All You Need to Know about UCITS Marketing in Italy

All You Need to Know about UCITS Marketing in Italy

With assets under management easily exceeding a trillion Euros, nearly half of which accounted for by the fund industry, Italy remains one of the most attractive markets for EU fund distribution. However, not an easy one especially for foreign asset managers. A very conservative local marketing regime, coupled with a bias for the local language and the lack of a private placement regime, has made Italy more difficult than other Southern European domiciles when it comes at distributing foreign funds cross border.

Designed with a unique two-tier marketing authorisation regime, UCITS marketing in Italy is more or less a cumbersome exercise depending on the type of investors targeted. Managers intending to approach qualified/professional investors will be able to do so via the marketing passport application provided for by the UCITS directive. More stringent – and costly – requirements are imposed on those managers who want to target local retail investors in Italy. The regulation governing UCITS marketing in Italy is heavily gold-plated when it comes to retail investors, with additional requirements spanning from appointment of a local paying agent to publication of fund documentation and other ad-hoc reporting to be carried out on a portal held by the local regulator Consob.

Get in touch here with your contacts at Veneziano & Partners to see how we can help with UCITS Marketing in Italy.

Italian Funds Market Overview

The existence of significant regulatory hurdles imposed on UCITS marketing in Italy, especially when considering to enter the retail segment of the market, makes Italy an option only for medium to large-sized players. With this in mind, international fund managers that can stomach the costs and eventually also establish a local presence can then reap the rewards of tapping into the most profitable segment of the Italian market. With a slight preference for Luxembourg over Irish domiciled funds, many international managers over the years have successfully met the demand of the local retail clientele, only in minimal part invested in Italian domiciled funds.

The key to succeed with UCITS marketing in Italy however remains a local presence, in an ideal case scenario with an own office and sales team. This being said, even though difficult without access to the right European network, partnering up with an outsourced Italian sales team has been a successful option for many international managers at the beginning of their journey in the Italian market. Also, whilst the most of the assets are raised by asset managers linked to the banking system, the general distribution architecture is rather open in Italy, with spaces opening on a cyclical basis for those foreign managers who are willing to seize the opportunity at the right time.

The two other segments of the Italian market are represented by the wholesale and institutional market, the latter being available by and large to those managers who have been able to create a solid local footprint and have a team of local sales people. There have been attempts to launch a listing on the local Stock Exchange as an alternative distribution channel. To date, the banking system still dominates local distribution and there is little to no chance that a listing would allow to achieve similar results.

Retail Authorisation Requirements

As anticipated, we have a two-tier authorisation regime for UCITS marketing in Italy, depending on the type of investors approached. The so-called institutional authorisation, in EU fund distribution jargon, allows to target professional investors resident in Italy. The process is one of the passport provided under the UCITS directive. From a commercial perspective, this is the first step to take when approaching distribution channels in Italy for retail investors as it demonstrates some sort of initial commitment to the jurisdiction as well as a necessary tick the box exercise for compliance purposes. Once this authorisation is in place for a fund, it is possible then to opt for a full retail registration, with appointment of local paying agent and ensuing publication requirements for the fund documentation via the ad-hoc portal held by Consob, one of the two Italian regulatory authorities.

It is worth to mention that the choice of a paying agent, whose functions are most typically carried out by locally authorised credit institutions, is not entirely free. One of the nuisances of the Italian market, where fund distribution is entirely dominated by local banks, is that certain distributors work only with specific paying agents. It will be the client or distribution channel to dictate the choice for a credit institution over another and it is not uncommon to work and appoint more than one paying agent as the distribution network grows.

Paying agents perform a very broad active role, including the application of the local withholding tax levied on local retail investors on their investments in foreign funds. For that very reason, paying agents will subscribe shares of foreign UCITS in their name but on behalf of the underlying Italian retail investor. For this to happen, it will be necessary to create an ad hoc subscription form for each paying agent appointed. From a legal standpoint, the subscription form in essence contains a mandate from the retail investor to the paying agent to subscribe or redeem shares or units in the UCITS on his/her behalf. There are no strict requirements imposed at local level on the subscription form and most typically each credit institution will have its own standard template form, to be personalized by UCITS managers with details of the unit or share classes offered for marketing, details on charges and fees etc.

One of the other characteristics of the retail authorisation is that publication of the fund offering documentation, including the subscription form, updates to fund documentation as well as marketing arrangements, including the offer of new unit or share classes or sub-funds will have to be carried out via a dedicated portal held by Consob. The portal was introduced in the recent past and superseded the actual physical deposit for publication required in Italy before UCITS IV was applied. The publication of the UCITS fund documentation on Consob portal, for all the UCITS authorised for marketing toward retail investors, will also serve the purpose of discharging the obligation to notify to the local authority changes in the fund documentation.


We couldn’t skip a reference to the PRIIPs KID and the notification regime imposed in Italy. Whilst for the time being this does not affect UCITS marketing in Italy in light of the grandfathering for UCITS to produce a PRIIPs KID it is worth to mention, for managers of retail AIFs as well as ELTIFs authorised for marketing in Italy, that Italy has implemented also the notification requirement for PRIIPs KIDs. The notification of PRIIPs KIDs for those funds which produce one is currently carried out via email and represents a separate and additional step from the process of marketing authorisation.

Get in touch here with your contacts at Veneziano & Partners to see how we can help with UCITS Marketing in Italy.

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