VPS to continue with the voluntary lending pool arrangement
Following consultations with its customers, VPS has decided to continue with the current lending pool arrangement. In the case of securities settlement participants that are members of Oslo Børs or Oslo Axess for equities trading but do not participate in the lending pool arrangement, a specific penalty fee for failure to deliver on the intended settlement day will be introduced with effect from 17 November 2008.
VPS is committed to offering its customers an efficient clearing and settlement system with a high settlement rate on the intended settlement date. An important factor in achieving this objective is that both local settlement participants, as well as remote members and their agents, support the securities lending and borrowing arrangement.
Settlement participants based in Norway recognize the current securities lending and borrowing arrangement as a positive and effective solution, but consider it to be unreasonable that the costs of the arrangement are not shared by all settlement participants. Other participants, particularly foreign participants, take the view that a mandatory lending pool arrangement is not a usual feature, and is therefore at odds with the development of a more harmonised and standardised market. This is the main background for the decision by VPS to continue the current voluntary arrangement, while at the same time introducing penalty fees for members that do not participate in the lending pool.
VPS does, of course, wish to see the greatest possible level of participation in the lending pool, but accepts that not all firms wish to participate in this arrangement. VPS therefore intends to introduce a penalty fee for participants that do not deliver securities on the intended settlement day, calculated on the basis of the individual firm's net position. The fees collected will be applied in part to compensate participants in the lending pool arrangement.
The next steps in this process will be as follows:
- A consultation paper on changes to the VPS business rules will be circulated to settlement participants on 12 September.
- Consultation with participants and their representative organisations will take place between 15 September and 10 October.
- The final version of the business rules will be circulated on 17 October.
- The arrangement for penalty fees will come into effect from and including 17 November.
Contact persons:
Anne Ekeren Bjone, Head of VPS Clearing and Settlement.
Tel: +47 22 63 52 61 or anne.ekeren.bjone@vps.no
Christian Sjöberg, Managing Director, Oslo Clearing.
Tel: +47 23 17 96 09 or christian.sjoberg@osloclearing.no