Infrastructure in the securities area
Published: 21 February 2024
In 2023, Finanstilsynet carried out an inspection of how Oslo Børs follows up equal treatment of shareholders in connection with issuers' use of private placements. In Finanstilsynet’s opinion, the Norwegian central securities depository (Euronext Securities Oslo) breached the provisions on oversight of account operators and the duty of disclosure to Finanstilsynet, and thus received an administrative fine of NOK 1 million. Outsourcing of data storage to external cloud service providers was the topic of a pan-European thematic inspection at the Euronext Group in 2023.
Facts about the securities market infrastructure
The infrastructure in the securities area encompasses trading venues, central counterparties, central securities depositories and financial benchmark administrators. These are shared functions that play a key role in ensuring that the securities market functions as a source of capital for the business sector and as a basis for investment activities and savings.
In Norway, there are five regulated markets and one multilateral trading facility. Oslo Børs ASA, which is owned by Euronext N.V., operates the two regulated markets Oslo Børs and Euronext Expand and the multilateral trading facility Euronext Growth Oslo, and owns 97 per cent of the shares of the regulated market Fish Pool. In addition, there are a further two regulated markets: Nasdaq Oslo ASA and Norexeco ASA.
Verdipapirsentralen ASA (Norwegian central securities depository) operates a securities register and operates the central securities settlement system (VPO NOK). Verdipapirsentralen ASA is also owned by Euronext N.V. and uses the brand name Euronext Securities Oslo.
Central counterparties offer clearing of various financial instruments. In the Norwegian market, the following central counterparties are relevant: SIX x-clear AG, LCH Ltd, Cboe Clear Europe N.V, LCH S.A, Nasdaq Clearing AB and European Commodity Clearing AG.
The supervised administrators of financial benchmarks are Norske Finansielle Referanser AS, Oslo Børs ASA, Fish Pool ASA, Norexeco ASA, Nord Pool European Market Coupling AS and Nordic Bond Pricing AS. Benchmarks are indices used as reference points in financial instruments and contracts, or to measure the performance of investment funds.
Supervision
Oslo Børs
In 2023, Finanstilsynet carried out an inspection of Oslo Børs’ follow-up of equal treatment of shareholders in connection with issuers' use of private placements. The inspection report will be available in early 2024. The inspection was part of a more extensive thematic inspection that also included a number of investment firms, checking whether they comply with the requirements of the Securities Trading Act when advising on, arranging and placing issues.
Finanstilsynet participates in a supervisory college with the national supervisory authorities of the other stock exchanges in the Euronext Group. In 2023, the supervisory college carried out the first joint thematic inspection of the Euronext Group on the subject of Euronext's outsourcing of data storage to external cloud service providers.
Nasdaq Oslo
Nasdaq Oslo is a regulated market offering trading in European energy derivatives. Nordic energy derivatives account for the greater part of turnover. Energy prices and market volatility remained at a lower level in 2023 than in 2022.
In June, Nasdaq Oslo announced that it had entered into an agreement with the European Energy Exchange on the transfer of all open positions in Nordic energy derivatives from Nasdaq Clearing to European Commodity Clearing. As part of the agreement, Nasdaq Oslo will wind up its operations. Based on input from the competition authorities in the Nordic region, the European Commission decided to investigate whether the agreement will lead to reduced competition in the energy market in Northern Europe. The agreement has been put on hold pending the European Commission's decision.
Fish Pool
Fish Pool is a regulated market for salmon derivatives where companies can hedge parts of their production. Finanstilsynet set new position limits for salmon derivatives at Fish Pool in May and August 2023.
Euronext Securities Oslo
In 2023, Finanstilsynet carried out the first inspection at Euronext Securities Oslo after it was authorised as a central securities depository pursuant to the Central Securities Depositories Regulation (CSDR). The inspection report is expected to be completed in the first quarter of 2024.
An error that occurred when registering two foreign shares in the VPS register entailed a breach of the provisions on oversight of account operators and the duty of disclosure to Finanstilsynet. Finanstilsynet issued an order for corrective measures and an administrative fine of NOK 1 million to Euronext Securities Oslo. At the same time, Finanstilsynet concluded that the conduct of business rules set out in the Securities Trading Act had been infringed and also ordered the account operator to implement corrective measures. Euronext Securities Oslo has appealed the decision, and the appeal is under consideration by the Ministry of Finance.
In 2023, Finanstilsynet granted Euronext Securities Oslo permission, subject to conditions, to outsource certain core services in connection with the establishment of a joint department with its sister company Euronext Securities Copenhagen.
Nominee registration in Norwegian owner registers
Nominee registration of Norwegian shares, subscription rights and equity certificates registered in a central securities depository and nominee registration in the unit holder registers of Norwegian mutual funds require approval from Finanstilsynet.
In 2023, Finanstilsynet authorised six new nominees, three of whom were Norwegian. Furthermore, the authorisations of 27 nominees were withdrawn, four of whom were Norwegian. At the end of the year, there were 227 authorised nominees, 54 of whom were Norwegian.
Benchmarks
In autumn 2022, Finanstilsynet conducted an on-site inspection at Norske Finansielle Referanser AS, which is the administrator for the Norwegian Interbank Offered Rate (Nibor). The inspection was completed in March 2023. The purpose of the inspection was to investigate the undertaking's compliance with the requirements of the Benchmarks Regulation and associated Commission Regulations.
Clearing
In 2023, Finanstilsynet considered one application for an exemption from the requirement to exchange collateral for intra-group derivative transactions and three notifications concerning exemptions from the obligation to report intra-group transactions to a transaction register.
As part of its supervision of central counterparties clearing trades on Norwegian marketplaces, Finanstilsynet also participated in supervisory colleges and resolution colleges with other national supervisory authorities in 2023.