VPO NOK Rules – Enters into force 18 June 2018
In the consultation-letter the following changes were proposed:
- Changes to adapt the wording of the VPO NOK Rules to the Regulation of 22 September 2016 no. 1095 on conducting the securities settlement.
- Introduction of a new requirement in the VPO NOK Rules whereby participants would have to nominate (appoint) a substitute liquidity bank for use in situations in which a participant’s primary liquidity bank enters into bankruptcy or insolvency proceedings or is placed under public administration.
- Definition of the term “settlement day (business day, cf. the Norwegian Payment Systems Act, Section 4-2, third paragraph)” in the VPO NOK Rules.
- Introduction of an Optional Settlement Account in the VPO NOK.
- A number of technical/wording changes.
The changes regarding optional settlement account were adopted by VPS and entered into force in September 2017.
Entering into force of the other changes was postponed, as announced in the consultation letter.
VPS hereby inform that the remaining changes in the VPO NOK Rules will enter into force 18 June 2018. This takes place at the same time as Changes in Norges Banks Terms and Conditions for Account Management at Norges Bank (NBO).enters into force.
VPS is of course available for questions regarding the changes. Please send an email to oppgjør@vps.no or contact Anne Ekeren Bjone at telephone + 47 920 27849 (or email aeb@vps.no).
Further details regarding the changes
The new rules regulates a situation where insolvency proceedings are opened against a Participant or Liquiditybank of VPO NOK. The changes are made to adapt the rules to the Regulation of 22 September 2016 no. 1095 on conducting the securities settlement. Included in the new rules is a definition of the term “settlement day” that has been lacking in the VPO NOK Rules until now.
The introduction of a new rule in the VPO NOK Rules, whereby participants in VPO NOK that use a liquidity bank are required to appoint a substitute liquidity bank is done to increase the settlement rate and reduce the risk of other participants in a situation where a bank that is a liquidity bank of VPO NOK enters into insolvency proceedings.
Information regarding the adoption of this new rule and the deadline of 18. June 2018 to appoint such a bank was given directly to participants that use a liquidity bank in a letter from VPS of 23rd April 2018. In the same letter VPS informed that a declaration from the substitute liquidity bank must be given on a standard form prepare by VPS for this purpose.
Information regarding some differences between the proposals in the consultation document and the rules that have been adopted
VPS informs that the wording of some of the provisions in the VPO NOK Rules has been redrafted from the version that was included in the consultation document. This has been done to clearify the rules. However, no material changes have been made to the provisions compared with the proposal in the consultation-document.
The most significant change of the wording is made in the definition of settlement day (business day). In the consultation document settlement day (business day) was defined as:
“The period from the Start of the first Settlement for the day in question until the Start of first Settlement for the following day.”
This is now substituted with:
“The periode from the Start of the first Settlement until the Start of the first Settlement for the following day.”
As of March 2018 the start of Settlement1 is at 8 p.m. on the evening before the settlement day. Where the settlement is on a Monday Settlement1 is at kl. 2000 the previous Friday.
The adjustment in the wording is done to clearify the rule and does not represent a material change compared to the proposal in the consultation-document. We refer to the discussion of this aspect in the consultation letter where it was stated that settlement day/business day for a settlement system may differ from a “calendar day”. It was further stated that:
“ A business day/settlement day in VPO NOK currently starts at 20:00 on the calendar day prior to the day which is given in the instruction (the settlement day) and ends at the start of the next settlement day. Settlement for an instruction whose settlement is Tuesday 7 December accordingly starts at 20:00 on 6 December and concludes at 20:00 on 7 December. This period is the business day/settlement day for settlement with a settlement day of Tuesday 7 December. If 7 December is a Monday, settlement would start on the preceding Friday, i.e. Friday 4 December. This period is thus the business day/settlement day for settlement with a settlement day of Monday 7 December.