The Board of Directors of Oslo Brs VPS Holding decided at its meeting on 25 February 2009 to introduce central counterparty (CCP) clearing for trades in equities, primary capital certificates and ETFs on Oslo Brs, and for trades in equities on Oslo Axess. The service will be provided by Oslo Clearing ASA, which currently offers a CCP service for clearing derivatives trading on Oslo Brs. Oslo Brs VPS plans to launch the new service in the first quarter of 2010.
As a central counterparty in the equities market, Oslo Clearing will take on the role of legal counterparty for both the original purchaser and the original seller from such time as an order is matched on the exchange.
“Establishing a central counterparty means that we will offer a competitive alternative that we believe is the best solution for the common interests of market participants. In addition, a central counterparty structure helps to make the securities chain more efficient and transparent, and will strengthen the group’s competitiveness over time”, says Bente A. Landsnes, President and CEO of Oslo Brs VPS.
The introduction of a central counterparty structure for equities clearing will require approval by the authorities and formal authorization.
“SEB has, in line with views from its client base, strongly recommended the use of a European CCP for the Norwegian market,” says SEB spokesman. “It is very disappointing that this has not been taken into account in the selection process, a process that has contained only one contender in the shape of Oslo Clearing. In bilateral meetings and correspondence with executives in the Norwegian infrastructure, SEB has expressed partly severe worries about the business model that in our opinion unduly mix CCP missions with CSD missions, imposes unacceptable costs on the market, offers extensive technology challenges and makes a prudent risk monitoring function very difficult. In front of the board meeting yesterday, verbal assurances were given that some of the shortcomings would be corrected and a positive attitude by Oslo Clearing on co-operation with significant users was assured. Until having seen a plan for how this will be done, SEB’s view remains skeptic and a lot of work will have to be done in order for us to turn positive. We encourage Oslo Brs to immediately start working to have a second CCP introduced.”