Prepared by Mr. Tanai Khiaonarong (MCM).
The Norges Bank’s Settlement System (NBO) is linked to the CLS system, a foreign multicurrency cash settlement system that supports 17 eligible currencies, including the Norwegian krone. The VPS has indirect links to Luxembourg-based Clearstream and Belgium-based Euroclear. The U.K. CCP LCH.Clearnet, German CCP European Commodity Clearing (ECC), Swedish CCP Nasdaq OMX Clearing AB, and Swiss CCP SIX x-clear have licenses to provide cross-border services in Norway. SIX x-clear Norwegian branch has links with LCH.Clearnet.
Formerly the Annual Report on Payment Systems until May 2014.
The assessor was Tanai Khiaonarong, Senior Financial Sector Expert from the IMF’s Monetary and Capital Markets Department.
See Norges Bank’s Financial Infrastructure Report and Annual Report on Payment Systems (http://www.norges-bank.no/en/Published/Publications/Financial-Infrastructure-Report/).
There were four private settlement banks at the end of 2013. Danske Bank and Skandinaviska Enskilda Banken are also settlement banks serving one bank each but are not considered FMIs.
“CLS” refers to the entire CLS organization which includes: (1) CLS Group Holdings, the group holding company incorporated under the laws of Switzerland and regulated by the Federal Reserve as a bank holding company in the United States; (2) CLS UK Intermediate Holdings, a limited company incorporated under the laws of England and Wales, a ‘shell’ company from a governance perspective providing corporate services (i.e., Finance, Human Resources, Audit and Communications) to CLS Bank and its affiliated companies; (3) CLS Bank, an Edge corporation organized under the laws of the United States and regulated by the Federal Reserve; and (4) CLS Services, a limited company incorporated under laws of England and Wales, which provides operational and back-office support to CLS Bank and its affiliated companies.
The US dollar, euro, pound sterling, Canadian dollar, Swiss franc, Hong Kong dollar, Australian dollar, New Zealand dollar, Mexican peso, Israeli shekel, Korean won, Singapore dollar, Japanese yen, South African rand, Danish krone, and Swedish krona.
Norwegian banks are also clearing members in foreign CCPs. This includes Eurex Clearing, EuroCCP, and ICE Clear Europe.
See Annual Report on Payment Systems 2012 (http://www.norges-bank.no/pages/94894/Annual_Report_2012.pdf).
See Watne, Kjetil (2012) A New Settlement System at Norges Bank, Norges Bank Economic Bulletin, Vol. 83, 4-13.
See Solheim, Jon A., and Helge Strømme (2004) Upgrading and Outsourcing Norges Bank’s Settlement System, Norges Bank Economic Bulletin, Q2.
At the EFTA and Economic and Financial Affairs Council meeting in Luxembourg on October 14, 2014, the EU and EEA reached an agreement on a proposal that makes it possible to implement EMIR and CSDR.
See Norwegian Ministry of Finance (in Norwegian) http://www.regjeringen.no/nb/dep/fin/pressesenter/pressemeldinger/2014/Norsk-finansnaring-sikres-adgang-til-det-europeiske-markedet.html?id=771726; http://www.efta.int/about-efta/news/eea-efta-and-eu-ministers-reach-agreement-european-supervisory-authorities-3211; and http://www.efta.int/sites/default/files/documents/eea/eea-news/2010-10-14-EEA-EFTA-ECOFIN-joint-conclusions.pdf for “joint conclusions”.
The role of the BFI has been described in Norges Bank and the FSA’s letter of December 16th, 2005 submitted to the Ministry of Finance on their cooperation in financial stability and crisis management. See http://www.norges-bank.no/en/Published/Submissions/2005/submission-2005-12-16html.
The Federal Reserve charters, regulates, and supervises CLS Bank. Under the Protocol for the Cooperative Oversight Arrangement of CLS of November 25th, 2008, the Federal Reserve has primary responsibility and coordinates the oversight of CLS. Other participating central banks whose eligible currencies are supported by CLS, including Norges Bank, designate a responsible senior official to the CLS Oversight Committee where meetings are chaired by the Federal Reserve. The protocol establishes the key elements governing the cooperative oversight, including the assessment of the overall system, approval of proposed new currencies, review of CLS proposals, oversight information, exchange of information, and procedures to achieve consensus. CLS published its PFMI disclosure framework on December 30th, 2014.
For example, see the European Central Bank’s Business Continuity Oversight Expectations for Systemically Important Payment Systems of June 2006, which was based on earlier international standards (http://www.ecb.europa.eu/press/pr/date/2006/html/pr060609.en.html).
See “Challenges for the Payment System”, Speech by Deputy Governor Jon Nicolaisen at Finance Norway’s payments conference, November 12th, 2014. (http://www.norges-bank.no/en/Published/Speeches/2014/12-november-Nicolaisen/).
For example, the Bank of England reported that technical issues relating to the routine maintenance of the RTGS payment system paused settlement on October 20, 2014. This prompted RTGS opening hours to be extended until 8 p.m. and use of manual procedures to process time critical payments by the end-of-day. See (http://www.bankofengland.co.uk/publications/Pages/news/2014/135.aspx).
See IOSCO (2013) Cyber-Crime, Securities Markets, ad Systemic Risk, July.
This involved credit card and/or contact data being compromised for Norwegian and foreign card users as a result of a concerted hacker attack.
See CPMI-IOSCO (2014) Cyber Resilience in Financial Market Infrastructures, November (http://www.bis.org/cpmi/publ/d122.htm).
This includes the following: (i) operational units, including the Interbank Settlement and IT Units under the Markets and Banking Services Department, conduct daily risk analysis and mitigation measures, with directors reporting to the executive director; (ii) executive directors who are responsible for risks under their areas, establish risk indicators, and report progress through the Risk Management Unit to the Governor on a quarterly basis and to the Executive Board twice a year; (iii) the Risk Management Unit is responsible for Norges Bank’s overall risk assessment and informs the Governor. Additionally, the Compliance Unit ensures that the risk of complying with laws, regulations and internal rules is reduced; and (iv) Internal Audit, on behalf of the Executive Board, ensures effective internal controls.
Unless otherwise indicated by the relevant authorities, activities not directly related to essential operations of the FMI and utilities (such as basic telecommunication services, water, electricity and gas) are out of scope when identifying CSPs.
See CLS PFMI Disclosure Framework (http://www.cls-group.com/About/CG/Pages/CorePrinciples.aspx).
For the NBO, Norges Bank signed an agreement for IT services with ErgoGroup AS in 2003, which was later merged with EDB Business Partner to form EVRY in March 2012. EVRY is currently under possible ownership changes. Norway Post and Telenor are majority shareholders of EVRY. As of August 2014, EVRY publicly announced its intention to seek strategic opportunities, which could include the sale of the company. For the NICS, Nets Holding A/S, which is a Danish holding company, was bought by a consortium consisting of the private equity firms Advent International and Bain Capital, and the Danish pension fund ATP in 2014. Nets Holding A/S was previously owned by Nordic banks and Denmark’s central bank. Nets Holding A/S wholly owns Nets Norway AS, which includes Nets Norge Infrastruktur AS that performs the technical operations of NICS.