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The Memorandum of Understanding (“MoU”) of 22 December 2020 between CONSOB and the SEC CONSOB and the SEC have signed the MoU for the purpose of reciprocal cooperation in the supervision over the regulated entities of the respective jurisdictions, i.e., the USA and Italy. The full text of the MoU can be inspected at:

http://www.consob.it/documents/46180/46181/MOU_Consob_Sec_20201222.pdf/bae 3b1d6-3ef6-438b-bba0-0b7943cce7a8

The cooperation under the MoU will take place through either “informal consultations” and “more formal cooperation” between the regulators, and each regulator represented that there are no internal regulatory constraints applicable to it that may adversely affect its ability to provide assistance to the other under the MoU.

The MoU complements and integrates, but doesn’t alter nor supersede, the preceding bi-lateral arrangements between CONSOB and the SEC of 1993 and 2013, the 2012  revised version of the IOSCO multi-lateral memorandum of understanding on reciprocal consultation and cooperation and the 2019 administrative arrangement for the transfer of personal data signed by the SEC and CONSOB.

Article III of the MoU points out the cases in which the cooperation and consultation are particularly important, e.g., actual or threatened crisis of a supervised entity, especially those of systemic importance, the acquisition of information by one regulator in connection with an application by an entity which is subject to the supervision of the other regulator, and the exchange of information in relation to ongoing supervision.

Article III also provides details on the procedures for the exchange of information, which can be either “event-triggered”, i.e., in case of regulatory changes or sanctions/disqualifications to a regulated entity, or “request-based”, i.e., when one regulator is asking information to the other one.

Article IV covers the on-site visits by providing, e.g., that CONSOB officers may visit firms located in the US and the same the SEC in Italy at the conditions and with the procedures described in the MoU, and articles V and VI address the exchange of information and the relevant confidentiality issues.

2 The importance of the MoU in relation to the management of investment portfolios

Under the EU (Regulation no 600/2014) and the Italian regulations (e.g., Bank of Italy Resolution of December 5, 2019), the possibility of delegation of the management of an investment portfolio to a non-EU financial intermediary is conditional upon the existence of a cooperation agreement between the competent Italian regulator, i.e., CONSOB, and the regulator of the country of domicile of the relevant third-country delegated asset manager.

While the specific situation of the UK asset managers and the arrangements with the EU allow to conclude that there is a cooperation between Italy/EU on the one side and the United Kingdom, with regard to the USA the recent guidance of CONSOB was that the pre-existing cooperation agreement was obsolete and thus that delegation to US entities was not possible. Therefore, the 2020 MoU between CONSOB and the SEC covers this gap and will render fully lawful the delegation of the management of the investment portfolio by an Italian investment firm or ManCo to a US entity, provided that the latter is authorized in that country and subject to the supervision of the SEC.

For this reason, the MoU complements the decision of COVIP (the Italian pension fund regulator) of 30 July 2020 according to which the managers of Italian pension 3 funds may delegate third country asset managers, provided that the general Italian and MiFID requirements, that included the bi-lateral co-operation agreement between regulators, are complied with (see our Newsletter no 2020 04).