“Consob considers it its duty to account for its work, as well as to the Government and Parliament, also to the subjects over which it exercises supervision”. It begins with a famous quotation by Tommaso Padoa Schioppa (pronounced exactly 20 years ago, in 1998), to whom he already he had said in recent months that he wanted to be inspired, the first public outing of the president of Consob, Mario Nava, officially installed on 16 April.
The theme of Consob Day, held at the Milan Stock Exchange with an innovative format (speech illustrated by slides and press conference to follow the main news), is precisely that dialogue with the market and the diversity of skills present in Consob. “The market authority – said Nava – is facing a double challenge: relaunching the market and relaunching the Authority, ie itself. To do this, we members of the Board of Consob count on all the personnel, whom I want to thank right now".
The starting point of this new phase, particularly delicate for Consob, is that of Parliamentary commission of inquiry chaired in the last legislature by Senator Casini: "We certainly take into account the suggestions that have emerged, the commission has highlighted critical issues within Consob and critical issues between Consob and the other authorities, to be resolved as soon as possible".
The crux is mainly that the commission for the supervision of companies listed on the stock exchange operates on the one hand in a market context that has been known for some time, and on the other in a constantly evolving international framework, "both for the regulatory aspects and for the processes of technological innovation in progress". So how does Consob of Nava intend to face this challenge? "With the proactive vigilance, the real novelty of this College”, explains the president to the audience in Piazza Affari.
There are six lines of action: support for market access; the quality of companies on the market (non-financial information); the protection of savings and investors; financial education; the strengthening of the Arbitrator for financial disputes; the relaunch of Consob in international forums. Nava then recalled some data on the Italian market: "Italy is the ninth (or eighth, in swing with Brazil) economy in the world in terms of GDP but only the 17th in terms of financial center: one of my goals will be to close this gap”.
Another well-known fact is that Italian growth is lower than that of the Eurozone, but not only that: “Savings too, which historically in Italy were higher than the average for the Eurozone, it dropped much more sharply than in the rest of the member countries. It has only been showing signs of recovery for a couple of years”, Nava pointed out, also recalling that even if the flow of savings has decreased, Italy has a stock of wealth higher than the eurozone average.
However, we are going through a transition period: before the portfolio consisted mainly of debt securities, now diversification leads to a different approach and a greater interest in equity: "It is important that Consob facilitates and monitors this probable and desirable transition from debt to equity". For now, however, the size of the Italian financial market remains behind, Nava reiterates: "The capitalization compared to the GDP is about half that of Germany and the euro area, 1/3 that of France and ¼ that of England".
The Italian stock market is small not only in terms of capitalization but also in relation to the number of listed companies: "However - underlines Nava - an encouraging evolution was recorded in the AIM segment, also due to the demand generated in 2017 by the PIRs, with a number of companies that has exceeded 100 and now reaches 105 issuers and a capitalization that has almost doubled".
The enhancement of SMEs is one of the central themes of Nava's programmatic speech: in Italy there are only two big companies (capitalization over 50 billion) listed, as in Spain, while there are 9 in Frankfurt and Paris and 14 in London. “And yet the weight of SMEs in the real economy is much greater than elsewhere: they account for 78% of employed people, against 63% in Germany and France; and offers an added value of 67,7% against 54% in Germany and France”, explains Nava.
POLICY
The number one of Consob also sent a clear message to the new government and to politicians in general: "Respect for Consob's independence and respect for the delicate market mechanisms by all market operators and of all policy makers it is essential for the stability and economic prosperity of the country”. Therefore, vigilance also on politics, especially in these times, with some positions taken by the new majority that have disturbed the markets, reopening the spread crisis: “We will have an excellent confrontation with the Government. Today no one was present because the new executive has just taken office, that's normal. Meanwhile, I greatly appreciated Minister Tria's interview with Corriere della Sera,” Nava said at the press conference.
When asked about a possible ongoing investigation into the contents of the "government contract", which were at the origin of the turbulence on the markets and on the Italian BTP, the president of Consob nevertheless hinted that there could be some news: "We're checking, for now I can't add anything else". Nava then reiterated that he wanted to have a fruitful dialogue with the new majority: “I want to go to Parliament often. For example regarding the possible reform of corporate governance: I will push for the one-tier system”. Finally, on Italy's permanence in the euro: "Absolutely no doubt".
SURVEILLANCE
The watchword is therefore proactive vigilance, that is "not only to repress but also and above all to prevent". With a dig at the previous management: “With me Consob will move from formal to substantial. I'm used to working on substance." But what exactly is proactive vigilance? "A vigilance that aims to anticipate and guide, which helps the supply side and protects the demands, and which is not only sanctioning", explains Nava to journalists. “We want to direct operators' behavior ex ante towards virtuous practices”.
To do this, action will be taken above all on the famous prospectuses (57% of investors do not read them, according to a recent figure), which has caused many problems for savers in recent years: too long, unclear. “They need to be simplified and made clearer, but taking care of the probabilistic scenario is not enough, also because I am of the opinion that there is no perfect model. The probabilistic scenario indicates probabilities, not certainties. And those who invest know very well that there is no return without at least a minimum of risk”.
On the side of the saver, it will be intensified financial education activity, which "must be personalized. It cannot be the same for everyone". Finally, the new Consob branded Nava will be more collaborative with the other authorities ("We signed a Memorandum of Understanding with the Bank of Italy on Friday) and will launch - starting tomorrow, Tuesday 12 June - a Consultation Committee, made up of external members, who will supervise the exchange with market operators in a "structured and systemic" way. It will be made up of 30 people and will meet every 3 months”.
