MILAN: Italy has approved European Union-mandated measures to create a more uniform framework for alternative investment funds, especially credit funds, whose importance has grown as a source of financing for companies outside the banking system.
Italy’s move to align its rulebook with EU standards comes amid mounting financial stability concerns over the $2 trillion global private credit market, which is showing signs of strain in the United States.
In the EU, however, policymakers are intensifying efforts to expand non-bank financing for companies to help the real economy.
The new Italian rules, which came into force on Saturday, make it easier for European alternative investment funds to operate in Italy, said Alberto Claretta Assandri, head of Italy funds and financial regulatory at law firm A&O Shearman.
“European managers of funds that have an authorisation from relevant authorities can simply notify the Bank of Italy about their decision to start their activity in Italy, while until now they had to undergo an approval process,” he said.
The EU moved to reform the regulatory setup for alternative funds after a European Commission review found that rising cross-border activity had exposed regulatory inconsistencies in areas such as liquidity management and supervisory reporting.
The EU review also highlighted how unclear delegation standards and uneven access to depositary services were hindering market integration and posing risks to investors.
Claretta Assandri said the new Italian law also allowed European credit funds to lend directly to consumers.
“The EU directive provides for this possibility but gives member states the option to prohibit it. Italy has chosen not to do so. The measure will become fully operational once the Bank of Italy issues the necessary secondary rules so we’ll need to see how the implementation proceeds,” he said.
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