Oslo Børs VPS to introduce central counterparty (CCP) clearing for equities trading in the Norwegian market

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.

The introduction of a central counterparty reduces the risk exposure between participants (investment firms and banks) in the central securities settlement process, and increases confidence in the local market infrastructure. A central counterparty structure also causes a reduction in transaction costs for broking firms since the number of settlement transactions carried out is reduced by means of transaction netting, in other words only net positions are submitted for settlement.

By offering this service, Oslo Clearing will take over the counterparty risk and the liability that this involves. The company will cover this liability by collecting collateral from its members. This will provide cover for losses that might be caused by default. In addition, a defence mechanism will be established comprising a default fund that will operate as a supplement to Oslo Clearing’s equity. The default fund will be established by joint and several contributions from the members of the clearing house.

“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”, explains Bente A. Landsnes, President and CEO of Oslo Børs VPS.

The introduction of a central counterparty structure for equities clearing will require approval by the authorities and formal authorisation.

For more information, please contact:
Bente A. Landsnes, Chief Executive Officer, tel. + 47 22 34 17 00 / + 47 905 50 495
Christian Sjöberg, CEO Oslo Clearing, tel. + 47 23 17 96 09 / + 47 916 19 106

Background
Oslo Børs decided in December 2008 that a CCP structure should be introduced for clearing trades in equities, primary capital certificates and ETFs on Oslo Børs, and for trades in equities on Oslo Axess. Part of the rationale for this decision is that over recent years the majority of European marketplaces have introduced central counterparty (CCP) clearing for trading in equities. A number of the broking firms that trade on Oslo Børs have campaigned for some time for the introduction of CCP in the Norwegian equities market in order to reduce counterparty risk. At its meeting on 25 February 2009, the Board of Directors of Oslo Børs VPS Holding decided to introduce a CCP structure that will be supplied and operated by the subsidiary Oslo Clearing, the company that is currently responsible for clearing and settlement in the derivatives market.

About Oslo Clearing
Oslo Clearing is 100% owned by Oslo Børs VPS Holding ASA, and is authorised to act as a central counterparty in accordance with the Norwegian Securities Trading Act. Oslo Clearing currently carries out CCP clearing of financial directives and security lending products.

About Oslo Børs VPS
The Oslo Børs VPS Group consists of the four companies Oslo Børs, VPS, Oslo Clearing and Oslo Market Solutions. The group offers marketplaces for listing and trading in securities, registration of ownership and clearing and settlement of securities in Norway, market data and on-line solutions. Oslo Børs VPS is owned by Oslo Børs VPS Holding ASA, and the company’s shares are traded on the OTC List of the Norwegian Securities Dealers Association.

Oslo Børs VPS, 26 February 2009