Cross-border activity by investment firms in third countries
Published: 13 September 2023
The Ministry of Finance has amended the Securities Trading Regulations by adding a new Section 9-39 a. The new provision entitles, under certain terms and conditions, undertakings with their head office outside the EEA to provide investment services and perform investment activities in relation to Norwegian eligible counterparties and the Norwegian Banks' Guarantee Fund without a Norwegian authorisation. The amendment has entered into force.
According to the Securities Trading Regulations, Section § 9-39a subsection (2), third country undertakings must have an authorisation in their home state covering the investment services provided and the investment activities performed in Norway, and must be under supervision in their home state. Furthermore, Finanstilsynet and the supervisory authorities in the undertaking’s home state must have a bilateral or multilateral agreement on supervisory cooperation in the securities area. Finanstilsynet assumes that this condition will be met by signing the ‘IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information’ (IOSOC MMoU). The signatories to the IOSCO MMoU are listed in Appendix A to the MMoU. The undertaking's home state cannot be listed by the Financial Action Task Force (FATF), which means that the home state cannot be on the FATF's ‘black list’ or ‘grey list’. The terms and conditions of the new Section 9-39 a of the Securities Trading Regulations must be met at all times in order for the third country undertaking to provide services to Norwegian eligible counterparties and the Norwegian Banks' Guarantee Fund. Finanstilsynet would like to point out that other rules, such as the sanctions regulations, may also contain restrictions as to whom one may legally enter into agreements with and receive investment services from.
Pursuant to the Securities Trading Act, Section 10-23 subsection (2), the following are recognised as eligible counterparties:
- investment firms
- credit institutions
- insurance undertakings
- collective investment undertakings and management companies for such undertakings
- pension undertakings and their management companies
- other authorised or regulated financial institutions
- public bodies at the national level, including central banks and supranational organisations
The Securities Trading Regulations, Section 9-39 a do not restrict third country undertakings’ right to provide investment services directly from a place of business outside the EEA at the exclusive initiative of the client, cf. the Securities Trading Act, Section 9-36 subsection (4).
The temporary regulations of 20 December 2018 no. 2204 on investment activity and investment services provided by third country undertakings to professional clients and eligible counterparties in Norway (contract continuity), which under certain conditions allow UK investment firms to provide investment services and perform investment activities targeting professional clients (per se) and eligible counterparties in Norway without a Norwegian authorisation, will be revoked on 1 October 2023.