News and Insights

With resolution no. 22008 of the 22 September 2021, Consob approved the amendments to the Rules of the Markets managed and organized by Borsa Italiana and related Instructions, already approved by Borsa Italiana’s Board of Directors on 22 July 2021.

The amendments include the review of the rules governing alternative investment funds (AIFs) to be listed on the Euronext MIV Milan market. The amendments summarized below enter into force on 25 October 2021.

1.    Admission requirements for AIFs

• Within the rules governing the admission requirements for units or shares of AIFs, the provision concerning the requirement for the amount of assets that an AIF must have been amended. It is specified that, in order to be admitted, the AIF must have an amount of at least 25 million euro of assets raised through the offering of shares or units and/or assets valued at NAV. The aim of this clarification is to confirm the possibility of admission to listing also for AIFs whose instruments are already distributed to non-professional investors and/or to professional investors to an extent deemed adequate by Borsa Italiana to satisfy the need for regular operation of the market.
• With regard to the free float requirement, it is specified that the application of the requirement may be waived if the admission concerns shares or units of single-fund AIFs or of a sub-fund of a multi-fund AIF, which intends to raise the majority of the assets required to carry out its investment policy at the time of listing, provided they amount to a value of no less than 50 million euro.

2.    Euronext MIV Milan Market: extension to retail AIFs of the trading method anchored to the NAV

• In light of the requests received from the market participants, the amendment made to the trading methods for instruments admitted to the Professional Segment of the Euronext MIV Milan market, in force since June 2019 has been extended, also to AIFs not reserved to professional investors newly admitted to the Euronext MIV Milan market. The purpose of this amendment is to also allow AIFs not reserved to professional investors, such as ELTIFs, to reduce their exposure to discount to NAV related to the intrinsic illiquidity of these instruments.
• The above-mentioned provision apply to the AIFs admitted after the entry into force of the amendment under discussion and do not apply to the SPACs or to closed-end funds that are already listed on the Euronext MIV Milan.

• Further to the requests put forward by several market intermediaries, it is specified that reserved AIFs of the open-end type can now be listed on the MIV market
  If an application is made to list shares or units of an open-end AIF or a closed-end AIF that provides for subscription or redemption on a periodic basis, adequate contractual safeguards shall ensure that early repayments do not hamper the orderly course of trading
  Having regard to Italian closed-end funds, the regulatory safeguards provided for in Italian Ministerial Decree No. 30 of 5 March 2015 remain in place if the AIF rules or bylaws provide for the early repayment of the units or shares
• Applications for listing on the MIV can be made not only by EUVECA and EUSEF funds but now also by Venture Capital Funds pursuant to the so-called Italian Budget Law 2019
• It is considered appropriate to indicate among the information requirements of the first listing the methodology for the calculation of the NAV considering the amendments reported for the reference price explained afterwards

2.       Amendments affecting the professional segment of the MIV: trading mechanism

• Certain aspects in the way that instruments are traded are amended, in acknowledgement of the requests put forward by intermediaries and in light of the typical composition of the shareholder base and the particular illiquid nature of the underlying assets
• While the trading phases on the MIV market remain the same, it is eliminated the relevance of the notion of the reference price
  This will ensure better alignment of the AIF market prices relative to the net asset value (NAV) of the AIF
• An indicative price is calculated and published in place of the reference price and equates to the unit value of the last NAV published on the market by the issuer, which will also be used to calculate the static price used in the automated trading checks
• The issuer is required to update the indicative price at least every six months and whenever events occur that could significantly affect the NAV valuation
• Financial instruments can be traded within a predetermined fluctuation range (price corridor), anchored to the NAV: therefore, it will only be possible to execute automatically contracts within specific percentage variations relative to the NAV considered normal, taking into to account the valuation of the units by the sector, on the basis of the investment strategy underlying the instruments and taking into account their liquidity characteristics
• With reference to the entering of orders and the variation on the dynamic and static price, price variation limits are specified in the updated Guide to the Parameters available at the following link https://www.borsaitaliana.it/borsaitaliana/regolamenti/guide/guide.htm
•  In case of particular trends of the individual listed instrument, Borsa Italia may modify them and make other interventions for example on the trading phases
  Therefore, the general rules on market supervision shall apply, in accordance with the management provided for the financial instruments on the MTA market
• By means of this amendment, the initial trading parameters of the financial instruments can be anchored to the valuation of the NAV, which is updated more frequently and takes into account extraordinary events and adjustments for payments of proceeds or dividends, without making any changes to the way traditional trading processes work
  The aim of the amendment is therefore to eliminate accumulated discount typically arising from the illiquidity of the instruments and thus ensure that discounts on the NAV are more in line with the average values recorded on markets that trade a higher number of instruments, with higher liquidity
• These provisions are not applicable for SPAC vehicles for which continue to be applied the arrangements in terms of the reference price

3.       Amendments affecting the professional segment of the MIV: rule of conduct of the intermediaries

• A fine tuning is made with reference to the rule of conduct of the intermediaries on the professional segment, allowing intermediaries to accept orders coming from categories of investors identified by the rules referred to Article 39 of the Consolidate Law on Finance, where the bylaw or the rules of the fund expressly provides for it
  The reference to the primary law, rather than the implementation provision of secondary level, allows the Market Rules to be aligned with any regulatory change that my occur in the future on the subject
  This legislative reference is also valid for both Italian and foreign funds traded in Italy