According to the 2005 International Monetary Fund (IMF) Financial Sector Assessment Program (FSAP), Norway's securities regulations are comprehensive and in line with international standards. Supervision is substantial and comprehensive, carried out by the staff of the Financial Supervisory Authority of Norway (FSAN), which is highly qualified. The supervisory procedures are transparent in the judgment of the IMF assessment team. As a member of the European Economic Area, Norway is required to implement EU financial services Directives and is therefore continuously upgrading its regulatory and supervisory framework. A detailed assessment of Norway's compliance with the International Organization of Securities Commissions' (IOSCO) principles would be desirable to confirm these positive findings.

General Overview

According to the 2005 International Monetary Fund (IMF) Financial Sector Assessment Program (FSAP), Norway's securities regulations are comprehensive and in line with international standards. "Supervision is robust and is conducted in a coherent manner" (p. 23). The staff of the Financial Supervisory Authority of Norway (FSAN), responsible for financial sector supervision, is highly qualified and its supervisory procedures are transparent. As a member of the European Economic Area (EEA) Norway is continuously integrating EU Directives into its legislation, and consequently, upgrading its regulatory and supervisory framework. However, a detailed assessment of Norway's compliance with the International Organization of Securities Commissions' (IOSCO) Objectives and Principles of Effective Securities Regulation is not publicly available.

The FSAN was established in 1986 and is charged with ensuring the efficiency of financial institutions and their compliance with the legal framework governing financial markets. It is an independent regulator which is subject to oversight by the Ministry of Finance (MoF), according to the MoF website. The FSAN website indicates that its scope of responsibility covers any companies that are authorized to function under the Securities Trading Act, Securities Funds Act, Central Securities Depository Act, and Stock Exchange Act, which include banks, insurance companies, other financial institutions, securities traders, exchanges, authorized and licensed market places, securities registers, estate agents, electronic money institutions, and auditors.. The FSAN conducts supervision both through on-site inspections and off-site supervision. The instruments and activities that it uses to carry out its responsibilities are supervision and monitoring, licensing, regulatory development, and information and communication. In 2006, the FSAN was responsible for the supervision of 85 investment firms, 23 securities funds management companies, 3 clearing houses, the Norwegian Central Securities Depository (VPS), 2 stock exchanges, and 1 authorized market place. Also, since 2005, the regulatory authority has been responsible for ensuring listed companies compliance with International Financial Reporting Standards (IFRS). The Financial Markets Department of the MoF, as mentioned on the MoF website, is responsible for establishing the financial markets legal framework. It is also in charge of structural issues of financial markets, international cooperation and planning, and managing the public ownership of financial institutions. The Financial Institutions Act of 1988 sets forth the guidelines for the establishment, winding up, and merging of financial institutions. The Securities Trading Act of 1997 ensures the proper functioning and security of trading in securities and derivatives. The Act also includes provisions on insider trading, share purchases disclosure, mandatory bids, other disclosure requirements, and other requirements that apply to those providing financial services.

The Oslo Stock Exchange is the only regulated securities trading market in Norway, according to its website. The Stock Exchange Act of 1988 solidified the Oslo Stock Exchange's position in charge of operating the Oslo marketplace, supervisory activities, and managing price distribution and price sensitive information. In addition, it has the authority to impose sanctions. In December 2000, a joint Nordic marketplace for trading securities (NOREX) was formed. Since then, all Nordic stock exchanges have been included. The members of the Oslo Stock Exchange are subject to the NOREX Member Rules.

The IOSCO multilateral memorandum of understanding (MMoU) is based on the thirty IOSCO Principles adopted in 1998 and the experience gathered by securities regulators in using bilateral MoUs. The IOSCO MMoU provides a standardized framework for sharing enforcement-related information and a gradually expanding network of participating regulatory agencies. IOSCO members who wish to sign the IOSCO MMoU participate in a comprehensive screening process to establish that they have the legal capacity to fully comply with the terms of the IOSCO MMoU. The FSAN is a signatory to the MMoU and an ordinary member of IOSCO.

The Principles

1. The responsibilities of the regulator should be clear and objectively stated.

II

The FSAN was established in 1986 and is charged with ensuring the efficiency of financial institutions and their compliance with the legal framework governing financial markets. It is an independent regulator which is subject to oversight by the MoF, according to the MoF website. The FSAN website indicates that its scope of responsibility covers any companies that are authorized to function under the Securities Trading Act, Securities Funds Act, Central Securities Depository Act, and Stock Exchange Act, which include banks, insurance companies, other financial institutions, securities traders, exchanges, authorized and licensed market places, securities registers, estate agents, electronic money institutions, and auditors. FSAN conducts supervision both through on-site inspections and off-site supervision. The instruments and activities that it uses to carry out its responsibilities are supervision and monitoring, licensing, regulatory development, and information and communication. In 2006, the FSAN was responsible for the supervision of 85 investment firms, 23 securities funds management companies, 3 clearing houses, the Norwegian Central Securities Depository (VPS), 2 stock exchanges, and 1 authorized market place. Also, since 2005, the regulatory authority has been responsible for ensuring listed company compliance with International Financial Reporting Standards (IFRS). The Financial Markets Department of the MoF, as mentioned on the MoF website, is responsible for establishing the financial markets legal framework. It is also in charge of structural issues of financial markets, international cooperation and planning, and managing the public ownership of financial institutions. The Financial Institutions Act of 1988 sets forth the guidelines for the establishment, winding up, and merging of financial institutions. The Securities Trading Act of 1997 ensures the proper functioning and security of trading in securities and derivatives. The Act also includes provisions on insider trading, share purchases disclosure, mandatory bids, other disclosure requirements, and other requirements that apply to those providing financial services. However, the publicly available information does address Norway's compliance with this principle.

2. The regulator should be operationally independent and accountable in the exercise of its functions and powers.

II

There is insufficient publicly available information that addresses Norway's compliance with this principle. According to its website, the FSAN is an independent regulator. The MoF website points out that the operating costs of the FSAN are fully covered by the institutions it monitors.

3. The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers.

II

The IMF's 2005 Report on Standards and Codes (ROSC) on Anti-Money Laundering indicates that the FSAN has sufficient powers for the supervision and inspection of Reporting Financial Institutions' policies, practices, and internal controls. It also has the power to impose administrative sanctions for non-compliance that range from requesting corrective action to fines and de-licensing. Both the institutions and officers/employees may be subject to sanctions. However, the ROSC recommends that the FSAN's powers to sanction officers/employees be clarified. The FSAN website indicates that the instruments and activities that it uses to carry out its responsibilities are supervision and monitoring, licensing, regulatory development, and information and communication. Supervision and monitoring are used to ensure company compliance with laws, regulations, and guidelines. The MoF website reports that in 2005, there were approximately 196 people on the FSAN's staff. However, the publicly available information does not directly address Norway's compliance with this principle.

4. The regulator should adopt clear and consistent regulatory processes.

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According to the 2005 IMF FSSA, the MoF maintains the right to make nearly all supervisory decisions, and may be influenced by a political agenda. Consequently, a lack of transparency may be a problem in decision making. The assessment recommends that the decision-making criteria be clarified and provide the FSAN with all decision making rights. However, the IMF report does not directly address Norway's compliance with this principle.

5. The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

II

There is insufficient information publicly available that directly addresses this principle.

6. The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, to the extent appropriate to the size and complexity of the markets.

II

There is insufficient publicly available information that addresses Norway's compliance with this principle. The Oslo Stock Exchange website notes that it is in charge of operating the Oslo marketplace, supervisory activities, and managing price distribution and price sensitive information. In addition, it has the authority to impose sanctions.

7. SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities.

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There is insufficient publicly available information that addresses Norway's compliance with this principle. The FSAN website notes that it is responsible for supervising stock exchanges, including the Oslo Stock Exchange.

8. The regulator should have comprehensive inspection, investigation and surveillance powers.

II

The 2005 IMF ROSC on Anti-Money Laundering indicates that the FSAN has sufficient powers for the supervision and inspection of Reporting Financial Institutions' policies, practices, and internal controls. It also has the power to impose administrative sanctions for non-compliance that range from requesting corrective action to fines and de-licensing. Both the institutions and officers/employees may be subject to sanctions. However, the ROSC recommends that the FSAN's powers to sanction officers/employees be clarified. The FSAN website indicates that the instruments and activities that it uses to carry out its responsibilities are supervision and monitoring, licensing, regulatory development, and information and communication. Supervision and monitoring are used to ensure company compliance with laws, regulations and guidelines. The MoF website reports that in 2005 there were approximately 196 people on FSAN's staff. However, the publicly available information does not directly address Norway's compliance with this principle.

9. The regulator should have comprehensive enforcement powers.

II

The 2005 IMF ROSC on Anti-Money Laundering indicates that the FSAN has sufficient powers for the supervision and inspection of Reporting Financial Institutions' policies, practices and internal controls. It also has the power to impose administrative sanctions for non-compliance that range from requesting corrective action to fines and de-licensing. Both the institutions and officers/employees may be subject to sanctions. However, the ROSC recommends that the FSAN's powers to sanction officers/employees be clarified. Also, according to the Oslo Bors website, the Oslo Stock Exchange has the authority to impose sanctions. However, the publicly available information does not directly address Norway's compliance with this principle.

10. The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.

II

See Principle 9.

11. The regulator should have authority to share both public and non-public information with domestic and foreign counterparts.

EN

According to the 2005 IMF ROSC on Anti-Money Laundering, Norway has signed several international agreements and participates in working groups that encourage intra-EU cooperation, including in the insurance and securities sectors. The 2005 IMF FSSA reports that there is excellent cooperation between Nordic financial market authorities. In a 2006 informational pamphlet, the FSAN indicates that it values good relationships with its environment, including national entities and stakeholder groups, as well as international entities. It undertakes collaborative efforts and maintains contacts with other supervisory authorities internationally, particularly within the EU/EEA. The 2005 IMF FSSA recommended that there should be greater collaboration between the FSAN, MoF and NB on financial stability issues.

The IOSCO multilateral memorandum of understanding (MMoU) is based on the thirty IOSCO Objectives and Principles of Securities Regulation (IOSCO Principles) adopted in 1998 and the experience gathered by securities regulators in using bilateral MoUs. The IOSCO MMoU provides a standardized framework for sharing enforcement-related information and a gradually expanding network of participating regulatory agencies. IOSCO members who wish to sign the IOSCO MMoU participate in a comprehensive screening process to establish that they have the legal capacity to fully comply with the terms of the IOSCO MMoU. The FSAN of Norway is a signatory to the MMoU and an ordinary member of IOSCO.

12. Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts.

EN

See Principle 11.

13. The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers.

EN

See Principle 11.

14. There should be full, timely and accurate disclosure of financial results and other information that is material to investors’ decisions.

II

The 2004 Code of Practice for Corporate Governance encompasses company, accounting, stock exchange, and securities legislation by either elaborating on existing legislation or including topics not addressed in existing legislation. The purpose of the 2004 Code is to ensure that the responsibilities and expectations for shareholders, the board of directors and executive management are clarified more extensively than required by existing legislation. The Code was revised in 2005, and then again in November 2006. The 2005 Code of Practice for Corporate Governance incorporates changes to the Accounting Act's information requirements that went into effect in 2006 and the European Union (EU) 2004 recommendations pertaining to the remuneration of the directors of listed companies. As a member of the European Economic Area, Norway is required to implement EU financial services Directives that foster stronger and more transparent prudential rules into Norwegian legislation. Specifically, the annual report should include information on the remuneration of each director and how all the elements of remuneration benefit the members of the executive management.

The 2005 Code of Practice for Corporate Governance also incorporates changes to the Accounting Act's information requirements that went into effect in 2006, and the European Union (EU) 2004 recommendations pertaining to the remuneration of the directors of listed companies. Specifically, the annual report should include information on the remuneration of each director and how all the elements of remuneration benefit the members of the executive management. The 2006 Code revision includes an additional section on risk management and internal control, noting that the board on directors is responsible from risk management and internal control. The Section incorporates the requirements of EU Directive 2006/46/EF on annual and consolidated accounts. Also, a statement on corporate governance must be included in the annual report. The section seeks to improve risk management and financial reporting. In addition, according to the FSAN website, since 2005 the IFRS have applied to all listed companies and the FSAN is responsible for compliance. However, the publicly available information does not directly address Norway's compliance with this principle.

15. Holders of securities in a company should be treated in a fair and equitable manner.

II

According to the 2004 Code of Practice for Corporate Governance, the Public Companies Act allows the Annual General Meeting (AGM) to waive pre-emption rights for existing shareholders in the case of a capital increase, but requires that an explanation be included in the agenda for the AGM. The 2004 Code expands on the existing laws and regulations that allow for the inclusion of restrictions in the articles of association in certain circumstances. It also prohibits the inclusion of any restrictions on the negotiability of its shares in the articles of association. The AGM should effectively represent the views of shareholders and the board by including as many shareholders as possible. The Public Companies Act permits shareholders to vote via proxy, but there is no electronic participation. The nomination committee should be elected by the AGM and be responsible for suggesting candidates for the corporate assembly and board of directors, as well as proposing remuneration. The 2006 Code of Practice for Corporate Governance includes that the election of the chairperson of the nomination committee as well as the committees' remuneration are to be decided by the AGM. The 2004 version of the Code indicates that "any transaction that is in effect a disposal of the company's activities should be decided by a general meeting, except in cases where such decisions are required by law to be decided by the corporate assembly" (p. 40). The 2006 Code revision expands the section on take-overs to improve shareholders' ability to evaluate any bid for the company. However, the publicly available information is insufficient to rate Norway's compliance with this principle. The 2004 Code mentions that the Public Companies Act prohibits the AGM and board of directors from providing an advantage to some shareholders at the expense of others. The Stock Exchange Regulations also provide for the equal treatment of shareholders. The Public Companies Act requires that shareholders of the same class be treated equally. "The Code of Practice is more restrictive than the Public Companies Act in that the Act does permit different classes of shares" (p. 15).

16. Accounting and auditing standards should be of a high and internationally acceptable quality.

II

A review of securities regulation during the IMF's 2005 FSAP, without a full assessment of the IOSCO standard, found that the laws and regulations governing the securities markets are comprehensive and modern and supervision is robust and is conducted in a coherent manner. However, there is no detailed assessment publicly available as to Norway's adherence to individual standards of the IOSCO's Objectives and Principles of Effective Securities Regulation.

According to the IMF's 2005 FSSA, accounting and auditing arrangements appear well developed and generally adequate to minimize risks to the financial sector from a lack of financial integrity. For financial services companies, compliance is subject to numerous checks; supervision by on-site inspection, external audit, internal audit, and for insurance companies, a control committee. Accounting, auditing, and actuarial standards and professions are well developed, in conformity with international standards and best practices. Accountants and auditors are licensed and supervised by the FSAN.

17. The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme.

II

The FSAN website indicates that it issues licenses, based on licensing requirements, to businesses that fall under its jurisdiction. Its scope of responsibility covers any companies that are authorized to function under the Securities Trading Act, Securities Funds Act, Central Securities Depository Act, and Stock Exchange Act, which include banks, insurance companies, other financial institutions, securities traders, exchanges, authorized and licensed market places, securities registers, estate agents, electronic money institutions, and auditors. The FSAN conducts supervision both through on-site inspections and off-site supervision. The instruments and activities that it uses to carry out its responsibilities are supervision and monitoring, licensing, regulatory development and information and communication. The Financial Institutions Act of 1988 sets forth the guidelines for the establishment, winding up, and merging of financial institutions. However, the publicly available information does not directly address Norway's compliance with this principle.

18. The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.

II

There is insufficient information publicly available that directly addresses this principle.

19. Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investor’s interest in the scheme.

II

The Securities Trading Act of 1997 ensures the proper functioning and security of trading in securities and derivatives, as mentioned on the MoF website. The Act also includes provisions on insider trading, share purchases disclosure, mandatory bids, other disclosure requirements, and other requirements that apply to those providing financial services. However, the publicly available information does not directly address Norway's compliance with this principle.

20. Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme.

II

There is insufficient information publicly available that directly addresses this principle.

21. Regulation should provide for minimum entry standards for market intermediaries.

II

There is insufficient information publicly available that directly addresses this principle.

22. There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake.

II

There is insufficient information publicly available that directly addresses this principle.

23. Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

II

There is insufficient information publicly available that directly addresses this principle.

24. There should be procedures for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk.

II

There is insufficient information publicly available that directly addresses this principle.

25. The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

II

According to its website, the scope of the FSAN's responsibility covers any companies that are authorized to function under the Securities Trading Act, Securities Funds Act, Central Securities Depository Act, and Stock Exchange Act, which include banks, insurance companies, other financial institutions, securities traders, exchanges, authorized and licensed market places, securities registers, estate agents, electronic money institutions, and auditors. However, the publicly available information does not directly address Norway's compliance with this principle.

26. There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants.

II

See Principle 25.

27. Regulation should promote transparency of trading.

II

The Securities Trading Act of 1997 ensures the proper functioning and security of trading in securities and derivatives, as mentioned on the MoF website. The Act also includes provisions on insider trading, share purchases disclosure, mandatory bids, other disclosure requirements, and other requirements that apply to those providing financial services. However, the publicly available information does not directly address Norway's compliance with this principle.

28. Regulation should be designed to detect and deter manipulation and other unfair trading practices.

II

See Principle 27.

29. Regulation should aim to ensure the proper management of large exposures, default risk and market disruption.

II

There is insufficient information publicly available that directly addresses this principle.

30. Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

II

According to the 2005 IMF FSSA, Norway's supervision of payments and securities settlement systems is generally sufficient, but some aspects could be improved by incorporating them into legislation and increasing transparency. For example, the supervisors' websites should include their supervisory requirements and standards. In addition, the assessment suggests that the risk management arrangements of the clearing and settlement of securities infrastructure be improved. Certain protections exist, such as against the default of a broker, but in the case where a bank can not settle its position, there are no protections. There is the risk that a default of the largest participant could destabilize the system. The IMF's assessment team recommends that the authorities decrease liquidity risk, especially in the case that a key bank fails to settle. As reported on its website, the FSAN is responsible for any companies that are authorized to function under the Securities Trading Act, Securities Funds Act, Central Securities Depository Act, and Stock Exchange Act. However, the IMF's assessment does not directly address Norway's compliance with this principle.