (Definitions) defines Professional Segment of the MOT market as “the segment of the MOT market reserved solely for qualified investors as defined in the Regulation (EU) 2017/1129” namely persons or entities of article 6, paragraphs 2-quinquies and 2-sexies of the Italian Legislative Decree No. 58/1998 as listed in the Annex 3.I of the Consob resolution of the 29th October 2007 n. 161910, and persons or entities listed in Annex 3.II of the abovementioned resolution who are, on request, treated as professional clients, or recognised as eligible counterparties under article 6, paragraph 2-quaterd) of the Italian Legislative Decree No. 58/1998, unless they have entered into an agreement to be treated as non-professional clients.
2) article 3.3.1 (Rules of Conduct), paragraph 11, reports that “operators may not accept orders coming from non-qualified investors regarding non-equity securities admitted to the Professional segment of the MOT market. Borsa Italiana does not verify the qualification of investors operating on the Professional Segment of the MOT market. Operators are committed to make authorized subjects whose orders come from respecting the rule of conduct”;
3) to the Market Instructions, article IA.6.2.1 (MOT Market), paragraph 2 has been added. It states that “Borsa Italiana, when required by the issuer, positions financial instruments of paragraph 1 on the Professional Segment of the MOT market, reporting it on the negotiation starting notice”. Accordingly, the format for the application of admission to trading on the MOT market has been amended to allow issuer having a program of non-equity securities to which only qualified investors can have access to enter the Professional Segment of the MOT market.
- Admission to the MOT Professional Segment
From the 25th of June 2018, the issuer, the bidder or the person applying for non-equity securities to be negotiated on the MOT Professional Segment shall activate the proceeding under the Market Regulation. Therefore, the applicant shall forward the request to Borsa Italiana specifying that non-equity securities are offered solely to qualified investors, and contemporary apply to the competent authority for the authorization for the publication of the prospectus complying with the legal requirements.
- Application of Prospectus Regulation to non-equity securities addressed to the MOT Professional Segment
Generally, Prospectus Regulation imposes that securities must only be offered to the public in the Union after prior publication of a prospectus. Besides that, the Regulation provides for a specific framework for non-equity securities – such as warrants, covered warrants, certificates, depositary receipts and convertible notes, such as securities convertible at the option of the investor – which are intended solely for qualified investors.
Therefore, the introduction of the new MOT Professional Segment is in line with the new regulatory framework introduced by Prospectus Regulation to the extent that it aims to ensure the proper functioning of the wholesale market for non-equity securities and increase market liquidity, setting out a distinct alleviated treatment for instruments admitted to trading on a regulated market and designed for solely qualified investors (see article 5, paragraph 2 of Prospectus Regulation).
The treatment designed for non-equity securities, regardless of their value, admitted to trading on a regulated market and intended for qualified investors comprises (i) minimum information requirements that are less onerous than those applying to non-equity securities offered to retail investors (scheme would be adopted by the Commission according to the delegated power contained in article 44 of Prospectus Regulation), (ii) no requirement to include a summary in the prospectus, and (iii) more flexible language requirements when the application for the admission to a regulated market is forwarded in one or more Member States.
- Entry into force
Prospectus Regulation and the amendments shall apply from the 21stof July 2019. However, it is made available before the regulation enters into force to allow issuers to access to the Professional Segment of MOT market on a voluntary basis. Issuers entering the Professional Segment of MOT market before the 21st of July 2019 shall nonetheless draft the prospectus according to the current discipline.
- Scope of application
The professional segment is cross to the current DomesticMOT and EuroMOT segments. On the professional segment, financial instruments may be admitted if they are settled both in Monte Titoli and foreign systems, Euroclear and Clearstream Banking Luxembourg.
For any further information feel free to contact the following professionals at our firm:
Avv. LL.M. Luca A. Lo Po’
Tel: 0039 02 82826000
Avv. LL. M. Donatella Naselli
Tel: 0039 02 82826000