Circular 14/2009

Central counterparties in trades in financial instruments – criteria and terms for an account in Norges Bank


A central counterparty (CCP) in a trade involving financial instruments is an institution specialised in risk management from a trade is agreed to its completion. The CCP interposes itself in the trade from the instant the trade is agreed. CCPs can act as intermediaries in various types of financial markets.  In an ordinary equity transaction, a CCP will, for example, buy a share from the seller and sell it to the buyer. The CCP is thereby responsible for carrying out both trades.

When the trade is settled via a CCP, considerable risk is concentrated on the CCP. It is therefore crucial that the institution is solid and well managed. Settlement in central bank deposit money and access to an account with borrowing access for the CCP will increase settlement predictability. This strengthens financial stability.

Pursuant to § 22 of the Act on Norges Bank and the Monetary System etc., in special circumstances Norges Bank may extend loans to and accept deposits from entities other than banks in the financial sector.

Norges Bank has decided that CCPs can open an account in the central bank provided that the maintenance of the account strengthens financial stability. CCPs with such an account may be given access to intraday loans against approved collateral and to deposits through the day. Positions in such accounts shall be closed daily within the opening hours for Norges Bank’s settlement system. For such an account to be established, CCPs must apply to Norges Bank, which will assess the application in the light of, among other things, the criterion of its contribution to financial stability.

Published 11 December 2009 11:00