Distribution of Illiquid Financial Products: The Case of Italy

The investment in illiquid financial products introduces multiple profiles of criticality related to the perception of the effective profiles of risk and to the intermediaries’ distributive policies. However, the notion of illiquid product could be affected by some misunderstanding such as the tendency (which constitutes a simplification) to identify it to the trading venue, for which are illiquid only those products negotiated over the counter. In actual fact, it is necessary to estimate an instrument on the base of its characteristics, those of the issuer and the eventual market of negotiation. From a substantial point of view, this has some important implications regarding the regulatory profiles of investor’s protection. The Mifid in Europe set conduct rules to align the behavior of the intermediary regarding the objective to best serve the investor. The harmonization of the conduct rules passes from the implementation of level 3 measures. This paper examines the problem to the light of the implementation of level 3 measures in Italy.