Central counterparties in trades in financial instruments – criteria and terms for an account in Norges Bank
This circular replaced circular no. 14/2009.
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.
CCPs that offer clearing and settlement services in Norwegian kroner may, on the basis of a specific assessment by Norges Bank, open an account in the central bank. 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 determines the terms and conditions for the management of the account.