Provisions on Foreign Clearing Houses to be Included in the Securities Markets Act
The Government proposes an amendment to the Securities Markets Act to include provisions on foreign clearing houses. Foreign clearing organisations would have to apply for an authorisation to operate in a branch office or across borders without establishing a branch. Authorisations would be granted on the basis of information supplied by the clearing house and the authorities of the home country to the Ministry of Finance. Additionally, a memorandum of understanding on supervision would be signed between the home country and the Finnish Financial Supervisory Authority.
Based on the proposal, foreign clearing organisations would be required to become a settlement counterparty with a Finnish clearing house. This obligation would also apply to clearing corporations and other foreign entities whose obligations deriving from securities are regularly executed in Finland and whose activities are significant for the financial markets.
The Finnish Financial Supervisory Authority would supervise the activities of the clearing houses in Finland and would be entitled to issue public reprimands and warnings where necessary. The Ministry of Finance, in turn, could restrict or prohibit a clearing organisation from operating in Finland or withdraw its authorisation. Foreign clearing houses would have to pay a fixed supervision fee.
A foreign clearing house is defined here as an organisation that stock exchanges and the organisers of multilateral trading use to define or execute obligations deriving from securities transactions.
The purpose of the regulation is to facilitate the supervision of foreign clearing house activities and to foster investors? confidence in the financial markets. Moreover, the aim is to make sure the financial markets can be kept stable in an increasingly international environment that is constantly changing. The proposal also promotes competition among clearing houses in the Finnish securities markets.
Amendments are proposed to the Securities Markets Act, the Act on the Financial Supervisory Authority and the Act on the Supervision Fees of the Financial Supervisory Authority. The President of the Republic will hand the proposals to Parliament in 9 October. The legislation would enter into force at the beginning of 2010.
Inquiries:
Ms Armi Taipale, Financial Adviser, tel. 358 9 160 34896.