The revised Market Practice reflects the remarks raised by ESMA after a public consultation process.

By Antonio Coletti, Marco Bonasso, and Isabella Porchia

Article 13 of MAR provides for an exemption from sanctions in case a transaction breaches the general prohibition of market manipulation for transactions carried out for legitimate reasons and in line with accepted market practices established by national competent authorities (in Italy, CONSOB).

New Practice No. 1 was prepared in accordance with the format set out under the Annex to the Delegated Regulation (EU) 908/2016.

The new practice is the result of a review process that started with a September 2018 public consultation procedure launched by CONSOB, in which Latham lawyers participated. Subsequently, CONSOB published a preliminary version of the new market practice in April 2019, which was notified to the European Securities and Markets Authority (ESMA) in November 2019. (See Italian Securities Exchange Commission Announces Market Practice on Liquidity Contracts.)

New Practice No. 1 modifies the preliminary version of the market practice adopted in 2019, reflecting the remarks raised by ESMA. The new practice requires an appointed intermediary to carry out liquidity support activities to ensure such activities are conducted independently, including separately from any other activity with reference to the same securities on the same trading venue carried out by the same intermediary in its quality as specialist.

New Practice No. 1 will enter into force 30 days after its publication on the Italian Official Gazette. Practice No. 1, which is currently in place, will cease to apply when New Practice No. 1 goes into effect.

CONSOB has made available on its website the form to be used by issuers and intermediaries that carried out liquidity support activities in the previous quarter for reporting purposes.