A failed delivery exists if Oslo Clearing does not receive full delivery in VPO of all equity market instruments on the settlement date. If a receiving clearing member has not received full delivery of a VPO settlement transaction within the seventh (7th) clearing day after the initial settlement date, it may at any time thereafter issue a notification to Oslo Clearing to initiate buy-in.

Buy-in notification

The clearing member initiates the buy-in using the Buy-in Notification Form , which must be received by Oslo Clearing by 14:00 (CET). Any buy-in notification received after this time will have effect on the following clearing day. The form is to be sent to clearing@osloclearing.no.

Upon receipt of the buy in notification, Oslo Clearing will issue a buy-in notification to the defaulting Clearing Member(s) with the oldest failed delivery(ies) relating to the same underlying financial instrument, within 15:00 (CET) the same day.

Oslo Clearing will cancel the affected transactions, and reinstruct these transactions to a dedicated settlement account in VPO. The affected clearing members shall immediately reregister and match the transactions in VPO.

Buy-in execution by third part

Unless the failed delivery has been delivered in full within the third (3rd) clearing day after the buy-in notification date, Oslo Clearing will cancel the unsettled parts of the VPO settlement transaction between Oslo Clearing and the defaulting clearing member and execute a buy in transaction for the account and risk of the defaulting clearing member (buy-in execution).

Oslo Clearing will rely on a third party institution to perform the buy-in execution, and the execution shall be based on a best effort. The defaulting clearing member shall compensate Oslo Clearing the difference between the buy-in transaction price and the original trade price, if the buy-in transaction price is higher than the original trade price. In addition, the defaulting clearing member will be liable to pay Oslo Clearing’s charges, commissions and other costs related to the buy-in transaction.

If the buy-in execution remains unsuccessful in whole or in parts until the fourth (4th) clearing day following the buy-in execution date, the unsettled parts of the VPO settlement transaction are cash settled (cash compensation).

Cash compensation

The cash compensation price shall be the highest of the original trade price of the defaulting clearing member, the original trade price of the receiving clearing member and the close price of the equity market instrument on the marketplace on the last buy-in execution date, or if no close price is available, the last quoted ask price.

The defaulting member shall compensate Oslo Clearing for the difference between its original trade price and the cash compensation price, and any other loss or cost incurred by Oslo Clearing.

The receiving clearing member shall be compensated the difference between the close price of the equity market instrument on the marketplace on the last buy-in execution date, or if no close price is available (substitution price), the last quoted ask price, and the original trade price of the net clearing transaction of the receiving clearing member, if such price is less than the substitution price.

Buy-in initiated by Oslo Clearing

Oslo Clearing may issue a buy-in notification to a defaulting clearing member on or after the thirtieth (30th) clearing day after the initial settlement date to the extent a VPO settlement transaction has not been settled, and designate and notify a receiving clearing member as recipient of the buy-in.

Oslo Clearing may upon extraordinary market conditions or events, or if other imperative reason requires it, issue a buy-in notification.

For further details regarding failed settlement please refer to the Clearing Rules Appendix.