CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.
Italy’s financial services sector is steeped in history and tradition, dating all the way back to ancient Rome. Today, despite its rather small geographic size, Italy has a population of 59.2 million, and what has become a vibrant economy that ranks fourth in the European Union and eighth in the world.
The primary stock market in Italy is the Borsa Italiana based in Milan. Originating in 1808 as the Milan Stock Exchange, the Borsa Italiana was founded in 1997 on the privatization of the Milan Stock Exchange. Since a merger in 2007, the Borsa Italiana is also a member of the London Stock Exchange Group.
In addition to providing a listing service for stocks and their derivatives, the Borsa Italiana also lists fixed income products, exchange traded funds, commodities and notes (ETFs, ETCs and ETNs), funds, warrants, and stock index futures and options.
The primary broad stock index for Borsa Italian is the FTSE Italia All-Share index that is made up of all shares traded on that exchange, whilst the FTSE MIB acts as the market’s main benchmark Index covering the 40 leading Italian companies with highly liquid stocks. On the other hand, the FTSE Italia Mid Cap index is aimed at mid-cap stocks and the FTSE Italia Small Cap index is the exchange’s small cap stock index.
As part of the European Union, Italy has adopted the euro (EUR) as its currency, which is issued and managed in the EU by the European Central Bank. Each euro consists of 100 smaller units called cents. Moreover, the Bank for International Settlements (BIS) ranks the euro as the second most frequently traded currency in 2016, accounting for 31.4% of the overall forex market turnover. The euro was also ranked the second most popular reserve currency among central banks, composing 19% of such reserves in the third quarter of 2018 as per the International Monetary Fund (IMF).
Moreover, the primary Italian financial sector regulator is known as the Italian Companies and Exchange Commission, or Commissione Nazionale per le Società e la Borsa (CONSOB). This regulator was founded in 1974 to monitor the securities market in Italy. Today CONSOB has broader powers including auditing brokers as well as reviewing allegations of insider trading cases. CONSOB also looks to develop and promote confidence in Italian markets by promoting transparency and enforcing regulations. Forex brokers and other financial institutions must be authorised by CONSOB before operating in Italy.
While a few reputable online forex brokers have offices in Italy, most prefer to be situated elsewhere in the EU in less restrictive jurisdictions such as Cyprus, due to CONSOB’s very strict reputation as a regulator. Fortunately, Italian traders can deposit money to trade on margin with almost any foreign online broker that will onboard them as a client.
Overall the numerous online brokers that allow forex and contract for difference (CFD) trading will accept clients from Italy. Moreover, having an EU-based broker could be preferable since traders would be able to litigate within the EU should an issue develop. Furthermore, EU brokers have an additional onus to uphold their reputation with their national regulators, as well as the need to abide by the EU’s markets in financial instruments directive (MiFID). Such requirements under MiFID include that client funds be segregated from broker funds, with the aim to protect the client’s margin deposit should the broker face financial difficulties.
When selecting a broker there are a couple of aspects to bear in mind, such as access to demo accounts and the type of deposit required. For example, virtually all online brokers provide demo accounts with virtual funds that traders can use to practice and test strategies and the broker’s system with. Brokers could also offer funded accounts that require a minimum initial deposit to use as margins when trading live.
There are also variables to consider in both asset class and stock trading. For example, in regards to asset classes that can be traded online, options differ considerably among brokers. Most of the online brokers allow forex trading of some type, and CFD trading is also fairly common as it tends to be beneficial for brokers due to the wider set of tradable assets usually offered.
With respect to stock trading, Borsa Italiana aims to provide fair and transparent trading in Italian stocks, as well as a range of additional asset classes. Trades on the exchange are in euros and are executed in real time using a fully electronic dealing system. Borsa Italiana also offers an afterhours trading facility called Trading After Hours (TAH).
According to information compiled by the US Department of Commerce, 99% of Italian businesses are small and medium sized firms (SMEs), which together produce 68% of the nation’s GDP.
Italy also provides a number of additional opportunities for businesses such as:
With respect to trading across borders, Italy achieved the top ranking among countries surveyed by the World Bank. Italy also ranked favourably in resolving insolvencies and registering property, with ranks of 22nd and 23rd respectively.
EU countries, such as Germany, France, the UK and Spain, were Italy’s top and closest trading partners in 2017 according to the World Bank Group. This may mean that Italy’s trade with the UK may experience challenges in any post-Brexit situation.
For example, if a no-deal Brexit occurs on October 31st, 2019, the UK will have no trade agreement with either the EU or any individual member countries, including Italy; although the EU’s Most Favoured Nation terms would apply to UK exports to Italy since they arise from mutual membership in the World Trade Organization (WTO).
According to the World Bank, Italy had a relatively low 31.2% ratio of its trade to GDP numbers in 2017, which could potentially mitigate its economy’s exposure to trade disruptions.
The World Bank also ranked Italy 51st in overall ease of doing business, while the country had considerably lower ranks with respect to paying taxes, obtaining credit, enforcing contracts and dealing with construction permits, with the county coming in at 118th, 112th, 111th and 104th respectively.
Traders and businesses should generally find Italy a relatively safe place to operate since it remains regulated under CONSAB. Moreover, as part of the EU, not only does the country enjoy the currency stability from being a member of the Eurozone, but Italian financial institutions must comply with the EU’s MiFID regulations.
When looking for an online broker to trade through from Italy, traders will want to check that they offer the right asset classes, have a good reputation with their clients and separate their money from their clients’. In addition, brokers should have a full featured trading platform and be subject to competent regulations in order to offer a safe place for the client’s margin deposit.