Legislation protecting the investor too complex, says Italian regulator

It is a mistake to think that more regulation will protect the investor, said Giuseppe Vegas, president of Consob, the Italian securities market regulator.

A common belief in the industry is that more regulation will provide the investor with more protection. But “this is not the case,” he said, speaking at the Salone del Risparmio, the annual conference of the Italian fund management industry held in Milan. At both the EU and the Italian national level, rules have been continually added under the justification of protecting the investor.

As a result, “legislation has become too complex,” he said, adding that the rules must be simpler, lighter and more transparent if the Italian market is to thrive. Talking of the Italian Stock Exchange, he said “it is not an exaggeration to say that the Borsa is not performing its function”, in the sense of providing businesses with a source of investment. Compared to the German stock exchange, the Borsa has a proportionately much lower level of IPOs.

His comments were aimed at finding ways to encourage investors to invest in the SME sector. Italy has one of the biggest savings pools in Europe and the SME sector is not benefiting.

However, Domenico Siniscalco, president of Assogestioni, the Italian fund management association, and host of the Salone del Risparmio, noted that the asset management industry and the investors were going through a difficult period. Since 2000, savings have declined from 16% to 11.5%, a trend that predates the current credit crisis.

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