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- BOT Purchases at Auction: Decrease in Maximum Commissions

NEW MINISTERIAL DECREE REGARDING TRANSPARENCY IN THE PLACEMENT OF GOVERNMENT SECURITIES.

Press release N° 18 of 01/19/2015

The decree of the Minister of the Economy and Finance of 15 January 2015 has been published in the Official Gazette of the Republic of Italy (No. 13 of 17 January 2015). The decree updates the regulations for transparency with reference to placements of government securities. The decree is effective as of tomorrow, 20 January 2015, and will substitute the previous decree issued on 12 February 2004 (and later amended on 19 October 2009), which will be repealed.
The new decree incorporates much of the content of the previous decree, but it also contains two important changes:

  • It reduces the maximum commissions to be charged to customers who subscribe to BOTs at auction, and it provides for no commissions in the event of negative yields;
  • It provides new means, which are more up-to-date with the changes in technology, for the publication of information related to the placements of government securities.

More specifically, the decree has established, as a consequence of the decline occurring in interest rates, a reduction in the maximum commissions applicable to the clientele, which is similar to that done in April 2014 with reference to the commissions on medium-/long-term securities (it is noted that the “transparency decree” governs only the maximum commission on BOTs, since client commissions cannot be charged on purchases of medium-/long-term securities purchased at auction).
The decree sets the maximum commissions for three-month BOTs at 0.05%, while those on the six-month and annual BOTs are 0.10% and 0.15%, respectively, with the commissions to be equal to zero in the event of a yield that is nil or negative.
Furthermore, considering the increased use of information technology at banking facilities, the decree provides that paper advices may be freely substituted by electronic instruments, which can be easily consulted by the customers. Finally, as a result of greater use of electronic channels for reserving securities at auction, the decree has provided that Internet sites dedicated to such online activity will be required to contain the same notices that must be provided for transactions carried out at banks and bank branches.

01/19/2015
IT