Equity derivatives—Norway—Q&A guide
Equity derivatives—Norway—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Equity derivatives—Norway—Q&A guide
  • 1. Other than transactions between dealers, what are the most typical types of over-the-counter (OTC) equity derivatives transactions and what are the common uses of these transactions?
  • 2. May market participants borrow shares and sell them short in the local market? If so, what rules govern short selling?
  • 3. Describe the primary laws and regulations surrounding OTC equity derivatives transactions between dealers. What regulatory authorities are primarily responsible for administering those rules?
  • 4. In addition to dealers, what types of entities may enter into OTC equity derivatives transactions?
  • 5. Describe the primary laws and regulations surrounding OTC equity derivatives transactions between a dealer and an eligible counterparty that is not the issuer of the underlying shares or an affiliate of the issuer? What regulatory authorities are primarily responsible for administering those rules?
  • 6. Do securities registration issues arise if the issuer of the underlying shares or an affiliate of the issuer sells the issuer’s shares via an OTC equity derivative?
  • 7. May issuers repurchase their shares directly or via a derivative?
  • 8. What types of risks do dealers face in the event of a bankruptcy or insolvency of the counterparty? Do any special bankruptcy or insolvency rules apply if the counterparty is the issuer or an affiliate of the issuer?
  • 9. What types of reporting obligations does an issuer or a shareholder face when entering into an OTC equity derivatives transaction on the issuer’s shares?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to equity derivatives in Norway published as part of the Lexology Getting the Deal Through series by Law Business Research (published: May 2020).

Authors: Advokatfirmaet Selmer AS—Linn M A Wilhelmsen; Per Morten Christiansen

1. Other than transactions between dealers, what are the most typical types of over-the-counter (OTC) equity derivatives transactions and what are the common uses of these transactions?

The most typical types of equity-based OTC derivatives in the Norwegian market are share options, forwards and different swap transactions, including total return swaps. The underlying asset can be individual shares, a group of shares or an index. 

2. May market participants borrow shares and sell them short in the local market? If so, what rules govern short selling?

Short selling is regulated by the Norwegian Securities Trading Act (STA), which inter alia incorporates Regulation (EU) No. 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps. Market participants are only permitted to short sell financial instruments (eg, shares and other securities comparable to shares) if they have such access to the financial instruments and that timely delivery is ensured on the agreement date. Accordingly, intermediaries, securities firms and banks can only pass on and execute short sale orders to the extent that the customer has secure access

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