Implementation of CSDR in Norway – What’s new?
The Central Securities Depositories Regulation (EU regulation no 909/2014 - CSDR) was implemented in Norway by the new Norwegian Central Securities Depositories Act (Nw. verdipapirsentralloven av 15.03.2019), effective as per the 1st January 2020.
The main impact of the CSDR-implementation in Norwegian law has been awaiting Verdipapirsentralen ASA (Euronext Securities Oslo – ESO) being granted the authorisation as a central securities depository under CSDR.
In 2022 this implementation process has gained significant speed, starting 28th of January 2022 with the Norwegian FSA granting ESO the authorisation as a central securities depository under CSDR. Furthermore, the FSA has announced that the authorisation will be effective as of the 1st of March 2022. As of this date, ESO and Norwegian participants in the securities marked will be subject to CSDR and the Norwegian Central Securities Depository Act.
Below we have raised some of the issues to be aware of for participants in the Norwegian securities market.
To be aware of as a party in the securities marked:
- Protection of interests towards third parties: Legal protection towards third party interests is not regulated by the CSDR. The introduction of the Regulation does however address the need for a cross-border alignment in this respect, and an EU regulation considering Securities Law Legislation has been subject to discussion by the EU Commission. For central securities depositories under Norwegian jurisdiction, it follows from the new Norwegian Central Securities Depositories Act chapter 7, that legal protection towards third party interests shall as a starting point be obtained by registration in a central securities depository governed by Norwegian jurisdiction. Where the issuer has chosen to register financial instruments with a central securities depository outside of Norwegian jurisdiction, the Norwegian rules of legal protection will not necessary apply for such instruments and further assessments should be made.
- Access to registered information: Confidentiality obligations apply to central securities depositories, account operators and engaged parties. Account holders, pledgees and parties like the police are exempted from this and will have access to information.
- Settlement penalties: Upon the effectiveness of the CSDR authorisation of ESO, the Delegated Regulation (EU) 2021/70 concerning settlement discipline will apply, allowing for parties causing delayed settlement to be fined.
To be aware of if you are an issuer of financial instruments:
- Registration of financial instruments: Issuers may choose to register financial instruments in any central securities depository with authorisation under CSDR.
- CSDR passport: Upon registration of financial instruments in a foreign central securities depositary with authorisation under CSDR, the respective foreign central securities depository must have reported cross-border activity to the Financial Supervisory Authority of Norway (CSDR passport). Notification of cross-border activity is to be reported in accordance with the applicable system through the regulatory authority of the domicile state.
- Registration obligation: Norwegian bearer bonds (norske ihendehaverobligasjoner) must be registered with an authorised central securities depositary under CSDR cf. the Norwegian Central Securities Depositories Act section 3-1, based on the registration obligation pursuant to CSDR art. 3. The existing terminology and assessment concerning the definition of Norwegian bearer bonds will still apply.
An amendment to the Norwegian administrative regulation supplementing the Norwegian Central Securities Depositories Act (Nw. forskrift til verdipapirsentralloven) entered into force the 8th of February 2022. The new regulation maintain the scope of the registration obligation for Norwegian bearer bonds, in accordance with the former administrative regulation under the previous Norwegian Securities Register Act. One can also note that the new regulation e.g. determines the access to registered information and details of the account operator arrangement.
We will follow the effectuation of CSDR and the Norwegian Central Securities Depositories Act with interest.
If you have any question or queries to the implementation of CSDR in Norway, do not hesitate to reach out to us for further information.