Investment firms

Finanstilsynet's registry provides an overview of which investment firms are licensed to provide various services in Norway.

Supervision

Legal requirements concerning investor protection and conflicts of interest are of key importance in the supervision of investment firms. The firms shall act honestly, fairly and professionally in accordance with the best interests of their clients and ensure that the integrity of the market is preserved in the best possible manner. The firms shall also have adequate internal controls and risk awareness.

On the basis of Finanstilsynet's risk-based approach, an inspection was initiated at one investment firm in 2023, in addition to four thematic inspections encompassing a total of 34 investment firms, covering the following topics:

• Equal treatment of shareholders and handling of inside information. This topic is discussed in further detail below.
• Placing of unlisted securities. Finanstilsynet looked into 18 investment firms’ placing of issues of unlisted shares and bonds. Investments in unlisted securities entail a particularly high level of risk, and strict requirements are imposed on investment firms offering such investments with regard to good business practices, product governance, fit and proper assessments and information to clients. The thematic inspection is expected to be completed in the first quarter of 2024.
• Market surveillance and information processing. Finanstilsynet has investigated two investment firms' monitoring of clients' orders/transactions and handling of inside information. At one of the inspections, which was completed in 2023, Finanstilsynet concluded that the firm for a long period had failed to effectively monitor all orders received and transmitted and all completed transactions. The second inspection is expected to be finalised in 2024.
• Capital adequacy. Finanstilsynet is looking into four investment firms' reporting of large exposures to individual clients, positions allocated to the firm's trading book, the valuation of accounts receivable and how possible incorrect account entries affect the firm's own funds. The inspection is expected to be finalised in 2024.

Finanstilsynet also participated in a Common Supervisory Action organised by the European Securities and Markets Authority (ESMA). As part of the supervisory action, Finanstilsynet assessed 13 investment firms’ compliance with marketing and advertising requirements.

In addition, work was in progress in 2023 on five inspections initiated in 2022, four of which were completed in 2023.

In December 2023, Finanstilsynet published its report after the thematic inspection of private placements, equal treatment of shareholders and handling of inside information. Finanstilsynet's investigations were based on private placements carried out in 2022 by selected issuers admitted to trading on Oslo Børs and Euronext Growth Oslo. The thematic inspection encompassed ten investment firms and focused on the firms' advice and information to the issuer, the implementation of market soundings, keeping of insider lists and documentation of communication with the issuer. The general impression was that the investment firms only to a limited extent had commented on or challenged the issuer’s choice to implement a private placement. Finanstilsynet pointed out that most of the firms did not have adequate procedures for this, and that several of the firms had not made sure to record Teams conversations/meetings with the issuer. The report from the thematic inspection has been published on Finanstilsynet's website (in Norwegian only).

Finanstilsynet registered that seven firms failed to meet the capital requirements in 2023, which is the same number as the previous year. In two of the cases, this was rectified by raising subordinated loans, while in four of the cases, the requirements were met through equity issues. In the last case, Finanstilsynet ended up revoking the authorisation. At year-end 2023, one investment firm was required by Finanstilsynet to report its capital adequacy position each month due to low capital adequacy ratios, a negative profit trend and inadequate procedures.

Finanstilsynet did not revoke any authorisations in 2023 apart from the one caused by the breach of capital requirements, but some firms voluntarily renounced their authorisations.

Licensing and other administrative matters

Ten new firms were granted an authorisation to provide investment services in 2023. One firm withdrew its application for an authorisation to provide such services.

Three firms renounced their authorisations to provide investment services in 2023, and two firms renounced parts of their authorisations.

Every year, Finanstilsynet assesses whether new members of boards of directors and senior executives and qualified owners of investment firms meet fitness and propriety requirements. In 2023, Finanstilsynet instructed one firm to strengthen the board's competence by appointing an external chairman with sufficient qualifications and experience.

During the year, Finanstilsynet received a number of notifications of cross-border activity from investment firms headquartered in other EEA states.

Investigations into possible illegal activity and market warnings

In 2023, Finanstilsynet investigated 13 firms for possible illegal provision of investment services without the necessary authorisation. These firms contact Norwegian investors directly and/or market their business on their websites. In such cases, Finanstilsynet considers whether to make a decision to stop the illegal activities and/or whether to publish market warnings. In 2023, Finanstilsynet did not order any firms to terminate operations, but published six warnings specifying that the firm in question is not authorised to provide investment services in Norway. Finanstilsynet also published 1 317 warnings issued by foreign supervisory authorities against entities providing services in the EEA without authorisation. Finanstilsynet's website provides information on investment fraud and advice to investors on how to protect themselves against fraud. Finanstilsynet's market warnings are also available at Finansportalen.no.

Regulatory development

In January 2023, Finanstilsynet adopted new rules in the Securities Trading Regulations on sustainability-related requirements for investment firms. The regulations implement new EEA legislation relating to sustainability.

During 2023, Finanstilsynet was commissioned by the Ministry of Finance to look into new rules on the right of firms in countries outside the EEA to provide investment services in Norway. On the basis of Finanstilsynet's report, the Ministry of Finance amended the Securities Trading Regulations in autumn 2023, whereby these firms are now permitted to provide investment services to eligible counterparties in Norway, subject to certain conditions. The temporary regulations on contract continuity, which applied to UK service providers, were revoked shortly thereafter.

In 2023, Finanstilsynet was commissioned by the Ministry of Finance to look into new rules for implementing the EU's Markets in Crypto-Assets Regulation (MiCA). The deadline for presenting the report is 1 March 2024.