Trading in Financial Instruments€¦ · 6 placing of financial instruments without underwriting...

Trading inFinancial Instruments

etc. through SpareBank 1 SR-Bank Markets

– Guidelines and Conditions

Last updated on 17 August 2018

Contents

General Business Terms and

Conditions for Trading in Financial

Instruments etc. through

SpareBank 1 SR-Bank Markets .................................................... 3

Guidelines for Executing Orders for

Professional and Non-professional clients ........ 15

Information on Client Classification ............................. 20

Properties and risks related

to financial instruments ..................................................................... 23

Trading inFinancialInstruments

General Business Terms and Conditions for

etc. through SpareBank 1 SR-Bank Markets

These General Business Terms and Conditions are based

on Norwegian legislation and legislation in the EU and EEA

which investment enterprises are obligated to comply with.

These General Business Terms and Conditions supersede in

their entirety earlier versions of these terms and conditions.

SR-Bank1 SR-Bank Markets (SR-Bank Markets) clients (the Client)

are assumed to have accepted these General Business Terms and

Conditions as binding on themselves regarding these investment

services and any related services SR-Bank Markets carries out

for the Client after having signed these terms and conditions.

These Regulations enter into force on 3 January 2018.

Based on the standard prepared by the

Norwegian Securities Dealers Association

Version - September 2017

4General Business Terms and Conditions for Trading in Financial Instruments etc. through SpareBank 1 SR-Bank SR-Bank Markets

1 In Brief about SR-Bank Markets

1.1 Contact informationSpareBank 1 SR-Bank Markets

Bjergsted Terrasse 1, Postboks 250, 4066 Stavanger

Phone: 915 02002

E-mail: [email protected]

Enterprise Registration Number: NO 937895321

Legal Entity Identifier (LEI): 549300Q30IWRHQUQM052

SR-Bank Markets is a part of SpareBank 1 SR-Bank ASA, and

the General Business Terms and Conditions and appurtenant

agreements are entered into with SpareBank 1 SR-Bank ASA as

the counterparty.

1.2 Communicating with SR-Bank MarketsThe Client’s written enquiries are to be sent by e-mail, letter

or – pursuant to agreement – using SWIFT or some other

electronic communication to the entity at SR-Bank Markets

or the contact person that is the correct recipient. If the Client

does not know the correct addressee for the enquiry, the

Client must contact SR-Bank Markets.

The Client may communicate with the SR-Bank Markets in

Norwegian or English.

1.3 Tied agentsSR-Bank Markets may appoint tied agents for the purpose

of promoting their services, soliciting business or receiving

orders from clients and communicating them, placing

financial instruments and providing advice in respect of such

financial instruments and investment services offered by

SR-Bank Markets.

SR-Bank Markets is responsible for all activities the agent

carries out on behalf of SR-Bank Markets.

SR-Bank Markets has no tied agents under contract at this

time.

1.4 Which services is SR-Bank Markets licensed to offer

SR-Bank Markets’ investment services and investments activities include the following licensed services:1

1 reception and transmission/communication, on behalf

of clients, of orders in relation to one or more financial

instruments,

2 execution of orders on behalf of clients,

3 trading in financial instruments on own account,

4 providing investment advice,

5 underwriting of financial instruments or placing of

financial instruments via underwriting

6 placing of financial instruments without underwriting

SR-Bank Markets also offers the following ancillary services:

1 safekeeping and administration of financial instruments,

2 credit provisions or loans,2

1 SpareBank 1 SR-Bank is a wholly-owned subsidiary of SpareBank 1 SR-Forvaltning AS, which offer the ’active management’ service.

2 Granting credit or loans to purchase financial instruments

3 advice on an undertaking’s capital structure, industrial

strategy and related issues, as well as advice and services

in connection with mergers and acquisitions,

4 services related to foreign-exchange operations when

these take place in connection with the provision of

investment services,

5 preparation and transmission/communication of

investment recommendations, financial analyses or

other forms of general recommendation relating to

transactions in financial instruments,

6 services related to underwriting,

7 services related to the underlying of commodity

derivatives and derivatives when these services are linked

to investment services or ancillary services as mentioned

in this provision.

SR-Bank Markets is licensed to offer investment advice.

Investment advice offered by SR-Bank Markets is not to be

regarded as independent investment advice according to the

conditions stipulated in the legislation.

For further information about what the advice is based on, see

www.sr-bank.no.

1.5 Supervisory authoritySR-Bank Markets is under the supervision of the Financial

Supervisory Authority of Norway (Enterprise Registration

Number: 84 0747972).

Address: Revierstredet 3, 0151 Oslo www.finanstilsynet.no

2 The Scope of the General Business Terms and Conditions

The General Business Terms and Conditions apply to SR-Bank

Markets’ investment services, investment activities and

ancillary services in so far as they are appropriate, as well as

for services concerning transactions in instruments that are

associated with the financial instruments.

The General Business Terms and Conditions also apply to

separate agreements entered into between SR-Bank Markets

and the Client. In the event of any conflict between such

agreements and the General Business Terms and Conditions,

the agreements are to take precedence.

The following conditions will apply to any special agreements or supplementary agreements:

1 trading in and clearing standardised (listed) derivative

contracts,

2 trading in and/or clearing of non-standardised (OTC)

derivative contracts,

3 trading on credit,

4 services in connection with the underwriting of unit

issues or other public offerings, including the placement

of unit issues or offers and services in connection with

corporate mergers and acquisitions,

5 the borrowing and lending of financial instruments,

6 safekeeping and administration of financial instruments,

7 conclusion of interest rate and foreign-exchange

contracts,


8 concluding contracts regarding mortgages and the

provision of financial security,

9 trading in commodity derivatives,

10 trading and settlement, including clearing in foreign

markets,

11 online trading (web-based trading), including the direct

relay of orders to the Oslo Stock Exchange or another

regulated market and algorithmic trading.

Trading and clearing may also be regulated by separate

trading rules/standard terms and conditions at the individual

execution venue3 and clearing houses where trading and

settlement/clearing take place. In the case of any conflict

between these General Business Terms and Conditions

and/or rules for trading/standard terms mentioned in the

previous paragraph, the rules for trading/standard terms at the

execution venue or clearing house shall apply.

SR-Bank Markets is also obligated to comply with rules for

good business conduct that have been established for the

individual markets, including ethical standards established by

the Norwegian Securities Dealers Association.

The ethical standards and procedural rules for complaints

regarding these can be found online: www.vpff.no.

3 Conflicts of interestSR-Bank Markets is required to take all reasonable steps to

identify conflicts of interest between the SR-Bank Markets and

its clients and among the clients themselves.

SR-Bank Markets has guidelines to deal with and prevent

conflicts of interest. A summarised version of the guidelines is

published online: www.sr-bank.

The purpose of the Guidelines is to ensure that SR-Bank

Markets’ business areas operate independently of each other

so that the Client’s interests are safeguarded in a satisfactory

manner. SR-Bank Markets will place emphasis on there being

satisfactory information barriers between departments

that provide advisory or managerial services and other

departments.

The way in which SR-Bank Markets is organized and the

special duty of confidentiality provisions that apply may mean

that SR-Bank Markets’ employees who are in contact with the

Client are not aware of, or may be prevented from using,

information which exists in SR-Bank Markets even if the

information may be relevant to the Client’s investment

decisions. In some cases, the Client’s contact person(s) at

SR-Bank Markets will not be permitted to provide advice on

specific investments. In such cases, SR-Bank Markets may not

provide any reason for being unable to provide advice or carry

out a specific order.

SR-Bank Markets and its employees may have financial or other interests of their own in relation to the transactions the Client wishes to make. This may be a consequence of, for instance:

1 advice or facilitator assignments for the investment

instrument in question,

2 provision of guarantees or participation in consortium

underwriting,

3 The execution venue includes all trade venues used by SR-Bank Markets; including SI/Systematic Internaliser

3 market-making, systematic internalisation and other own

account trading,

4 advice and execution of orders for other clients,

5 unpublished investment recommendations (analyses)

prepared by SR-Bank Markets,

6 employees’ own positions

4 Voice recordings and other documentation

SR-Bank Markets records telephone conversations as required

by law related to our investment services and investment

activities.

SR-Bank Markets will record conversations concerning all

orders for purchase, sale or subscription of financial

instruments that are made by telephone. SR-Bank Markets

does not have the opportunity to execute orders made by

phones that are not connected to voice recording equipment

(including mobile phone). Voice recordings and other

documentation will be stored on SR-Bank Markets’ servers.

The recordings will be stored by SR-Bank Markets for a period

that corresponds with legislation and starts on the day of the

recording and will normally be deleted after the period of

storage has ended. Voice recordings of some Client can be

queried by searching for such things as date and time of the

conversation, the incoming and outgoing telephone number

and the name of the employee at SR-Bank Markets who

participated in the conversation.

SR-Bank Markets will hand over a voice recording to the

public authorities or others if required to do so pursuant

law. The Client has also consented to giving the recordings

to the Ethical Council of the Norwegian Securities Dealers

Association or the Norwegian Financial Services Complaints

Board if the information is needed to process complaints or

claims. Other enterprises that cooperate with SR-Bank Markets

in managing relevant investment services have a similar

obligation to record voice conversations with clients to the

extent investment services are offered or executed by phone.

Documentation of communication through other channels

of communication than by telephone when performing

investment services will be stored for the time period

designated by law.

SR-Bank Markets will make the voice recordings and other

documentation available to the Client, upon request. The

Client will receive further information about this process by

contacting SR-Bank Markets.

5 Client classificationAccording to legislation, SR-Bank Markets shall classify its

clients into the following client categories: Non-Professional

clients, Professional clients or Qualified counterparties.

Categorisation is done according to applicable laws and

regulations. SR-Bank Markets will inform all clients about

which category they are classified into.

Classification has significance to the scope of protection

provided a client. The information and reports given to clients

classified as non-professionals are subject to more demanding

standards than those given to clients classified as professional.

In addition, according to the legislation, SR-Bank Markets


is obligated to obtain information on the Client in order to

assess whether the service or financial instrument/product in

question is suitable for the Client, by means of a suitability test.

The classification is important for the scope of the test and

for the assessment of what will be the best execution when

carrying out trading for the Client.

Clients classified as Professional are regarded as being

particularly qualified to assess the individual markets,

investment alternatives and transactions as well as advice

provided by SR-Bank

Markets. Professional clients cannot invoke rules and

conditions that have been stipulated to protect non-

professional clients.

The Client can ask SR-Bank Markets to change the

classification. Should a Professional client wish to be treated

as a Non-professional, SR-Bank Markets must consent to

this and the parties must enter into an agreement on this.

Non-professional clients that want to be classified as

Professional clients must meet the conditions stipulated in

the legislation. More information about the process of

reclassification, conditions and the consequences of

reclassification can be obtained upon enquiry to SR-Bank

Markets and is also available online: www.sr-bank.no.

6 Client’s responsibility for information given to SR-Bank Markets, authorisation etc.

In order to satisfy the requirement to ”know one’s clients”

as stated in money laundering legislation, the Norwegian

Securities Trading Act requires investment firms to subject

potential clients to a suitability test. SR-Bank Markets is also

obligated to collect and maintain specific information about

its clients. This information is also collected to satisfy the

requirements for information that are required for transaction

reporting and FATCA (Foreign Account Tax Compliance Act)4

and CRS 5 reporting (Common Reporting Standard) according

to international agreements to which Norway is bound.

The Client will provide SR-Bank Markets with data upon

signing the Client Agreement, which includes a personal

identity number/enterprise registration number/ LEI6, legal

address, country of tax obligation, telephone number and

any electronic addresses, owners or real rights-holders of

legal persons or legal entities, as well as the names of persons

authorised to sign. Natural persons shall state their citizenship.

The same applies to bank accounts and securities fund

accounts in the Central Securities Depository (VPS) or a similar

register.

SR-Bank Markets must be notified in writing of any changes to

such information.

The Client is also obligated to give SR-Bank Markets

satisfactory, correct information on the Client’s financial

position, investment experience and investment goals that

are relevant to the desired services and financial instruments.

Such information is required for SR-Bank Markets to act on the

Client’s best interest and provide advice about which financial

instruments are suitable for the Client to acquire, sell or own.

4 Foreign Account Tax Compliance Act, applies to American citizens

5 Common Reporting Standard, applies within OECD

6 Legal Entity Identifier (LEI)

When offering investment advice, SR-Bank Markets must

also send a suitability declaration to the Client. The Suitability

Declaration will be sent to the Client after the order is

submitted if the investment advice was carried out by remote

communication.

The Client is also obligated to inform SR-Bank Markets when

any (significant) change occurs to the information given

previously.

The Client understands that SR-Bank Markets has the right to

undertake suitable investigations to make certain the collected

information is reliable. The Client understands that SR-Bank

Markets is entitled to conduct its own investigations to make

sure its assessment of a service or the financial instruments are

suitable for the Client.

Furthermore, the Client understands that if SR-Bank Markets

is not given sufficient information, SR-Bank Markets cannot

determine which service or financial instrument is suitable for

the Client. For investment advice or active management, the

Client will be informed if the service cannot be offered or

performed. For the remaining investment services, the Client

will be informed if the information provided to SR-Bank

Markets is insufficient and that the service or financial

instrument is considered unsuitable for the Client. If despite

such warnings the Client still wishes to utilise the service or

the financial instrument, this can still be carried out. Lacking

or incomplete information can reduce the level of investor

protection the Client otherwise would be entitled to. If despite

such warnings the Client still wishes to utilise the service or the

financial instrument, the assignment will still be carried out.

The Client is obligated to comply with legislation and the

rules, terms and conditions that apply at any given time at

the execution venue at which a trade is executed. The same

applies to settlement and clearing through individual clearing

house.

The Client understands that own trading and clearing is

done in accordance with and within the permissions and

authorisations that apply to Client trading in financial

instruments. The Client shall document such permissions and

authorisations for SR-Bank Markets upon request. If the Client

is a foreign enterprise, SR-Bank Markets reserves the right to

see an appropriate legal statement of the Client’s permissions

and authorisations to carry out the trade, at the Client’s

expense.

SR-Bank Markets may require an overview of the person or

persons who are authorised to submit orders or enter into

other agreements related to financial instruments or who have

the authorisation to accept trading transactions on behalf of

the Client. Trading or acceptance from these are binding for

the Client, unless SR-Bank Markets failed to act in good faith

with regard to any individual’s authorisation. The Client is

responsible for keeping SR-Bank Markets updated with regard

to who is authorised to submit an order or accept a trade for

the Client. SR-Bank Markets will not accept any authorisations

that set frameworks for the individual Client’s trade, unless this

was agreed upon in writing, in advance. The Client is obligated

to ensure that the funds and financial instruments that form

part of an individual assignment are free for encumbrances

of any kind, such as liens, mortgages security interests (right

to retain financial instruments), arrest etc. The same applies

to incidents in which the Client trades as an authorised third

party.


7 RiskThe Client understands and acknowledges that investing and

trading in financial instruments and other related instruments

entail a risk of loss. The invested capital can both rise in value

and fall in value. The value of financial instruments depends,

among other things, on fluctuations in the financial markets

and may increase or decrease. Historical price developments

and yields cannot be used as reliable indicators of future

developments in and return on financial instruments.

Financial instruments and related instruments can have

different degrees of liquidity. For the most liquid financial

instruments, one can probably trade the instruments without

particularly influencing the price, while the opposite can occur

for less liquid financial instruments. Some instruments can

be difficult to trade. For more detailed information about the

characteristics of the

different financial instruments as well as risks related to trading

in different instruments, we refer you to the Information

Memo available online: www.sr-bank.no. The Client must

evaluate the risk associated with the applicable instrument and

market.

The Client should abstain from making investments in and

trading in financial instruments and related instruments if

the Client understands and acknowledges that investing and

trading in financial instruments and other related instruments

entail a risk of loss. The Client is encouraged to ask advice

from SR-Bank Markets and other relevant advisors and, if

needed, search for supplementary information on the market

before making a decision.

All trading the Client carries out after receiving advice from

SR-Bank Markets is done at the Client’s own risk, discretion

and decision. SR-Bank Markets under no circumstances

accepts any liability if the Client completely or partially disre-

gards the advice provided by the Enterprise. SR-Bank Markets

does not guarantee any specific outcome on client trading.

The Client is aware that the investment service being offered

will depend on the Client’s dialogue with brokers. If, for

example, this concerns sporadic contact on the Client’s

initiative, one must put to reason that the service being

offered by SR-Bank Markets is an order relay/ order execution.

Any investment recommendations (marked as marketing

documents prepared by SR-Bank Markets) and a broker’s

general opinion of the market is generic information and is

not considered investment advice. Such general recommen-

dations are not suited to individual clients and is not

considered investment advice.

8 Orders and assignments – forming an agreement

8.1 Submitting and accepting orders and ente-ring into agreements

Clients can submit orders verbally, in writing or electronically.

Some limitations exist for submitting orders by means of

electronic communication channels. Please contact SR-Bank

Markets for more information. The order is binding for the

Client once it has been relayed or communicated to SR-Bank

Markets, unless other special agreements are in place.

For trading in non-standardised derivative contracts (OTC),

as well as trading in currency and interest rate instruments,

including currency exchanges, the trading agreement is

considered entered into and binding when the Client has

accepted the conditions. SR-Bank Markets will normally act as

the Client’s counterparty for this types of transaction.

SR-Bank Markets is under no obligation to relay orders

if the Bank suspects a breach of law, regulation or the rules

established for and by the marketplace in question.

The Client is obligated to provide SR-Bank Markets with

information if the Client relays an order to sell financial

instruments that the Client does not own (short selling).

The Client cannot recommend algorithmic trading (use of

algorithms) with or via SR-Bank Markets without coming to a

special agreement to do so.

Orders from a client who normally trades for others, i.e. his

or her employer or other a natural or legal persons, will be

rejected if the Client is unable to verify at whose expense the

order is being carried out. If the Client submits orders at own

expense and at the expense of his or her employer or another

natural or legal person, SR-Bank Markets will prioritise the

person the principle represents.

8.2 Assignment periods for ordersFor orders related to trading in financial instruments,

the order shall be applicable on the day of the assignment

or until the regulated market closes on the day on which

the order was submitted and only applicable that day unless

otherwise agreed or as stated for that type of order or order

specification. For other assignments, the duration of the

agreement will be agreed separately.

’Assignment day’ means the day the Client’s order for

SR-Bank Markets to purchase or sell a financial instrument(s)

through or to/from another firm or enterprise has been

received by SR-Bank Markets.

If SR-Bank Markets initiates a trade, the day of the assignment

is considered the day SR-Bank Markets contacts the Client and

receives acceptance to carry out the assignment to purchase

or sell the applicable financial instrument(s).

The order can be called-in to the extent they are not executed

by SR-Bank Markets. If SR-Bank Markets places the order in

whole or in part with others as part of execution, the call-in on

the order can only be applied to the extent SR-Bank Markets

can get the order recalled.

8.3 Guidelines for executing ordersSR-Bank Markets is obligated to execute all measures to secure

the best conditions for the Client when executing received

orders during the assignment period. SR-Bank Markets has

prepared special guidelines for relaying orders which list the

trading systems in which transactions in different financial

instruments can be executed. Trade will be carried out in

accordance with these Guidelines unless the Client has given

specific instructions on how the trade shall be executed.

In such cases, the order will be placed according to such

instructions.

SR-Bank Markets reserves the right to aggregate the Client’s

orders with orders from other clients, persons or enterprises

that are or are not associated with SR-Bank Market as

described in the guidelines for relaying and executing orders.

Orders are only aggregated if it is unlikely that the aggregation

would generally be a disadvantage to the clients. The Client

however understands that aggregating orders may cause

some disadvantages in some cases.


SR-Bank Markets also reserves the right to aggregate a

Client’s orders with transactions executed at SR-Bank Markets’

expense. If the total order is only partly executed, the Client’s

order will as a point of departure be prioritised ahead of

SR-Bank Markets’ order. There is one exception to this,

however, if SR-Bank Markets could not have executed the

trade on similar advantageous conditions without aggregating.

The current applicable guidelines for executing orders is

considered approved by the Client upon entering into Client

Agreement. By entering into this agreement, the Client

expressly consents to SR-Bank Markets trading financial

instruments for the Client outside a marketplace.

8.4 Information about special rules for tradingFor trading in financial instruments at execution venues, the

rules for each venue shall also apply in relation to the Client

and SR-Bank Markets as long as they are appropriate. Those

rules usually deal with registering orders and trading in trading

systems at the execution venue, including conditions that

generally apply to ordering and the detailed rules for

prioritising and validity etc.

8.5 Cancelling orders and transactionsAn execution venue can cancel an order or transaction under

certain conditions, according to the rules that apply at the

execution venue itself. A cancellation of this nature is binding.

9 Delivery and payment (settlement) on financial instruments in Norway

9.1 Negotiable securities, securities fund units, standardised financial forward contracts and options and certificates

For trading negotiable securities in Norway on regulated

markets, securities fund units, standardised financial forward

contracts and options on the purchase or sale of financial

instruments registered with the Norwegian Central Securities

Depository (VPS) and certificates – the ordinary deadline for

settlement is three trading days (T+2) unless otherwise agreed.

Trading day in this context means any day the Norwegian

Stock Exchange is open for trading.

The deadline for settlement is calculated from the trading day

to settlement day.

Settlements are conditional on the Client putting necessary

funds and financial instruments at the disposal of SR-Bank

Markets on or before settlement day. Unless otherwise

especially agreed, SR-Bank Markets has the Client’s permission

and authorisation (in accordance with the individual trade or

transaction) to charge the Client’s monetary or bank account

or submit a request to charge the Client’s account as long as

the bank in question does not require a written authorisation

from the Client to charge the account.

The Client is considered to have paid the purchase amount

to SR-Bank Markets when the amount of the transaction is

credited to SR-Bank Markets’ bank account with a value-dating

no later than settlement day.

The Client is considered to have delivered the VPS-registered

financial instruments to SR-Bank Markets when the financial

instruments are received by an SR-Bank Markets securities

account in VPS or in another VPS securities account as

indicated by SR-Bank Markets.

The Client is obligated to deliver the sold financial instruments

to SR-Bank Markets or release the sold financial instruments

in his VPS securities account or other similar register before

the settlement deadline. Submitting an order to sell financial

instruments or accepting a sales offer involves, unless

otherwise agreed in writing, that SR-Bank Markets has been

authorised to request the release of the Client’s financial

instruments from the Client’s registrar. Delivery of physical

financial instruments shall be done according to a special

agreement with SR-Bank Markets.

For financial instruments that either are taken for clearing in a

CCP7 8, or are registered in a CSD, or listed on a marketplace,

a short covering will automatically be implemented if the

financial instrument is not delivered before a certain number

of days have passed after the settlement deadline. This will

normally be four days after the settlement deadline. This

deadline can be extended to seven days for instruments traded

on less liquid marketplaces and to fifteen days for financial

instruments listed on an SMB exchange.

The individual CCP, CSD or marketplace has its own rules for

short coverings which are approved by the authorities and

established according to legislation regarding the securities

depositories and clearing enterprises

The short covering is implemented by the CCP if the

instrument is cleared by CCP. A short covering will be

implemented if the instrument is traded on the marketplace

and not cleared by CCP. In cases where an instrument is

neither cleared by CCP nor traded on a marketplace, the

short covering will be implemented by CSD. If the short

covering fails to be successful, the purchasing party has the

opportunity to select between postponing the delivery or a

cash compensation.

Delayed deliveries are subject to a statutory sanctioning

system. The CCP, CSD or marketplace will impose fines on

the selling party due to the default, regardless of whether the

short covering is implemented or not. The amount of the fine

is standardised and imposed regardless of whether seller is

responsible or not (objectively responsibility). The amount of

the fine is standardised according to legal rules established for

this.

9.2 Currency trading (spot)For currency spot trading, the ordinary deadline for settlement

is three bank days (T+2) (trading days included) unless

otherwise agreed. Bank day means the day the banks in the

applicable market are open. The deadline for settlement is

calculated from the trading day to settlement day.

9.3 Other financial instrumentsThere are special settlement deadlines and clearing rules

for other financial instruments. These rules and settlement

deadlines will be stated in the special agreements. For trading

in non-standardised derivatives (OTC), as well as trading in

7 A CCP (Central Counterparty) is an operator in a securities market that acts as the central counterparty in a securities trading, which carries out the settlement on securities and money between the two original parties (purchaser and seller). The CCP enters as the purchaser for the seller and sells against the purchaser at the moment the trade takes place.

8 Verdipapirsentralen (VPS) is the central securities depository in Norway


currency and interest rate instruments, including currency

exchanges, the rules for settlement and deadlines will be

agreed upon when the agreement is signed.

In such cases, the rules for settlement and deadlines will be

stated on the Confirmation Order sent to the Client after the

agreement is entered into.

10 Reporting executed services – confirming agreements and completed assignments

SR-Bank Markets utilises contract notes/order confirmations

or another manner of immediate reporting to the Client about

the services that have been executed or agreements that have

been entered into. To the extent they are relevant, the contract

note/order confirmation shall include information about fees

and costs of the trading executed on the Client’s behalf

according to current legislation that might apply to this.

Beyond this, the contract note/confirmation will contain

information as required by current applicable legislation.

Confirmations that need to be endorsed by the Client must be

endorsed immediately after they are received and then sent

back to SR-Bank Markets as stated on the confirmation or in

another manner agreed with the Client.

The Client may not assert a claim regarding any errors on

the confirmation if the Client fails to check for errors on the

confirmation as stated in Item 12 below, which implies that the

Client can be bound by the content of the confirmation even if

it deviates from what was agreed.

SR-Bank Markets reserves the right to correct any obvious

errors on the contract note or other type of confirmation. The

corrections will be made as soon as an error is discovered.

Deliveries of financial instruments that are registered in VPS

can be confirmed using a notification of change from VPS, to

the extent the Client has agreed with the registrar to receive

such confirmation.

11 Right of cancellationThe Client has no right of cancellation pursuant to legislation

for services and trading in financial instruments that are

covered by these General Business Terms and Conditions.

12 Claims between SR-Bank Markets and the Client

If the Client has agreed to receive the contract note or

another confirmation by e-mail or another kind of electronic

communication and the Client has not received the note or

confirmation by the end of the first trading day/bank day after

the agreement was entered into or after the settlement period

has expired, the Client must as quickly as possible and no later

than the end of the trading day/bank day after the agreement

was entered into or after the settlement period has expired,

notify SR-Bank Markets about this.

If the Client has agreed to receive the contract note or

another confirmation by conventional mail and the Client has

not received the note or confirmation within three trading

days – and within seven trading days for clients with foreign

addresses – and after the agreement was entered into or after

the settlement period has expired, the Client must as quickly

as possible and no later than the end of the fourth trading day/

eighth bank day after the agreement was entered into or after

the settlement period has expired, notify SR-Bank Markets

about this.

Immediately after receiving the contract note or other

confirmation, the Client must check this and, as soon as

possible after receiving it and no later than the end of the

next trading day/bank day (if the claim cannot be submitted

by the end of normal office hours on the day it was received),

notify the applicable unit at SR-Bank Markets if he wants to

complain that something on the contract note/confirmation

conflicts with the order, assignment or the trade. If the Client

fails to submit his complaint as stated above, the Client will be

bound by the contract note/confirmation even if it does not

correspond with the agreement/conditions for trade.

If the financial instruments registered in VPS have not been

delivered to the Client by settlement day and the Client has

put the necessary funds at the disposal of SR-Bank Markets,

the Client must contact SR-Bank Markets immediately and

cancel the agreement with SR-Bank Markets if the Client wants

to invoke the delay as grounds for cancelling the agreement.

The cancellation declaration will however not be valid if the

Client receives compensation by the deadlines established for

short coverings on the relevant CCP, CSD or VPS. The Client

is not entitled in this period to close a cover agreement at

SR-Bank Markets’ cost and risk.

”Immediately” in the previous sentence is understood as the

same day or, if the claim or objection could not be submitted

by the end of normal office hours, no later than the end of the

next trading day. The deadline will commence not earlier than:

• The time the Client received or should have received

information that the delivery did not occur after

examining the VPS account using the digital confirmation

system, or being informed by the manager or in another

manner,

• The date and time the notification of change arrived

from VPS should have arrived by conventional mail to the

address the Client provided.

If the Client does not receive payment at the time established

in the agreement and the Client has delivered the financial

instruments in question or put these instruments at the

disposal of SR-Bank Markets, the Client must contact SR-Bank

Markets as soon as he/she verifies or should have verified that

the settlement was not received. The Client can only invoke

a delay as grounds for a claim on interest due on overdue

payments.

For trading in financial instruments through SR-Bank Markets,

the general rules regarding invalid agreements between a

purchaser and seller shall apply. If the Client objects that an

agreement is not binding due to invalidity, the Client must

submit the objection immediately after the Client learned

about or should have known about the conditions that form

the basis for the invalidity. In any case, the objection must be

submitted within six months after that agreement was signed.

Such objections will be valid in relation to SR-Bank Markets’

general rules about agreement invalidity.

For any other claims against SR-Bank Markets, the Client loses

the right to assert such a claim if the Client fails to do so wit-

hout unnecessary delay after the Client learned of or should

have known that the conditions for the claim existed.


Verbal claims or objections must be confirmed in writing

immediately.

Partial deliveries do not entitle the Client to cancel the

agreement unless the Client has expressly taken reservation to

complete deliveries.

For currency spot trading agreements, the deadline for claims

is calculated using bank days and not trading days.

The deadline for claims is considered waived if the Client has

not asserted a claim within the time limit stated above.

If SR-Bank Markets is the Registrar Investor in VPS for the

Client, the Client shall immediately notify SR-Bank Markets

concerning errors in VPS account registration. If such

notifications are not received by SR-Bank Markets by the end

of the subsequent trading day after the Client received the

notification of change from VPS, the Client is considered to

have accepted SR-Bank Markets’ registration.

13 DefaultThe Client is considered to have defaulted on his obligations to the General Business Terms and Conditions when:

1 Delivery of financial instruments or money has not

occurred by the deadline for settlement or the Client fails

to satisfy any other significant obligations to the General

Business Terms and Conditions,

2 The Client signs a special agreement with his creditors to

defer payments, becomes insolvent, commences debt

negotiations of any kind, ceases his payments or begins

bankruptcy proceedings or public administration,

3 Significant depreciation of the Client’s financial position

that would weaken the Client’s opportunity to fulfil

his obligations to the General Business Terms and

Conditions, and according to a deadline set by

SR-Bank Markets the Client has not provided sufficient

security to execute the Client’s agreements pursuant to

the General Business Terms and Conditions,

4 The Client winds down its commercial activity or

significant parts of it,

5 The Client dies or is put under custody or guardianship,

or other incidents occur that hinder the Client from

fulfilling agreements to the General Business Terms and

Conditions.

In the event of default, SR-Bank Markets has the right but not the obligation to:

1 Declare all unsettled tradings as defaulted and

uncompleted assignments as cancelled and terminated.

2 Exercise its security interests.

SR-Bank Markets has the right to withhold financial

instruments that SR-Bank Markets has purchased for the

Client. If the Client has not paid the purchase amount

within three (3) days after the settlement deadline,

SR-Bank Markets can – unless otherwise agreed in

writing and without further warning – sell the financial

instruments at the Client’s expense and risk to cover

SR-Bank Markets claims.

Such sales normally occur at the quoted price or a price

that is reasonable based on market position. If the

applicable financial instruments are transferred to the

Client’s securities account in VPS or a similar financial

instruments register, the Client is considered to have

released the financial instruments or giving his

authorisation to the release to execute the cover sale.

3 Other assets are realised than those included in Item 2

above, and the Client is considered to have consented to

such forced sale through an independent broker,

4 Close all positions that are the subject of the provision of

security and/or margin calculation,

5 Used to set-off all SR-Bank Markets’ outstanding credit

with the Client from other financial instruments and

or services, including claims on broker’s commissions,

outlays for taxes and duties, claims on interest etc. and

costs or losses due to Client default on one or more

obligations above towards SR-Bank Markets, regarding

any outstanding amounts the Client has with SR-Bank

Markets at the time of the default, whether the claim is

in the same or a different currency. Claims on foreign

currencies are converted to NOK based on the market

price at the time of the default.

6 Execute at the Client’s expense and risk what SR-Bank

Markets considers necessary to cover or reduce the loss

or liability for agreements entered into on behalf of the

Client, including reversing transactions.

7 Immediately carrying out a short covering or borrowing

on financial instruments at the Client’s expense and risk

to fulfil his delivery obligations toward counterparties if

the Client fails to deliver the agreed amount, including

not delivering the financial instruments to SR-Bank

Markets at the agreed time. If the short covering is not

executed by SR-Bank Markets, the short covering will

be implemented according to the rules established in

legislation for CCPs, CSDs or regulated marketplaces.

Similarly, SR-Bank Markets can take any action SR-Bank

Markets considers necessary to reduce the loss or liability

from the Client’s default on agreements entered into

with SR-Bank Markets, including any actions needed to

reduce the risk of loss related to changes in the currency

rates, interest and other rates of exchange, or prices that

the Client’s trading is tied to. The Client is obligated to

compensate SR-Bank Markets losses with a supplement

for any interest due and any fees.

8 Demand to have all costs and losses SR-Bank Markets

incurs due to the Client’s default, including but not limi-

ted to fines issued to SR-Bank Markets by relevant CCPs,

CSDs or marketplaces, costs incurred in the execution of

cover transactions or borrowing on financial instruments,

losses on rate of exchange from cover trading and

reversing transactions, losses from changes in currency

rates, interest and other fees for delays.

For transactions carried out in which the Client defaults or is

expected to default, the Client bears the risk for changes to

exchange rates or changes to the market until the transaction

is carried out.

This applies regardless whether a transaction is a cover

transaction carried out by SR-Bank Markets or a transaction

carried out by the Client after SR-Bank Markets has notified

the Client that measures will be implemented to remedy the

default.

Otherwise, the provisions of the Sales of Goods Act concer-

ning anticipated default, including cancellation in the event of

default, shall apply.


14 Interest after defaultInterest is calculated according to the government’s rate for

interest on overdue payments, unless another agreement is

reached, if either SR-Bank Markets or the Client defaults on its

obligations.

15 RemunerationSR-Bank Markets is remunerated in the form of a broker’s

commission, the difference in the exchange rate or another

form of remunerations, with any supplement for fees related

to trading and clearing etc. which are subject to the individual

agreement.

A broker’s commission (remuneration) is added to or deducted

from the value of the financial instruments a client purchases

or sells. The broker’s commission is normally based on a

percentage. The Client will pay a specific minimum

commission up to a determined investment amount. Another

alternative is calculating the difference in the exchange rate,

which means a mark-up on the buying price or a deduction

on the selling price. For derivatives and compound financial

instruments, the Client must often pay other costs than those

mentioned above.

Before the service is executed, the Client will receive detailed

information about the terms and conditions for payment and

the overall costs that the Client must pay for each financial

instrument, investment service or ancillary service. This

includes informing the Client about any commissions, fees,

taxes and charges that must be paid via SR-Bank Markets.

If the costs cannot be stated precisely, the Client shall be

informed about the basis for calculation. The Client shall also

be informed if other fees and/or costs apply that are not paid

or are imposed on SR-Bank Markets.

For more information about remunerations paid to

SR-Bank Markets, please see www.sr-bank.no.

SR-Bank Markets reserves the right to make deductions from

the Client’s account balance to pay the costs mentioned in the

first sentence, as well as for any taxes, selling fees etc. that are

due.

In cases where trading is not possible, SR-Bank Markets will

not demand remuneration unless otherwise especially agreed.

16 Registration in VPS and depository

Unless otherwise agreed, the terms stated below shall apply to

VPS registration and storage/management of depositories.

Where SpareBank 1 SR-Bank acts as the Client’s Registrar

Investor in VPS, SpareBank 1 SR-Bank is authorised to carry

out the registrations for the VPS account as per the Client’s

instructions, including transferring transferable securities

from the VPS account that form part of sales orders relayed

to SpareBank 1 SR-Bank. The Client understands that the

purchased or subscribed transferable securities are registered

for the applicable VPS account if no other account is stated

on the order form. SR-Bank Markets is authorised to review

the contents and balance of the VPS account. The Client

also understands that SpareBank 1 SR-Bank’s registrations in

the VPS account are done in accordance with the provisions

stated in the General Terms and Conditions for the Norwegian

Central Securities Depository, which are available on the VPS

website (http://www.vps.no/public/Kontofoerer/) as well as

current applicable laws and regulations.

SR-Bank Markets can enter into agreements with another

depository to manage or safeguard the Client’s instruments.

A depository is selected according to SR-Bank Markets’ best

discretion, and the Client is considered to have accepted the

selection unless otherwise stated in a special management or

depository agreement with SR-Bank Markets. SR-Bank Markets

accepts no responsibility for any default by a depository from

trading or managing the Client’s assets.

17 Authorised representatives (middlemen), managers and clearing agents

If the Client submits an order or assignment as authorised

representative, manager, clearing agent etc. for a third party,

the Client and the party he acts on behalf of are bound by the

General Business Terms and Conditions. The Client is joint and

severally liable towards SR-Bank Markets for the third party’s

obligations to the extent the obligations are a result of the

Client’s orders or assignments.

We encourage the use of special agreements when the Client

utilises a manager, clearing bank or other middleman. The use

of such middleman does not exempt the end-client from his

responsibilities to the General Business Terms and Conditions.

18 Safekeeping client assets – client accounts

SR-Bank Markets wants to make sure the Client’s assets are

kept separate from SR-Bank Markets’ own assets, and as far as

possible protected against SpareBank 1 SR-Bank ASA’s other

creditors. The Client will be credited the interest on his funds

based on general terms and conditions for this as dictated by

SR-Bank Markets.

The funds that SR-Bank Markets holds on behalf of the Client

will be deposited into SR-Bank Markets’ client account at a

credit institution or approved money market fund based on

the Client’s written consent. This account can be a summary

account for funds an enterprise holds on behalf of several

clients. If the credit agency goes bankrupt, the funds in the

account are covered according to the rules that apply to

the bank’s compensation scheme. For deposits in credit

institutions that are members of the Norwegian Investor

Compensation Scheme, a summary client account will

be compensated up to an amount of NOK 2 000 000.00.

The Client’s right to coverage in such cases will thus be

proportionally reduced. If a deposit is made to a credit

institution that is not a member of the Norwegian Investor

Compensation Scheme, coverage will be based on the rules

from the compensation scheme in the country in which the

credit institution is a member. The right to coverage will also

be proportionally reduced in this case.

The Client’s financial instruments, if these are registered in

the Central Securities Depository (VPS) or a similar securities

register, will be credited to the Client’s accounts in this register.

If the financial instrument is not registered, it will be kept in

deposit at a bank or another depository. If the register, bank or


other depository is wound up or goes bankrupt, the

Client’s financial instruments are normally protected by

so-called asset rights.

SR-Bank Markets accepts no responsibility towards the

Client for the assets that are transferred to client accounts

at a third-party (including summary accounts), assuming

the third-party was chosen according to applicable law

and SR-Bank Markets otherwise has fulfilled the general

requirements for due care. This will also apply if the third-party

becomes insolvent or goes bankrupt.

If information is not provided in another manner, SR-Bank

Markets will at least once a year send the Client an overview of

the assets SR-Bank Markets is holding on behalf of the Client.

This does not apply if such information is included in other

periodical overviews9. SR-Bank Markets cannot utilise financial

instruments that SR-Bank Markets holds on behalf of a client

unless expressly agreed.

19 Liability and exemption from liability

SR-Bank Markets is responsible towards the Client to complete

the purchase or sale that was executed on behalf of or with

the Client. This does not apply however if the Client has

approved another party as the counterparty to a trading

transaction in advance.

SR-Bank Markets accepts no responsibility for settlement

if the Client fails to put the agreed funds and/or financial

instruments at the disposal of SR-Bank Markets on or before

settlement day. SR-Bank Markets is not responsible if an

unsuitable or inappropriate service is performed because

the Client has provided SR-Bank Markets with incomplete or

incorrect information; see Item 6.

SR-Bank Markets accepts no responsibility for indirect harm or

loss suffered by the Client because the Client’s agreement(s)

with third parties are waived or terminated in whole or in part

or not correctly fulfilled.

SR-Bank Markets or its employees are not responsible for the

Client’s losses as long as SR-Bank Markets or its employees

have provided advice or executed an order or assignment that

complies with the general requirement for due care. In the

event SR-Bank Markets uses credit agencies, investment firms,

clearing houses, managers, nominees or similar Norwegian

or foreign assistants, SR-Bank Markets or its employees will

only be liable for the actions or omissions of these assistants if

SR-Bank Markets failed to satisfy the general requirement for

due care when selecting its assistants. If the assistant

mentioned above is used after the order or request from

the Client was placed, SR-Bank Markets is not liable nor

responsible for any error or default on these.

SR-Bank Markets is not liable for harm or loss from hindrances

or other conditions outside SR-Bank Markets’ control,

including power failure, error or breach in electronic data

storage systems or telecommunications system etc., fire,

water damage, strikes, changes to laws or regulations, orders

imposed by the authorities or similar circumstances.

When a trade is carried out at a Norwegian or foreign

execution venue based on an order or request from the

Client, SR-Bank Markets is not liable for any error or default

committed by the execution venue or an associated clearing

9 This does not apply to credit institutions.

house. The Client thus understands that the execution venue

or the clearing house may have its own rules for governing its

responsibilities towards any members of the execution venue

or clearing houses, clients etc. with greater or lesser levels of

liability and exemption from liability.

SR-Bank Markets is not liable in those cases where a delay or

omission is due to the settlement of money or securities being

suspended or terminated as a result of circumstances outside

SR-Bank Markets’ control.

The limitations to SR-Bank Markets’ liability beyond that stated

above can be stated in a special agreement with the Client. If

the public authorities or rules require clients to be registered

with a Legal Entity Identifier (LEI), it is the Client’s responsibility

to obtain and maintain this. The Client shall hold SR-Bank

Markets harmless for any possible loss, claim or costs that

SR-Bank Markets is imposed as a consequence of the duty to

obtain and maintain a LEI not being complied with.

20 Withholding of taxes etc.When trading abroad, SR-Bank Markets may be obligated

– pursuant to laws, regulations or a tax treaty – to withhold

amounts corresponding to various forms of taxes and duties.

The same may apply when trading in Norway on behalf of

foreign clients.

In the event that such withholding is to take place, SR-Bank

Markets may provisionally calculate the amount in question

and withhold this amount. When a final calculation is available

from a competent authority, any excess amount withheld as

tax shall be paid to the Client as quickly as possible. The Client

is responsible for producing the necessary documentation for

this and for the documentation being correct.

21 Trading in a foreign country, including the storage of the Client’s assets

For trading, clearing and settlement of foreign financial

instruments, we refer you to the trading rules and clearing

and/or settlement and delivery conditions established by and

in the country or the regulated market where the financial

instrument was purchased or sold. We also refer you to the

special agreements that may be required or signed for this

type of trading.

If the financial instruments or client’s funds are held in another

jurisdiction in the process of performing investment services

or ancillary services, SR-Bank Markets will inform the Client

about this. The Client understands that his or her rights

related to such assets can deviate to similar rights in Norway.

The Client also understands that settlement and provisions

of security in foreign markets can involve the Client’s assets

being held for settlement or as a provision of security may not

be kept separate from the assets or those used by SR-Bank

Markets’ foreign investment companies and/or clearing

agents’ own funds. The Client understands that he or she

bears the risk that own assets that are transferred to foreign

banks, investment firms, settlement agents, clearing houses

and similar entities in the form of a settlement or provision of

security, and that SR-Bank Markets responsibility towards the

Client for such assets are limited in accordance with laws and

rules that apply in the applicable country or on the applicable

market. SR-Bank Markets accepts no liability beyond that


stated in Norwegian law, see Item 20, unless otherwise stated

in a written agreement with the Client.

22 Terminating the commercial relationship

Trading or transactions being settled when the agreement

with the client is terminated shall be settled as soon as

possible. When terminating a client agreement, SR-Bank

Markets shall execute the final settlement in which SR-Bank

Markets is entitled to offset the Client’s balance to compensate

SR-Bank Markets for any outstanding commissions, taxes, fees,

interest etc.

23 Provision of securitySpareBank 1 SR-Bank is a member of the Norwegian Investor

Compensation Scheme in accordance with current applicable

legislation.

The Norwegian Investor Compensation Scheme is intended

to provide compensation for claims which are due to its

members’ inability to repay money or hand back financial

instruments that are held in safekeeping, administered and

managed by the members in connection with the provision

of investment services and/or certain additional or ancillary

services. Coverage is offered up to NOK 200 000 per client.

This security does not cover claims that arise from

transactions covered by legally binding court rulings

concerning money laundering or clients who are responsible

for or who have benefited from conditions that concern

SpareBank 1 SR-Bank, when such conditions have caused

SpareBank 1 SR-Bank economic difficulty or that could

worsen SpareBank 1 SR-Bank’s economic situation. The

security does not cover claims from financial institutions,

credit agencies, insurance companies, investment firms,

securities funds and other collective management enterprises,

pension schemes or pension funds, as well as any of the

companies in the SpareBank 1 SR-Bank group.

24 Measures to counteract money laundering, financing of terrorism and sanctions

SR-Bank Markets is obligated to investigate potential clients

before the Client Agreement can be approved. This requires

clients to document their identity, document their owners or

real rights-holders if the Client is a legal entity, and specify and

document any powers of attorney or authority to represent

others. Information about the origin of funds, the Client’s

objectives and the intentions of the client relationship shall

be stated. Existing client relationships are monitored by

SR-Bank Markets as long as the relationship lasts. This involves

collecting information and documentation when changes

occur to the information described above whenever needed.

Requested information and documentation are necessary for

SR-Bank Markets to satisfy its obligations to the Norwegian

Money Laundering and Terror Financing Act etc. (Norwegian

Money Laundering Act).

The Client is obligated to inform SR-Bank Markets about any

changes to the requested information. The Client is aware

that SR-Bank Markets is or may be obligated to provide public

authorities with all relevant information related to its

relationship with the Client or individual transactions.

This may be done without the Client being informed that

such information has been provided.

According to the current Money Laundering Act, SR-Bank

Markets shall not establish client relationships or execute

transactions if the client verification requirement cannot be

fulfilled. Established client relationships shall be terminated if

the client relationship implies a risk that transactions would

be related to criminal acts or conditions covered by sections

131-136a of the Norwegian Penal Code.

SR-Bank Markets is obligated to comply with any sanctions

stated in laws and regulations. This will hinder SR-Bank

Markets in establishing or maintaining client relationships

for natural or legal persons who are sanctioned, or who

cooperate with sanctioned natural or legal persons.

SR-Bank Markets shall not offer products or services to legal

or natural persons involved in corruption or bribes, or who

have commercial partners or relationships that are involved in

such activities. If such activities are identified after the client

relationship is established, the Enterprise must assess whether

the relationship be terminated.

25 Duty to inform the authorities, right of appeal etc.

SR-Bank Markets will provide the authorities with confidential

information about the Client, the Client’s transactions, the

balance of client accounts and other information which the

authorities require pursuant to law.

The Client is considered to have consented to providing

confidential information to other agencies or enterprises

as required by laws, regulations or as stated in other rules

that apply to these agencies. The Client has also consented

to giving such information to the Ethical Council of the

Norwegian Securities Dealers Association or the Norwegian

Financial Services Complaints Board if the information is

needed to process complaints or claims.

26 AmendmentsSR-Bank Markets reserves the right to amend or change

the General Business Terms and Conditions. Significant

amendments shall take effect on the date on which the Client

has been informed of the amendment. The Client is regarded

as having agreed to receive notification of amendments by

e-mail if he/she has informed SR-Bank Markets of his/her

e-mail address. Other amendments enter into force at the

date and time they are published on SpareBank 1 SR-Bank’s

webpage. Changes will not influence orders, trades,

transactions etc. that were entered into or carried out

before the date and time of the notification of change.

27 InterpretationIf the General Business Terms and Conditions conflict

with laws or regulations, the General Business Terms and

Conditions shall take precedence. Should there be a reference

to legislation, other regulations or these terms and conditions,

this shall be understood to be a reference to the prevailing

legislation, regulations and terms and conditions.


28 ComplaintsThe Client shall submit complaints or claims to SR-Bank

Markets. These should clearly state the nature of the

complaint. SR-Bank Markets has guidelines for processing

client complaints. These are available online: www.sr-bank.no.

If the Client is not satisfied with the manner in which SR-Bank

Markets has handled a complaint or claim, the Client can bring

the complaint before the Ethical Council of the Norwegian

Securities Dealers Association in accordance with the ethical

norms and procedural rules for cases that are subject to these

norms. Complaints may be submitted to the Norwegian

Financial Services Complaints Board (Finansklagenemnda)

if the Board deals with this type of complaint. SR-Bank

Markets can provide further information on the way in which

complaints regarding the individual products are dealt with.

Foreign clients, including Norwegians residing abroad, who

invoke laws, regulations or rules that protect against legal

disputes by SR-Bank Markets in relation to their obligations

towards SR-Bank Markets, waive this right as long as this does

not directly conflict with applicable laws or regulations.

29 Legal Venue – Choice of Law - Dispute Resolution

Disputes regarding the relationship between clients and

SR-Bank Markets, including disputes related to the General

Business Terms and Conditions, shall be resolved pursuant

to Norwegian law with the Stavanger District Court as the

(non-exclusive) legal venue. Clients with foreign legal venues

waive any right to oppose legal suits regarding these Business

Terms and Conditions presented to the Stavanger District

Court. Clients with legal venues in foreign countries can,

regardless of that stated above, be sued by SR-Bank Markets in

those legal venues if SR-Bank Markets so wishes.

30 Processing personal dataThe director for capital markets at SR-Bank Markets shall act as

the Data Processor where personal data is concerned.

Personal data will be processed and kept in accordance with

prevailing laws and regulations. The objective of processing

personal data is to execute the agreements entered into

between SR-Bank Markets and the Client, administration,

invoicing/settlement as well as marketing investment products

and services.

Should there be a statutory duty to disclose information,

personal data may be handed over to public authorities.

This applies to reporting transactions to the authorities, in

accordance with current rules.

The Client may request to see information about personal data

processing done by SR-Bank Markets, and which information

is registered. The Client may demand that incorrect or

defective information be rectified, and that information is

to be deleted when the purpose of the processing has been

completed and the information cannot be used/archived for

other purposes.

31 LanguageThe General Business Terms and Conditions are available

in Norwegian and an English translation. In the event of any

conflict of wording or interpretation, the Norwegian version

shall take precedence.

Guidelines for executing orders for Professional and Non-professional clients

Guidelines for Executing Orders for Professional and Non-professional clients

16Guidelines for executing orders for Professional and Non-professional clients

1 IntroductionThese guidelines have been approved to ensure that

SpareBank 1 SR-Bank ASA (SR-Bank) delivers the best

possible results for its clients when executing investment

orders. SR-Bank Markets is part of SR-Bank and is licensed

as an investment firm and can offer investment services and

ancillary services.

Securities and investment firms are, pursuant to MiFID II1,

obligated to execute any measure that is sufficient and

necessary to execute a client’s orders to achieve the best

possible results for the client (’best execution’). SR-Bank will

carry out specific evaluations when an order is received as to

how to execute the order to achieve best execution.

However, there will be situations in which SR-Bank is not

bound by its obligation to best execution, such as when

SR-Bank acts as the principle and/or accepts counterparty

risks for a transaction. Regardless of whether SR-Bank is

bound by the requirements for best execution or not, there

will always be a primary obligation to conduct activities in an

honest, just and professional manner in line with the clients’

interests.

2 Scope of the GuidelinesThese Guidelines apply to Non-professional and Professional

clients, but not for Qualified Counterparties unless otherwise

especially agreed. Best execution obligations shall apply to

listed and unlisted financial instruments. This includes

securities such as bonds money market instruments, and

interest rate, currency and commodities derivatives.

Best execution shall apply when SR-Bank performs any of the

following investment services related to financial instruments:

Execution of orders on behalf of clients When SR-Bank offers and performs the investment service

execution of orders on behalf of a client, SR-Bank shall act

with the intention of entering into agreements to purchase or

sell financial instruments on the Client’s behalf.

For example, this is the case when SR-Bank is a member of

a trading venue and executes an order on this venue in the

name of SR-Bank on behalf of the Client. When the service

order execution is completed, there is normally no middleman

between SR-Bank acting on behalf of the Client and the

execution venue.

Receiving and placing orders on behalf of the Client When SR-Bank performs the investment service Receiving

and placing orders, SR-Bank receives the Client’s order and

intermediates this further to another investment firm for

execution. This can occur when SR-Bank is not a member of

the applicable trading venue for trading financial instruments

the Client wishes to trade, e.g. in connection with trading in

bonds.

Trading in financial instruments on own account Trading on own account involves SR-Bank acting as the

counterparty and as the principle to purchase or sell a financial

instrument for clients. This is the case when a Client wishes

to trade with SR-Bank as the counterparty for trading e.g.

derivatives.

1 MIFID II is an EU Directive that also applies to Norway as of January 2018

Exceptions There is normally no obligation to execute transactions

based on best execution when SR-Bank acts as the principle.

SR-Bank will also supplement the following factors (The

fourfold legitimate reliance test) to determine whether the

best execution obligations shall apply:

1 Who takes the initiative for a transaction – Client or

SR-Bank?

2 Market practice and the Client’s opportunity to trade in

other places

3 Relative price transparency on the market

4 Information from SR-Bank.

Regardless of whether SR-Bank is bound by the requirements

for best execution or not, there will always be a primary obli-

gation to conduct activities in an honest, just and professional

manner in line with the clients’ interests. In addition, SR-Bank

recommends that clients investigate the prices of other

operators.

The best execution requirement does not apply to instruments

that are not financial instruments. This includes currency (FX)

spots, money-market deposits, loans, repurchase agreements

(repo) and securities financing.

Forward currency contracts entered into between SR-Bank

and non-financial counterparties with the objective of

ensuring commercial means of payment, where contracts

are traded outside regulated markets and contracts settled

in physical currency exchanges, will not be covered by the

requirement for best execution. Similarly, currency exchange

in connection with international payments will not be covered

by such requirements.

Regardless of this, SR-Bank will always try to protect the

Client’s interests in the best possible manner when trading in

non-financial instruments.

3 Weighting relevant factors for the execution of client orders

When executing a Client’s order to trade financial instruments,

SR-Bank will take the following relevant factors into

consideration to achieve best execution:

• Price

• Costs

• Time

• Probability of execution and settlement of the order

• The amount and special characteristics of the order

• And other relevant conditions to execute the order

In addition, SR-Bank will consider the Client’s classification

(Non-professional or Professional), the characteristics of the

Client’s order, the characteristic of the financial instruments

that the order applies to and the characteristics of the trading

systems the order can be placed in.

3.1 Non-professional clientsFor a Non-professional client, best execution is determined

based on price and cost. This includes the achievable price for

the relevant financial instrument with a supplement for costs

related to execution when these are communicated further

to the Client. These costs can include direct costs such as the

cost of selling on the marketplace, transaction costs,

settlement and clearing fees and other relevant costs payable


to third parties that are involved in executing orders –

including relevant taxes and official charges.

Other factors such as date/time, probability of execution and

settlement will only be given higher weight than price and

costs if this would contribute to best execution.

3.2 Professional clientsFor Professional clients, other factors than price will be given

greater weight than for Non-professional clients.

After doing a comprehensive evaluation based on professional

discretion, SR-Bank will decide the relative importance of

factors for execution, taking into consideration the type of

client, type of order, financial instruments involved, available

markets and current market conditions.

3.3 Deviating from the guidelinesSR-Bank may waive or deviate from these guidelines in

situations where the markets are very volatile or significantly

disrupted.

If SR-Bank receives specific instructions related to an order,

these instructions will be followed. This implies waiving

provisions on best execution which would hinder SR-Bank

from achieving best execution. If a client gives specific

instructions for only parts of an order, the requirement for best

execution will still apply to the rest of the order.

4 Time and date for order execution

If a client does not give specific instructions, SR-Bank will

publicize and begin executing the order immediately after an

order is received from a client. SR-Bank will execute the orders

in the sequence in which they are received. One exception

to this could be if SR-Bank determines that best execution

would be achieved by combining an order with other orders.

SR-Bank reserves the right to aggregate a client’s orders

with order from other clients, private persons or companies

associated with or not associated with SR-Bank. Aggregating is

done if we consider it unlikely that aggregation would result in

a disadvantage to individual clients. The Client will however be

told about the aggregation if it involves any disadvantage.

SR-Bank reserves the right to aggregate client orders for

transactions done at SR-Bank’s own expense (Own account

trading). If the total order can only be executed in part, the

client’s order will be prioritised ahead of SR-Bank’s own

trading. There is one exception to this, however, if SR-Bank

could not have executed the trade on similar advantageous

conditions without aggregating. If the order was received

outside of opening hours for the applicable market, the order

will normally be executed the next day when the marketplace

opens.

5 Execution venue and trading with SR-Bank as counterparty

SR-Bank will always attempt to trade at execution venues that

allow us to deliver the results for our clients. As a consequence

of this, SR-Bank will also (when beneficial for the client)

execute orders outside regulated markets and multilateral

trading facilities.

Examples of relevant execution venues:

• Regulated market (RM)

• Multilateral trading facility (MTF)

• Systematic Internaliser (Sl)

• Market Maker (MM)

• Other liquidity suppliers

• Organized trading facility (OTF)

For trading in financial instruments, SR-Bank will execute

orders through other parties if needed. In such cases, this will

ensure us that the other party’s guidelines for executing orders

are in accordance with our expectations and requirements.

When a client trades in financial instruments with SR-Bank

as the counterparty, SR-Bank will be the execution venue.

Best execution implies that SR-Bank can document adequate

market price.

6 Amending and checking the guidelines

Updating/amending the guidelines will be done as follows:

• Minor changes will only be published on our web site:

https://www.sparebank1.no/nb/SR-Bank/om-oss/

om-banken/markets.html.

• The Client will be notified directly about significant

changes via e-mail. The Client is responsible for sending

SR-Bank his current e-mail address. It is assumed that

clients have read and accepted the Guidelines for

Executing Orders. SR-Bank will check our order

execution systems and guidelines to look for and improve

weaknesses. Among other things, SR-Bank will evaluate

executed transactions against available market data to

monitor achieved prices and costs of trading.

• These guidelines will be updated at least once a year or

whenever necessary due to significant amendments.

The latest version of the Guidelines will be published on

our webpage: https://www.sparebank1.no/nb/SR-Bank/

om-oss/om-banken/markets.html.

7 Liability for external market conditions or technical systems

If external conditions affect a market or technical systems,

SR-Bank refers you to the General Business Terms and

Conditions for the provisions about liability and exemption

from liability.

8 Best execution for the different classes of instruments

8.1 Foreign capital instrumentsSR-Bank offers the following debt/foreign capital instruments:

• Government bonds

• Corporate bonds

• Fixed and floating rate securities/bonds

• Hybrid bonds (fund bonds)

• Bonds with preferential rights

• Converted bonds

• Certificates and money market instruments


This list is not exhaustive. The instruments mentioned

here have different properties such as different risk factors,

counterparty risk and liquidity. For trading in foreign capital

instruments, SR-Bank will act as the principle for client

trading regardless of whether the Client is a Professional or

Non-professional. SR-Bank will try to set an adequate market

price consisting of the (bid/ask) price SR-Bank would achieve

under applicable market conditions with the supplement of

our margin. In our gross price, the margin will cover the bank’s

expenses related to market risk, counterparty risk, financing,

capital requirements, operational expenses, taxes and official

fees, marketplace turnover, clearing/clearing costs and the

bank’s earnings.

When SR-Bank prices its bonds, we will take our point of

departure in transaction date and observable market prices.

In some cases, there will be limited information available

about the market price. SR-Bank will base its decision on a

discretionary evaluation of market price.

The Client can contact SR-Bank in several ways. A price

request can be given via telephone, SMS or e-mail. SR-Bank

will normally set a price, and trading is done when the Client

and SR-Bank agree on a price. The most important factors for

best execution are the price of the financial instrument and

its costs, including the commission and fees associated with

execution. Other less significant yet relevant factors:

• Market influences

• Speed

• Probability of execution and settlement

• Size

• Other conditions relevant to order execution.

For bonds, SR-Bank will normally execute orders for

Non-professional and Professional clients in the same manner.

For Professional clients, there may be situations where market

influences, speed and probability of execution would be

prioritised ahead of price.

8.2 Interest rate derivativesSR-Bank offers the following interest rate derivatives:

• FRAs (forward rate agreements),

• Interest rate swap agreements (swaps),

• Interest rate and currency swaps (cross currency swaps),

• Interest rate options and

• Combinations of such instruments.

Interest rate derivatives are traded upon a Request for Quote

basis.

When SR-Bank trades in interest rate derivatives with

Professional and Non-professional clients, SR-Bank will

function as the principle. SR-Bank will act as the Client’s coun-

terparty and execution venue for such instruments. SR-Bank

will try to set an adequate market price consisting of the (bid/

ask) price SR-Bank would achieve under applicable market

conditions with the supplement of our margin. In our gross

price, the margin will cover the bank’s expenses related to

market risk, counterparty risk, financing, capital requirements,

operational expenses, taxes and official fees, marketplace

turnover, clearing/clearing costs and the bank’s earnings.

Clients who trade in interest rate derivatives interact with

SR-Bank in several ways. A price request can be given via

telephone, SMS or e-mail. SR-Bank Markets will normally set a

price, and trading is done when the Client and SR-Bank agree

on a price.

SR-Bank does not accept orders on interest rate derivatives.

8.3 Currency (FX) SpotForeign exchange spots (FX) are not covered by the

requirement for best execution. Regardless of whether

SR-Bank is bound by the requirements for best execution

or not, there will always be a primary obligation to conduct

activities in an honest, just and professional manner in line

with the clients’ interests.

Unless otherwise agreed specifically, SR-Bank will execute

transactions with clients, whether Professional or

Non-professional, exclusively as a principle for own risk.

SR-Bank will always attempt to set an adequate market price

consisting of the (bid/ask) market price SR-Bank would

have achieved in applicable market conditions for a similar

transaction, with a supplement of a gross margin that covers

market risk, operational costs and the bank’s earning.

Gross margin will vary based on several factors. In addition to

the factors described above, the gross margin will vary depen-

ding on such things as the size of the transaction, liquidity in

relevant market as well as historical and anticipated earnings

(including trading behaviour) for each individual client.

The Client can submit orders in FX spots. An FX spot order

means a request from a client to execute a transaction with

SR-Bank under terms specified by the client. SR-Bank will

consider the market opportunities when handling orders

that would allow it to be executed within the parameters

specified – including price, speed and size. That means these

transactions will be entered into when the market can meet

the parameters specified in the order. For a Stop/Loss order,

the Client will be covered by best possible price after the

order’s price level is set.

When SR-Bank agrees to work with an order on behalf of

a client, SR-Bank will attempt to execute a transaction that

meets the parameters requested by the Client. Receiving an

order does not imply that an agreement has been entered into

between SR-Bank and the Client. An order will not signify a

transaction or another contract until SR-Bank confirms that

the Client’s order is executed, in whole or in part. It can also

mean that it will not be possible to execute the order if market

opportunities are not present.

All prices quoted to the Client are indicative prices unless

otherwise specifically stated.

SR-Bank utilises a number of execution venues and other

market operators when trading in FX spots on the interbank

market. When we trade with clients, SR-Bank will offer

execution via telephone, SMS and e-mail – in addition to

execution via the bank’s trading platform. SR-Bank will act as

the principle in all circumstances and on all marketplaces.

If SR-Bank receives a request for a price that exceeds

established threshold values, SR-Bank will reject this request

to trade.

8.4 Currency derivativesSR-Bank offers the following currency/FX derivatives:

• Forward currency contracts (FX forwards)

• Currency swap agreements (FX swaps) and

• Foreign currency options

Forward currency contracts entered into between SR-Bank

and non-financial counterparties with the objective of

ensuring commercial means of payment, where the contracts

are settled in ”physical” currency exchanges, will not be

covered by the requirement for best execution.


Currency derivatives are traded upon a Request for Quote

basis.

When SR-Bank trades in currency derivatives with Professional

and Non-professional clients, SR-Bank will function as the

principle.

SR-Bank will act as the Client’s counterparty and execution

venue for such instruments.

SR-Bank will try to set an adequate market price consisting of

the (bid/ask) price SR-Bank would achieve under applicable

market conditions with the supplement of our margin. In

our gross price, the margin will cover the bank’s expenses

related to market risk, counterparty risk, financing, capital

requirements, operational expenses, taxes and official fees,

marketplace turnover, clearing/clearing costs and the bank’s

earnings.

When establishing market prices, SR-Bank will base its

decisions on observable quotes in relevant markets and

marketplaces, executed tradings and applicable market

conditions. For certain instruments and under certain market

conditions, there may be indicative quotes or recently

executed comparable tradings for the requested trade which

are not available. In such cases, SR-Bank will base its price on

own estimates for the correct price, taking into consideration

applicable market conditions adjusted for relevant risk factors

including the potential lack of an underlying market for the

requested trade.

A margin will be added to the market price, and will vary

based on several factors. In addition to the factors described

above, the gross margin will vary depending on such things

as the size of the transaction, liquidity in relevant market as

well as historical and anticipated earnings (including trading

behaviour) for each individual client.

Clients who trade in currency derivatives interact with SR-Bank

in different ways. The Client can submit a price request via

telephone, SMS and e-mail. SR-Bank will normally set a price

that the Client can choose to accept or not. When the Client

requests and executes tradings using electronic channels, the

trade is executed when the trade is accepted by the Client and

confirmed as executed by SR-Bank.

If SR-Bank receives a request for a price that exceeds

established threshold values, SR-Bank will reject this request

to trade.

8.5 Commodities derivativesSR-Bank offers the following commodities derivatives:

• Forward contracts,

• Swap agreements (swaps) and

• Options, or

• A combination of these, with different underlying

commodities/prices.

Commodities derivatives are traded upon a Request for Quote

basis.

When SR-Bank trades in commodities derivatives with

Professional and Non-professional clients, SR-Bank will

function as the principle. SR-Bank will act as the Client’s

counterparty and execution venue for such instruments.

SR-Bank will try to set an adequate market price consisting of

the (bid/ask) price SR-Bank would achieve under applicable

market conditions with the supplement of our margin. In

our gross price, the margin will cover the bank’s expenses

related to market risk, counterparty risk, financing, capital

requirements, operational expenses, taxes and official fees,

marketplace turnover, clearing/clearing costs and the bank’s

earnings.

When pricing a commodities derivative, the price will be

based on SR-Bank’s own viewpoint about market level,

as well as forward curves, volatility etc., for the applicable

underlying commodities, and observable prices from other

market operators. For certain instruments and under certain

market conditions, available information may be limited or

non-existent regarding applicable market prices. In such

cases, SR-Bank reserves the right to refuse to set a price on the

Client’s request.

All quotes offered to the Client are indicative unless otherwise

explicitly presented in the quote.

Clients who trade in commodities derivatives interact with

SR-Bank in several ways. The Client can submit a price request

via telephone or via electronic channels. SR-Bank will normally

set a price, and trading is done when the Client and SR-Bank

agree on a price.

SR-Bank can receive orders in commodities derivatives. An

”order” means a request from a client to execute a transaction

with SR-Bank under terms specified by the client, including

orders with conditions that allow SR-Bank to exercise

discretion with regard to price, speed and amount of any

transaction with the Client.

When SR-Bank agrees to work with an order on behalf of

a client, SR-Bank will attempt to execute a transaction that

meets the parameters requested by the Client. Receiving an

order does not imply that an agreement has been entered into

between SR-Bank and the Client. An order will not signify a

transaction or another contract until SR-Bank confirms that

the Client’s order is executed, in whole or in part. It can also

mean that it will not be possible to execute the order if market

opportunities are not present.

SR-Bank will consider the market opportunities when

handling orders that would allow it to be executed within the

parameters specified – including price, speed and size. That

means these transactions will be entered into when the market

can meet the parameters specified in the order. SR-Bank will

exercise reasonable discretion when entering into transactions

based on a client’s order with regard to amount, execution

times, priorities and whether one should use internal or

external sources of liquidity.

Information on Client Classification

Information on Client Classification

21Information on Client Classification

1 ClassificationSpareBank 1 SR-Bank ASA (henceforth SR-Bank) is obligated

to classify all our clients in different categories depending

on their level of professionalism. According to legislation,

clients are classified into the following client categories:

Non-Professional clients, Professional clients or Qualified

counterparties.

The client is categorised according to a level of protection as

determined by law. This document provides an explanation

on the main features of investor protection for each client

category. These explanations are not exhaustive.

Legislation allows certain clients to change categories. Please

consult us about any such desire or request. SR-Banks would

like to emphasise that changing client category must be

approved by SR-Bank. Even if the conditions listed below

for reclassification are satisfied, SR-Bank is not obligated to

approve a client’s request.

2 Non-professional clients

2.1 Degree of investor protectionClients classified in this client group receive the highest degree

of investor protection. This implies that SR-Bank Markets is

obligated to adapt its services to the individual needs and

assumptions of this type of client to a greater extent than the

other client categories.

In addition to acting as a service provider to its clients,

SR-Bank is subject to general rules for good business conduct.

Before trading or advice take place, SR-Bank Markets will

assess whether a service/transaction, i.e. financial instruments,

is suitable for a client. Investment advice is given on the basis

of information provided by the Client that includes his or her

intentions for investment, financial position as well as experi-

ence and knowledge about the transactions themselves.

If the Client wishes to execute a transaction that SR-Bank does

not find suitable considering the Client’s level of knowledge

and experience, SR-Bank is obligated to advise against the

trade. The transaction can still be executed if the Client wishes

to do so, despite this advice. SR-Bank’s obligation to assess

whether a service/ transaction is suitable does not apply on

every occasion. Among other things, there are extensive

exceptions where online trading is concerned.

The status of Non-Professional clients also implies an

extensive right to receive information from SR-Bank. SR-Bank

is obligated to inform the Client about financial instruments

and risks associated with these, trading systems and market-

places that are used at SR-Bank, as well as prices and other

expenses for any transactions – so the Client is better able to

make an informed decision on his or her investment.

2.2 Allowing reclassificationNon-professional clients can submit a request to change client

category in writing to become a Professional Customer or a

Qualified Counterparty, under the assumption that the

conditions for such a change are fulfilled. Reclassification

implies a lower degree of investor protection.

2.2.1 From Non-professional to Professional client

1) Absolute requirements The Client must e.g. satisfy at least two of the following

criteria:

1 the Client has carried out transactions of a significant size

in the relevant market, on average 10 times each fiscal

quarter during the previous four fiscal quarters,

2 the size of the Client’s financial portfolio (cash reserves

and financial instruments) exceeds an amount in

Norwegian kroner above 500 000 euro,

3 the Client has worked within the financial sector for

a minimum of one year, in a position that requires

knowledge about relevant transactions and investment

services.

2) Procedures The Client shall inform SR-Bank in writing of its wish to be

categorised as a Professional client. The Client will be asked

to document that the requirements stated in Item 1 above

are met. Furthermore, the Client shall provide a separate

written document to declare that the client understands the

consequences of losing the protection as a consequence of

being classified as a Non-professional and which is primarily

covered by this information memo. Please contact SR-Bank for

more information.

SR-Bank shall carry out a dedicated evaluation of whether the

Client – based on the Client’s level of expertise, experience

and knowledge and the type of transactions that are planned

– is capable of making the decisions on investments and

understands the risks involved.

3 Professional clients

3.1 Degree of investor protectionClients classified as Professional clients are protected by

legislation to a lesser extent than Non-Professional clients.

Professional clients are considered in certain respects to be

capable of protecting their own interests, so services provided

are adapted to the professional client’s individual needs to a

lesser extent.

As a point of departure, the rules regarding good business

practices also apply to Professional clients. The scope of

SR-Bank’s obligations to such clients however is reduced.

Among other things, Professional clients are normally

expected to have sufficient knowledge to assess whether a

transaction is suitable or not. For investment advice, SR-Bank

will base its advice on the information provided by the Client

about the intentions of the investment and – as a starting

point – neither collect information about financial position

nor assess the Client’s knowledge and experience. SR-Bank

will not assess whether a transaction is suitable or not, and

SR-Bank thus has no obligation to dissuade a Professional

client from an investment, as is the case with Non-Professional

clients. Execution of transactions will thus be somewhat less

elaborated than for Non-professional clients. This can be

of significance to the speed of execution for an applicable

transaction. Another consequence would be that Professional

clients can gain access to a wider range of products.

Professional clients are also assumed to be capable of

assessing which information is necessary to make investment

decisions. This implies that Professional clients to a greater

22Information on Client Classification

extent than Non-professional clients can gather information

they consider necessary. Professional clients will however

receive reports about executed services and other important

information such as SR-Bank’s Guidelines for executing

orders and SR-Bank’s security test or right to retain financial

instruments or funds.

3.2 Allowing reclassificationProfessional clients can request to be classified as Non-

professional clients and thereby receive a higher degree of

investor protection. Professional clients can also request

reclassification as a Qualified counterparty and thereby receive

a lower degree of investor protection. Professional clients are

responsible for keeping SR-Bank informed about any changes

that would influence the client’s classification.

3.2.1 From Professional to Non-professional clientA Professional client must request a higher degree of

protection if the client does not feel qualified to make correct

risk assessments. This type of change of client classification

must be documented in a written agreement between

SR-Bank and the Client.

3.2.2 From Professional to Qualified counterpartyProfessional clients defined as professional clients in

appurtenant legislation can request to be reclassified as a

Qualified counterparty. An expressly written confirmation is

required from the Client, which consents to being categorised

as a Qualified counterparty

4 Qualified counterparty

4.1 Degree of investor protectionA qualified counterparty has the lowest degree of investor

protection.

Clients with a Qualified Counterparty status are as a point of

departure protected on equal terms as professional clients;

see Item 3. Investor protection is significantly reduced

however for this group, when SR-Bank Markets offers the

following investment services: receiving and relaying orders,

executing orders at a Client’s expense and selling financial

instruments at own expense. When performing such services

for Qualified Counterparties, SR-Bank Markets is not subject

to the provisions of the Norwegian Securities Trading Act

concerning good business conduct, best results (including

SR-Bank Markets’ guidelines for executing orders) and certain

rules regarding handling orders.

Where the requirements for evaluating suitability are

concerned, the rules that apply to Professional clients also

apply to Qualified counterparties.

The exception to the provision on good business conduct

involves e.g. that some of the rules about requirements for

information and reporting do not apply to this client category.

As a point of departure, this also applies to the rule that

SR-Bank shall ensure that a client’s interests are attended

to in the best manner possible. Qualified counterparties

are protected to a certain degree by specific provisions in

legislation that impose honesty, order and correct conduct by

securities investment firms regarding Qualified Counterparties.

4.2 Allowing reclassificationQualified counterparties can request to be classified as

Professional clients and thereby receive a higher degree of

investor protection.

4.2.1 From Qualified counterparty to Professional clientQualified counterparties can request reclassification as a

Professional client if they want to increase the degree of

investor protection and be covered by the rules for good

business conduct.

4.2.2 From Qualified counterparty to

Non-professional clientIf the clients who as a point of departure are classified as

qualified counterparties want a higher degree of investor

protection, they can request re-categorisation as a

Non-professional client. Item 3.2.1 above shall apply

correspondingly for such requests.

Information for clients about the Properties and risks related to financial instruments

Properties and risks related to financial instruments

Information for clients about

AS A CLIENT YOU NEED TO UNDERSTAND THAT:

• trading in financial instruments is done at your own risk

• you are required to read the General Business Terms and

Conditions before trading in financial instruments can begin,

and read any other relevant information carefully regarding

the properties and risks of applicable financial instruments

• you need to check the Contract Note immediately

and notify the enterprise of any errors

• you are solely responsible for monitoring the value changes

to the financial instruments in which you have positions

• you must evaluate your investments and make the

changes that you consider necessary to adapt these

to your investment strategy and risk profile

24Information for clients about the Properties and risks related to financial instruments

1 DefinitionsFinancial instruments. This is a catch-all term for assets and

obligations that are traded on the securities market, derivative

market and in part currency market and is further defined in

section 2-2 of the Norwegian Securities Trading Act.

Regulated market. A regulated market is a market for trading

financial instruments. A regulated market is licensed and sub-

ject to a number of rules and obligations. Norway has specific

laws to govern regulated markets (the Regulated Markets Act).

Stock exchange. A stock exchange is a regulated market

with a special license to operate as a stock exchange. Only

an exchange authorised to use the term stock exchange and

operate under its own name.

Multilateral Trading Facility (MTF). An MTF is not a regulated

market; it is a trading venue/marketplace for trading financial

instruments. A securities and investment firm must satisfy

objective requirements in order to participate on a Multilateral

Trading Facility. In Norway, a license is required to operate as

an MTF, pursuant to the Norwegian Securities Trading Act.

Systematic Internaliser (Sl). A securities and investment firm

that carries out extensive own-account trading in shares with

clients must register as an Sl for the financial instruments in

question. An Sl is obligated to offer binding bid and ask prices

and notify its clients of these.

Dark pool. A marketplace where participants can submit

orders that are not shown in the order book, but which

are automatically matched if another participant enters a

corresponding order. Such orders are often required to reach

a minimum amount and matching is done automatically at

mid-price, which means the average of best bid and ask prices

in the open order book. Some dark pools are open, allowing

investors to submit orders to the pool on their own.

Underlying assets / Underlying financial instrument(s). These

are the assets or financial instruments that a derivative gives

the parties the rights and obligations to buy or sell, or that the

parties have agreed to base the monetary settlement on.

Option. A contract that gives one party (the Holder) the

right but not the obligation to buy (Call Option) or sell (Put

Option) – for a limited period – an agreed volume of financial

instruments at a predetermined price from/to the other party.

Forward. A contract in which the buyer and seller agree to

transfer an agreed volume of financial instruments from the

seller to the buyer at an agreed price on an agreed date in the

future that is beyond the normal settlement period for the

underlying financial instrument covered by the contract.

Price swap. A contract linked to an agreed volume of financial

instruments, a swap price and settlement date, where no

delivery is made on the underlying financial instruments

but a monetary settlement is made based on the difference

between the swap price and the market price on expiry date.

Contract For Difference (CFD). A contract where both the

buyer and seller are obligated to a monetary settlement of the

price developments for an agreed volume of one or a group

of financial instruments, indices, currencies etc. The buyer of a

CFD profits when price rises and loses if the price falls. A CFD

has no pre-determined expiry date, but the buyer may close

his position at any time.

Credit Default Swap (CDS). A contract in which the buyer is

insured against the issuer of a debt obligation who is not able

to settle the debt, in whole or part, on settlement date.

Index option/index forward. A contract where the underlying

value is an index value, not a security. This type of contract is

not settled by the delivery of financial instruments, but rather

by calculating the contract’s monetary value.

Short selling. Selling financial instruments one does not own,

but which are borrowed to execute settlement on time. The

financial instruments are bought at a later date and returned to

the lender. Short selling where the seller has not borrowed the

underlying financial instruments is called a naked or

uncovered short sale. Uncovered short selling is illegal in

Norway.

Securities swap are a combination of short and long positions

in (at least) two financial instruments, in which the change in

the price of one of the instruments (long position) is netted

against the change in the price of the other instrument (short

position).

Exercising an option means demanding a trade on the

underlying financial instrument based on an options contract.

The Holder will normally require partial exercise of the option

while the option is maintained on the remaining part of the

option.

Expiry date. The date one must either demand to exercise

an option or the options lapses as worthless. The expiry date

for a forward or future contract is the date the contract is

changed into a trade with an ordinary settlement deadline for

the delivery of an underlying financial instrument in return for

payment of the purchase amount.

Settlement day. The date when a forward/futures contract,

option or price swap is finally settled by transferring the

underlying financial instruments in return for an agreed

purchase amount, or the monetary settlement falling due for

payment. Settlement day is normally three stock exchange

days after the expiry date.

American option. An option where the Holder can demand

to exercise, in whole or in part, at any time prior to the agreed

time on the expiry date.

European option. An option that can only be exercised on

expiry date.

Spot price/Spot rate. The price at which a security is sold

at, for normal delivery on the second stock exchange day

following trading day.

Strike price/Strike rate. The agreed price of exercising an

option.

Forward/futures price/rate. The agreed price to settle a

forward/futures contract.

Swap price/Swap rate. The agreed price(s) or rate(s) that will

be used to settle the individual elements of a swap.

Option premium. The amount the Holder has paid to the

Issuer to purchase an option.

Hedging units/Hedge. If the seller of an option/forward/

futures contract or swap does not want a price risk, he or she

can buy/short sell a quantity of the underlying securities so

any value increase on the sold derivatives is offset against a

corresponding value increase of the underlying securities. The

securities that safeguard the issuer against price risk in this

manner are often called hedging units or hedges.

NIBOR interest. An interest rate calculated by the Oslo Stock

Exchange based on the rules established by Finance Norway,

which set the market interest rates for unsecured loans in


Norwegian kroner. Interest is set daily for various terms of

maturity.

Interest rate risk. The risk that the financial instrument a client

invests in will fall in value due to changes in the market interest

rate.

Credit risk. The risk of an issuer or counterparty failing to

make payments.

Clearing. Functioning as the counterparty between the parties

to a derivatives contracts or share trades that guarantees that

the parties settle their contracts/trades.

2 Trading in Financial InstrumentsTrading in financial instruments, such as shares, equity

certificates, bonds, certificates, derivatives or other rights

and obligations intended for trading on the securities market,

which normally takes place in an organized manner via a

trading system.

Trading is done through investment firms that use the trading

system. As a client, you will normally contact an investment

firm to buy or sell financial instruments. There are also

investment firms that forward/communicate orders to other

investment firms who use the trading system. Trading can also

be done internally within an investment firm, such as when the

enterprise acts as a counterparty for a trade or when trading

against another firm’s clients (internal trading).

On a regulated market, financial instruments can be admitted for listing. That means the instruments must be approved for

trading and the marketplace verifies that the company that

issued the financial instruments satisfies specific requirements

for admittance to listing. On the Oslo Stock Exchange shares,

equity certificates, bonds, certificates, some fund units and

derivatives linked to financial instruments can be listed.

Trading in listed financial instruments can be done on

regulated markets, via an MTF in a dark pool or through an Sl.

Price information about the financial instruments being traded

on a regulated market is published regularly on the market-

place’s website, in newspapers and/or through other media.

2.1 Share tradingShares in a limited company entitle the owner to a percentage

of the company’s share capital. The share entitles the owner

to a percentage of the dividends or other disbursements

from the company. Shares also provide a right to vote at the

general meeting, which is the highest decision-making body

of a company. The more shares an owner has, the larger

the owner’s percentage of capital, dividend and votes one

will normally have as a shareholder. Voting rights can vary

depending on which category of shares one possesses. There

are two types of limited companies in Norway, public limited companies (ASA) and private limited companies (AS).

Only shares issued by a public limited company (ASA) or

corresponding foreign entity can be listed on a stock

exchange in Norway.

There are also requirements set for company size, the

company’s business history and ownership distribution as

well as publication of the company’s financial position and

activities.

There are often more lenient rules regarding listing on a

regulated market which is not a stock exchange.

Norway currently has two regulated markets for trading in

shares; the Oslo Stock Exchange and Oslo Axess. Only the

Oslo Stock Exchange is licensed as a stock exchange (www.oslobors.no). Oslo Axess (www.osloaxess.no) is subject

to the same rules that apply to the Oslo Stock Exchange for all

intents and purposes with regard to follow-up, monitoring and

sanctioning of rules or laws that are violated

Shares can be listed on several regulated markets, so-called

secondary listings. Several Norwegian companies have

secondary listings on foreign regulated markets.

Trading in Norwegian securities also takes place on a number

of MTFs.

Trading in shares that are not listed on a regulated market

is done on a so-called OTC market. In this market, trading

is usually done based on information about prices and

interests that brokerage firms provide one another. In Norway,

brokerage firms can declare interest in buying or selling in a

trading support system run by NOTC AS, a company owned

by the Norwegian Securities Dealers Association and the Oslo

Stock Exchange. The brokerage firms enter into agreements to

buy/sell over the telephone. The companies registered on this

list are required to publish price information of significance to

NOTC’s trading support system. For more information about

the NOTC List, please see www.vpff.no.

If a share is not listed on a regulated market nor traded on

an MTF or does not have buy and sales interests published

in a trading support system, the sale will normally occur by

having the brokerage firm try to assist a client by contacting

clients who might be interested in becoming a counterparty.

Investments in this type of shares is associated with significant

liquidity risk and significant uncertainty related to the setting

of prices.

Trading on a regulated market or another trading systems

comprises a secondary market for shares and equity

certificates that a company has already issued. In addition,

the NOTC List functions as a secondary market for shares. If

the secondary market functions well, which is to say it is easy

to find buyers and sellers and the bid prices from buyers and

sellers are listed as trading occurs, and that there are final rates

on executed trading, the companies benefit from the fact

that it is easier to issue new shares and acquire more capital

for the company’s activities. The primary market is where

newly issued shares, equity certificates and bonds are traded/

subscribed.

Shares registered on a regulated market or another trading

system are normally divided into various groups depending on

the company’s market value or liquidity. These groups, often

called lists or segments, are usually published on the trading

system’s website, in newspapers and through other media.

The companies listed on the Oslo Stock Exchange are divided

into three different segments depending on the company’s

liquidity; respectively OBX, OB Match and OB Standard.

Daily key prices at which shares are traded, such as ”highest”,

”lowest” and ”latest”, as well as information on trading volume,

are published in financial news media e.g. and on different

online trading websites run by the marketplaces, investment

firms and information suppliers for the financing sector. The

relevance of this price information may vary depending on the

manner in which it is published.

Shares are distributed into different classes, usually A and B

shares, which are normally of significance for exercising voting

rights at the company’s general meeting. Only a few of the

Norwegian companies that are listed on the stock exchange


have different classes of shares. Class A shares normally allow

one vote, while Class B shares normally allow a restricted or

no right to vote. The differences in voting rights may e.g. be

due to ownership distribution to protect the original founders’

and owners’ influence over a company by giving them

stronger voting rights.

A share’s nominal value is the value that each share represents

in the company’s share capital. The total of all shares in the

company is multiplied by the nominal value of each share

which amounts to the company’s share capital. Occasionally,

a company will change the nominal value i.a. because the

market price of a share has risen significantly. By dividing up

each share into several shares, a so-called split, the nominal

value and price of the share are reduced. After a split, the

shareholder’s capital remains the same but is divided into a

greater number of shares, of which each has a lower nominal

value and price.

The opposite is also true. One can splice (reverse split)

if the price falls significantly. Two or more shares are thus

consolidated into one share. The shareholder still owns the

same amount of capital after a splice, but has fewer shares

which have a higher nominal and a higher price.

Exchange introduction or floatation is used as a concept for

shares in a limited company when they are listed and admitted

for trading on a regulated market. The general public may

be invited to subscribe (buy) shares in the company. This

is often motivated by the owners of an existing company

wanting more access to the capital market and to improve the

opportunity to sell the company’s shares.

Acquisition usually involves one or more investors offering

to buy the shares from the shareholders in a company under

certain conditions. If the buyer gets 90 % or more of share

capital and voting rights in a company, the buyer can demand

a compulsory purchase (enforced sale) of the remaining

shares from the remaining owners who did not accept the

acquisition offer.

A mandatory bid obligation occurs when a shareholder

becomes the dominant owner with enough votes to take

control of a company. The Norwegian Securities Trading Act

defines this as occurring when a shareholder becomes the

owner of, or in some other way controls, more than one third

of the shares in the company. A mandatory bid obligation

occurs again when the dominating owner controls more than

40 % and 50 % of the shares. Anyone who exceeds that limit

and fails to reduce the shareholding below that limit is

obligated to offer an unconditional offer to all the other

shareholders in the company to purchase their shares

for the highest price the bidders paid in a given period.

Share issues raise new capital for companies. More capital

is required if a limited company wants to expand operations.

Companies acquire new capital by offering new shares via

share issues. The main rule for this, as stated in the Companies

Act, is that the existing shareholders have a pre-preemptive

right to subscribe new share issue.

The number of shares that can be subscribed is determined

in relation to how many shares an owner previously owned,

and the company issues subscription rights to existing

shareholders. The subscriber must pay a price (issue price)

for the newly issued shares. This price is normally lower than

the market price. Subscription rights therefore have a certain

market value, and after these are split from the shares, the

price of the shares usually drops. The shareholders, who have

subscription rights but who do not subscribe, can during the

subscription period (which for a pre-preemptive issuance must

be at least two weeks) can sell their subscription rights on the

marketplace where the shares are listed. After the subscription

period expires and the new shares are distributed, the subs-

cription rights expire and then become useless and worthless.

A limited company can also execute a so-called private placement, which is an issuance that is only directed at a

limited group of investors. To execute a private placement,

the shareholders at the general meeting must have decided

to waive the pre-preemptive right to the new shares. Private

placements offer occur according to an authorisation given

to the company’s board at the general meeting. A private

placement, the existing shareholders’ percentage of the votes

and share capital in the company are diluted.

2.2 Share-like instrumentsEquity certificates, convertible bonds and depositary receipts

can have similar properties as shares. Trading in these

instruments is normally done on a regulated market, but OTC

trading also occurs for this type of financial instruments.

Equity certificates are very similar to shares. The difference

is primarily related to ownership of the company’s assets and

influence over the issuer’s corporate bodies. There are also

some restrictions as to the distribution of dividends. The listed

equity certificates in Norway are issued by savings banks. More

information about equity certificates is available online: www.

egenkapitalbevis.no.

Convertible bonds are interest-bearing securities that, within

a certain period of time, can be exchanged for newly-issued

shares at an agreed price. A convertible bond is both an

interest rate instrument and a call option. When the

conversion rate is significantly higher than the share’s market

price, a convertible bond is usually priced as any other interest

rate instrument. In the opposite case, the price of the

convertible bond will reflect both the option value and the

interest element. In both cases, the price is expressed as a

percentage of the nominal value of the convertible bond.

Depositary receipts are financial instruments that give the

Holder all the rights of an owner to an underlying financial

instrument that is registered with a custodian. A depositary

receipt is normally traded in the same way as the underlying

financial instrument.

2.3 Interest-bearing financial instrumentsAn interest-bearing financial instrument is a claim against the

issuer of a loan that has not yet fallen due. Yield is normally

paid in the form of interest (coupon). There are different kinds

of interest-bearing instruments depending on who the issuer

is, the security that the issuer provided for the loan, the term of

maturity and how interest is paid.

Instruments with a term of maturity of less than or equal to

one year are often called certificates, while instruments with

longer maturity periods are called bonds.

Many interest-bearing instruments are assessed by inde-

pendent analysis firms, so-called credit rating agencies. An

assessment of this kind is called a rating, and expressed as the

risk that the debt is not paid/defaulted.

In addition to the rating done by the credit rating agencies,

several Norwegian brokerage firms have started to use

so-called shadow ratings. That means the brokerage firm

assesses the creditworthiness of the issuer and then gives the


security a rating value. The method commonly used is similar

to the methods used by the other rating agencies.

The interest (coupon) is normally paid either at a fixed or

floating interest rate. The interest on a fixed-interest loan

applies to the entire maturity period for the loan. The interest

on a floating-interest rate loan is normally set (fixed) four times

a year for three months at a time, based on the NIBOR interest

rate and an agreed interest spread. The interest-spread is fixed

for the entire maturity period of the loan unless one agrees

that certain incidents would trigger a change. It is not unusual

for it to be agreed that the interest spread for loans that are

not rated is to change if the loan achieves a predetermined

satisfactory rating.

For certain types of loans, no interest is paid except for a

nominal amount on the instalment due date for the loan

(zero-coupons). The purchase of zero-coupon securities takes

place at a considerable discount, which makes the effective

interest rate the same as for securities with a regular coupon

rate. One example of this, is all debts the Norwegian state

issues in Treasury bills (government certificates) are

zero-coupon instruments.

The interest a borrower must pay depends on the market’s

assessment of the risk of the debt being defaulted. We

commonly classify loans into two main groups: High Yield and

Investment Grade. Interest-bearing securities that are classified

lower than bbb or similar by rating agencies are considered

a significant default risk and therefore classified as high yield

securities.

A number of bonds are listed on the stock exchange and

thus trading on these financial instruments is reported on

the same terms as shares listed on a regulated market. The

Oslo Stock Exchange also offers an alternative marketplace

for trading in bonds and certificates that are not listed on the

stock exchange – The Alternative Bond Market (ABM). ABM is

a separate marketplace that is not governed by or subject to

licensing pursuant to the Regulated Markets Act, but which is

administrated and organized by the Oslo Stock Exchange.

Bonds are normally traded differently than shares. In practical

terms, the interest and currency market are considered

quote-driven or price-driven market, in contrast to stock

markets which are order-driven.

2.4 Derivative instrumentsShare options give the Holder the right to buy or sell a share.

Acquired (bought) purchase options (call options) give the

owner the right to buy previously issued shares within a certain

period of time at a pre-determined price (strike). Acquired

(bought) sell options (put options) give the owner the right to

sell shares within a certain period of time at a pre-determined

price (strike). There will always be an issued (sold) option that

counters any acquired option.

Index options provide a gain or loss linked to in the value of

the underlying index and are settled in cash payments on the

difference between strike price and market price when this

difference is an advantage to the buyer.

The price of options (premium/price) normally follows chan-

ges in the price of the option’s underlying shares or index.

Call options with a longer term of maturity than standardised

call/purchase options are called warrants. Warrants can be

used to buy underlying shares or provide cash settlement if a

gain is achieved as a result of the price of the underlying share

being higher than the agreed future purchase price/ selling

price. Many warrants that are traded on the stock exchange

are issued by investment firms or banks as part of their

derivatives operations. Warrants can also be issued by the

company itself. Such warrants are exercised by the company

issuing new shares or selling the shares it owns.

Derivative instruments are a form of contract that can be

traded on the capital market for financial instruments. The

derivative instrument is related to an underlying financial

instrument or to an underlying index value.

Derivatives can also have other types of underlying value,

such as a currency or a commodity, or indices for these. Such

derivatives are called currency derivatives or commodities

derivatives (English commodities) and are by nature similar

to derivatives with underlying financial instruments. The

following explanations will mainly focus on derivatives with

financial instruments as their underlying value.

Derivative instruments can be used for many different

purposes

• to protect against unfavourable price developments in

the financial instruments one owns.

• to achieve gain when market prices change without

having to own or short sell the underlying financial

instrument.

• to achieve a gain or yield with a smaller capital invest-

ment than that required to carry out a corresponding

direct trade in the underlying financial instrument.

• agree to sell securities with settlements in the future.

The price of a derivative will mainly swing in the same

direction as the underlying financial instrument. Investments

in derivatives will therefore usually be based on the same

assessments as investments in the underlying financial

instrument, while investments in derivatives will have another

risk profile than a direct investment.

Investors in the derivatives market can also speculate on the

changes to secondary parameters that influence the price of

the derivative such as changes in interest rates and market

volatility.

In Norway, standards derivatives are traded on the Oslo Stock

Exchange. Derivatives with Norwegian shares and indices are

also traded on other marketplaces, such as NASDAQ OMX.

Trading in unlisted derivatives takes place on the so-called

OTC market.

In this market, trading is usually done based on information

about prices and interests that brokerage firms provide one

another. It is also common for the brokerage houses to carry

out own-trading in OTC derivatives and offer prices and act as

the counterparties for their clients.

3 Risks of trading in financial instruments

3.1 General information about riskFinancial instruments normally provide a return (yield) in

the form of dividends (shares and fund unit) or interest (interest-bearing instruments). In addition, one can gain or

lose if the price of the instrument rises or falls. The total yield

is the sum of dividends/interest and change in the price of the

instrument.


Of course, investors seek an overall yield that is positive, which

means it produces a gain/profit. But there is also a risk that

the total yield will be negative, meaning a loss on an invest-

ment. The risk of loss varies between different instruments.

In an investment context, the word risk is often used to express

both the risk of loss and the opportunity for a gain. In our

description below, we will only use the word risk to describe

the risk of loss.

There are different ways to invest in financial instruments

to reduce this risk. It is usually less risky to invest in several

different financial instruments than one or a few instruments.

These instruments should have characteristics that spread the risk so as not to trigger all the risks at the same time. One

can also invest in negative positions in instruments (short

positions). Such investments will increase in value when the

share price falls.

The client bears the risk of an investment falling in value and

must therefore read and try to understand the conditions,

prospects etc. that apply to trading in such instruments and

about the individual risks and properties of each instrument.

The client must also monitor his or her investments in such

instruments on a regular basis. This is true even if the client

was given advice on an investment. Information for use in

monitoring prices and thus changes in the value of the client’s

own investments may be obtained from lists made public

through mass media, such as newspapers, internet and in

some cases from the investment firm itself.

The client must continually assess the risk of his or her invest-

ments. There are many different factors that can influence the

value of financial instruments. The client should therefore try

to understand the factors that influence the different instru-

ments and have a certain awareness of which elements can

influence his or her investments. The client should assess his

or her investment portfolio and, if necessary, make changes to

adapt this to the client’s investment strategy and risk profile.

3.2 Shares and share-related instrumentsThe price of a share is generally influenced by a company’s prospects. The share price can rise and fall depending on the

investors’ analyses and assessments of a company’s

opportunities for future profits. Future external developments

in economic cycles, technical developments, legislation,

competition etc. may determine the demand for a company’s

products or services and therefore also the fundamental

significance of price developments on a company’s shares.

Prices can also be influenced by general market risk – the risk

of market prices dropping on the whole or on certain parts of

the market where a client has made his investments. The price

developments of financial instruments listed on foreign regu-

lated markets can influence price developments in Norway.

Prices are also influenced by developments in the sector in

which a company operates, sector-specific risk – the risk that

a specific sector does poorer than anticipated or is hit by a

negative incident that leads to a fall in the value of the financial

instruments related to the companies in the applicable sector.

The price of a company’s shares within this same sector can

often be influenced by changes in the share prices of other

companies within the same sector, irrespective of the country

to which the companies belong.

There are other factors associated directly with the company

itself, such as changes in the company’s management and

organization, interruption of production etc. which can

influence a company’s future ability to create profits, in the

short term and in the long term. This is called company- specific risk – the risk that a specific company does poorer

than anticipated or is hit by a negative event or incident that

leads to a fall in the value of the financial instruments related

to the company.

Framework conditions for the industry or business, on a

national and international level, can also influence share

prices. Changes to national and foreign taxation, duties and

public fees can influence cost levels that influence a

company’s ability to compete. International agreements

between countries regarding customs charges upon import

and export of goods and services will influence competition

between companies and thus share prices. Violent incidents

such as catastrophes, terrorism and war can result in a fall in

share prices on the stock exchanges around the world.

The general interest rate level (market interest rate) will also

play a decisive role in price performance. If the market interest

rate rises, interest on an investment in interest-bearing finan-

cial instruments can also rise, so the operators are forced to

move parts of their investments from the stock market to the

interest rate market, so demand for shares falls. The prices of

shares normally fall when demand falls. Share prices are also

influenced negatively by an increase in the interest payable

on the company’s debts, because this worsens the company’s

future financial results.

Changes in foreign exchange rates can also influence the

share price. Companies that have revenues and costs in

different currencies are especially vulnerable to such

fluctuations. This applies to several Norwegian export trades.

When investing in foreign markets, fluctuations in currencies

and exchange rates will influence the results from fluctuations

on buying and selling amounts in Norwegian kroner.

In worst case, a company can have such poor results that

bank ruptcy is the final solution. Shareholders are the last

priority when the bankruptcy estate is dissolved and creditors

paid. The company must first pay all its debts. This usually

means there are only limited assets remaining after debts

are paid, so bankruptcy normally makes a company’s share

worthless.

Operators on financial markets have different assumptions

about how share prices develop and how the different factors

influence price developments, or they have different

expectations to the development of factors that can influence

the changes. This is why there will always be buyers and

sellers. When many investors share the same opinion about

price developments, they will either purchase – which triggers

pressure to buy – or sell, which triggers pressure to sell.

Pressure to buy raises prices, and pressure to sell lowers prices.

Turnover, meaning the quantity of a specific share that is

traded, will also influence share price. High turnover reduces

the difference (also called spread) between the price the

buyers are willing to pay (bid price) and the price the seller

demands (ask price). A share with a high turnover, where

large amounts can be traded without influencing any major

influence on price, has good liquidity and therefore is easy

to buy and sell. A company that participates in a reference

(benchmark) index used by a regulated market normally has

high liquidity.

3.3 Interest-bearing instrumentsThe risk associated with interest-bearing instruments consists

partly of the price changes that may occur during the term of

maturity due to changes in market interest rates, and partly


due to the market’s assessment of the risk that the issuer will

not be able to repay the loan. Loans with satisfactory security

are considered less risky than loans without security.

Loans where the credit risk is considered especially high are

characterised by the issuer having to pay an especially high

interest rate. These interest-bearing securities are often called

High-yield bonds.

In the event of bankruptcy or debt settlement, the owner

of an interest-bearing instrument risks losing all or parts of

his investment. In the event of bankruptcy, all debts must be

repaid before shareholders can receive anything, so in general

terms one can say that the risk of loss on interest-bearing

instruments is lower than for shares.

Market interest rate is determined on a daily basis for

instruments with short maturity periods (less than one year)

such as certificates and for instruments with longer maturity

periods such as bonds. This takes place in the money market

and bond market. Market interest rates are influenced by

analyses and assessments done by Norges Bank (Central Bank

of Norway) and other major institutional market operators

with regard to developments to economic factors such as

inflation, the general economic situation and interest rate

developments in other countries in the short and long term.

If the market interest rate goes up, the price of interest-bearing

financial instruments will fall since yield on the instruments

relative to the market interest rate was less favourable.

Conversely, the price of already issued instruments increases

when the market interest rate declines.

Loans issued by the Norwegian state, the county

municipalities and the municipality (or guarantees from such

organizations) are considered nearly risk-free with regard to

redemption at the predetermined value on their due date.

3.4 General information about the risks of trading in derivative instruments

Trading in derivative instruments is associated with special

risks in addition to the risks on the underlying financial

instrument. The client bears this risk and must try to

understand how derivatives work, as well as the conditions

(general conditions, prospects etc.) that apply to trading in

such instruments. The client must also monitor his or her

placements (positions) in such instruments on a regular basis.

Monitoring information may be obtained from lists made

available online and in the mass media and from the client’s

investment firm.

One can describe trading in derivative instruments as trading

in, or a transfer of risk. For example, a party that expects

prices in the market to fall can buy put options that increase

in value if the market drops. To avoid or reduce the risk of

falling share prices, a buyer will pay a premium, meaning

what the option costs. Trading in derivatives is in many cases

not recommended for clients with little or no experience in

financial instrument trading because derivative trading often

requires specialised knowledge. The structure of a derivative

instrument means that developments in the price of the

underlying asset affect the price of the derivative instrument.

This price effect is often stronger in relation to the investment

than the change in the value of the underlying asset. This price

effect is therefore called the gearing effect and can lead to

greater gain on invested capital than if a placement had been

done directly in the underlying asset. On the other hand, the

gearing effect can lead to greater loss on a derivative instru-

ment compared with the change in the value of the underlying

asset. One must therefore monitor price developments in a

derivative instrument and on its underlying asset very closely.

The client should, for his own sake, be prepared to act quickly,

often that same day, if the investment in the derivative

instrument starts to develop negatively.

A party that incurs an obligation by issuing an option or

signing a forward/futures contract is required to provide

some form of collateral/security for the position from the

very start. The security requirement changes as the price of

the underlying asset rises or falls so the value of the derivative

instrument increases or falls. Supplemental security/collateral

may therefore be required. The gearing effect shall also apply

to the security requirement, which can change radically and

rapidly. If the client fails to provide adequate security, the

clearing organization or investment firm has the right to

terminate the placement (close the position) without the

client’s consent in order to reduce its risk. A client should thus

monitor price developments and the security requirement

closely to avoid an involuntary closure of his position.

The terms of maturity on derivative instruments can vary from

very short to several years. The relative price change is often

greater on instruments with short (remaining) maturity

periods. The price on a held option generally falls more

rapidly as one reaches the end of the maturity period as the

time value reaches is reduced. The client should therefore

also monitor the maturity period on derivatives instruments

carefully.

At times, derivative trading will require a client to provide

collateral/security (margin requirement), such as by selling

options, purchasing and selling futures and forwards and swap

agreements. The margin requirement will vary depending on

such things as the underlying security, the type of instrument,

the instrument’s maturity period and volatility. The margin

requirement can also vary significantly from day to day. To

protect his interests, the client should be ready to act - i.e.

offering further collateral/security (to satisfy any higher

margin requirement) or to terminate placements in derivative

contracts (close his positions) by buying or selling (opposite)

contracts.

3.5 Risks involved in different types of derivative instruments

The main types of derivative instruments are options, forward/

futures and swap contracts.

3.5.1 OptionsAn option is a contract that involves one party (the issuer of

an option contract) agreeing to buy (put option) or sell (call

option) the underlying financial instrument of the other party

(holder of the contract) at a price agreed in advance (strike) if

the holder requires it. The date when the holder can exercise

this right depends on which type of option we are talking

about. For an American option the right can be exercised at

any time during the term of maturity. For a European option the right can only be exercised on expiry date. The holder

pays a premium to the issuer for the right to the contract.

The price of the option normally follows the price of the

underlying financial instrument. The main elements of the

price of an option are the difference between the market value

of the underlying financial instrument and the agreed strike

and a time value, which is an expression of a possible future

fluctuation in the value of the underlying financial instrument.

The time value declines as the remaining life of the option is


reduced, so that the price of a call option may fall even if the

value of the underlying financial instrument has risen.

The investor must look at all the price elements when

assessing whether he shall terminate a derivative position or

continue to maintain it.

3.5.2 Call optionsWhen buying a call option, one has the right to buy the

underlying financial instrument at a future point in time at

a predetermined price. When one buys a call option, one

pays an option premium as well as the costs of selling and

administrative fees for the option contract.

The maximum amount the holder of a call option can lose is

limited to the option premium and the costs paid. The maxi-

mum loss occurs when the price of the underlying financial

instrument remains lower or equal to the agreed strike.

The potential gain is, in theory, unlimited. When exercising

the option, the gain is the value of the underlying financial

instrument less the strike price and the option premium,

including costs.

When issuing/selling a call option, one is obligated to

sell (if the holder demands to buy) the underlying financial

instruments at a future point in time at a predetermined price.

When one sells a call option, one receives an option premium

less the costs of selling and administrative fees for the option

contract.

The potential gain on an issuance is limited to the net option

premium. If the strike remains higher or equal to the market

price on the underlying financial instrument until expiry date,

the holder will normally not demand to buy the securities, so

one can take the entire net option premium as profit.

The issuer of a call option has an unlimited potential for loss

if the price rises. If the holder demands to exercise the option,

the issuer must buy the financial instruments on the market

at market price. The loss is calculated as the market value of

the underlying financial instruments less the strike and option

premium.

If one has protected oneself by owning the underlying

financial instruments (a covered call), there will be no payable

loss if the price rises, but one will lose the value increase

beyond the strike plus the net option premium. By binding the

underlying financial instruments, one exposes oneself to the

risk of loss if the price falls, and loss occurs when the value

reduction is greater than the option premium. If one sells the

underlying asset, one is then exposed to the risk if the price

rises again. The issuer of covered calls often tries to control

the risk of a falling price by selling some of the underlying

assets.

3.5.3 Put optionsWhen selling a put (sell) option, one has the right to sell the

underlying financial instrument at a future point in time at

a predetermined price. When one buys a put option, one

pays an option premium as well as the costs of selling and

administrative fees for the option contract.

The maximum amount the holder of a sales option can lose is

limited to the option premium and the costs paid. The maxi-

mum loss occurs when the market value of the underlying

financial instruments remains higher or equal to the strike.

The potential gain is limited to the strike less the option

premium, including costs. The gain is the strike price less the

value of the underlying financial instrument on the strike date

and the option premium, including costs.

When issuing/selling a put option, one is obligated to

buy (if the holder demands to sell) the underlying financial

instruments at a future point in time at a predetermined price.

When one sells a put option, one receives an option premium

less the costs of selling and administrative fees for the option

contract.

The potential gain on an issuance is limited to the net option

premium. If the value of the underlying financial instrument

remains higher than or equal to the strike price, the holder will

not normally demand to be allowed to sell the securities and

the issuer can take the entire net option premium as profit.

If the price falls, loss occurs when the value of the underlying

financial instruments is lower than the strike price less the net

option premium. The maximum loss is limited to the strike

price less the net option premium.

3.5.4 Forward/futuresA forward/futures contract involves the parties entering

a mutually binding agreement to buy or sell an underlying

financial instrument at a predetermined price with delivery or

another performance of contract on a further agreed date.

For forward dealings, no option premium is paid but the

agreed futures price will normally be stipulated to be the spot

price (the current market price) on the underlying financial

instrument plus the interest cost until the forward’s settlement

day. In addition, one must pay the costs of selling and

administrative fees for the forward contract.

For trading in forwards, the buyer accepts the price risk on the

underlying financial instrument in its entirety. If the price falls,

loss occurs which is equal to the difference between the value

of the underlying financial instrument and the forward price.

If the price increases, a corresponding gain occurs, equal to

the difference between the value of the underlying financial

instrument and the forward price. In addition to the price risk,

the buyer also has a credit risk in that the seller delivers the

agreed financial instruments on settlement day.

A seller who owns the underlying financial instruments has

to pay an amount relating to developments in the price of the

underlying financial instrument but loses out on the increase

in value in excess of the agreed forward price. The seller has

a credit risk because the buyer being able to settle the agreed

amount on the settlement day.

If the seller does not own the underlying financial

instruments, he has in principle an unlimited loss potential

if the price rises. The loss is calculated as the value of the

underlying financial instruments less the agreed forward price.

Correspondingly, the seller will have a potential gain if the

price falls, which is calculated as the value of the forward price

less the value of the underlying financial instruments. The

seller also has a credit risk because the buyer being able to

settle the agreed amount on the settlement day.

A forward/futures contract is a common designation

for instruments with different clearing and settlement

mechanisms, but with the same risk profile. Forward/futures

contracts to be settled as physical delivery of the underlying

financial instrument are called forwards, while contracts

settled on settlement day as a settlement in cash are called

futures contracts.

The provision of security for forwards/futures shall protect

the investor against future price fluctuations. Traditionally, the


middleman or settlement agent for a forward/futures contract

does not offer any security, he will only demand collateral

from his clients, but many investors are now demanding

mutual provisions of security.

For futures, it is common to also have collateral/security

against future fluctuations and also do settlement on a daily

basis, based on the price development as of the previous stock

market day fluctuations.

3.5.5 Contract For Difference (CFD).Standardised futures with specific shares or indices as the

underlying instrument are often sold today under the name

CFD. The seller of a CFD often requires a low security margin

so one can achieve broad market exposure using little money.

Contract for Difference involves higher risk. It is possible to

lose more than the original investment. Prices can move

rapidly in the opposite direction of what one expected,

and loss can lead to further requirements for a margin

contribution. Under certain market conditions, it can be

difficult or impossible to close a position. This may occur, for

example, when the price of an underlying instrument rises

or falls so quickly that trading in the underlying instrument is

restricted or closed.

The risk involved in such low margins is also that the issuer can

immediately, including within one day, close a position if the

value of the collateral falls below the margin requirement.

The client will often have a very short period of time in which

to add more collateral, and rapid fluctuations can force the

issuer (based on the underlying agreement) to close a position

in conflict with the client’s wishes.

The value of CFD investments with underlying instruments

listed in foreign currencies can vary, also due to changes in

foreign exchange rates.

CFDs are not for everyone. The client must ensure that

he completely understands the risks involved and consult

independent advisors if necessary.

3.5.6 Swap contractsA swap contract involves the parties agreeing to make

payments to one another on a regular basis, e.g. based on a

fixed or floating rate of interest (interest swap) or at a certain

point in time to exchange (swap) an asset with each other,

such as different kinds of currencies (currency swap).

3.6 Standardised and non-standardised derivative instruments

Derivative instruments are traded as standardised and

non-standardised.

Trading in standardised derivative instruments is done on

the regulated markets and follow agreements and conditions

which are standardised by a stock exchange or a clearing

organization. On the Norwegian derivatives market, the Oslo

Stock Exchange offers trading in standardised options and

forward/futures. The following regulated markets in Norway

offer trading in standardised derivative instruments:

• Oslo Børs ASA - trading in standardised

options and forward/futures.

Trading on the Oslo Stock Exchange is cleared by

SIX x-clear and London Clearing House (LCH).

• NASDAQ OMX OSLO ASA - carries out trading and

clearing of commodities derivatives, including financial

power contracts and freight derivatives.

• Fish Pool ASA - trading in salmon contracts.

Trading on Fish Pool ASA is cleared by NASDAQ OMX.

Trading in foreign standardised derivative instruments

normally follows the rules and conditions set by the country

where the stock exchange trading and clearing are organized.

It is important to note that these foreign rules and conditions

are not necessarily the same as the rules that apply in Norway.

Some investment firms offer own kinds of derivative

instruments which are not traded on regulated markets.

These derivative instruments are designated non-standardised

derivative instruments (OTC derivatives). A party wishing to

trade in these kinds of derivative instruments should read the

agreements and conditions for the trading in these derivatives

carefully.

3.7 ClearingClearing of derivatives is done by clearing institutions that

act as the counterparty between the investment firm that

represent the buyer and the seller of derivative contracts

and guarantee that the investment firm settles the contract.

The clearing institution acts as the seller in relation to the

buying investment firm and as the buyer in relation to the

selling investment firm. In the standardised derivative market,

derivative contracts are also cleared by a licensed central

counterparty (CCP). In the OTC market, investment firms will

often take this role.

At present, CCPs provide no direct protection to end-

investors. Investors in CCP-cleared trading and OTC-trading

have a risk, in that investment firms may not fulfil their

contracts.

Investors who want to avoid such risks can sign an agreement

to segregate an account at the clearing house. This solution

requires a separate system of agreements and will cost more,

but it is best suited to large institutional investors.

4 Securities fundsA securities fund is a portfolio of different financial instruments

such as shares and/or bonds. The fund is owned by everyone

who has savings in the fund (unit holder), and managed by an

investment management company. There are different kinds

of securities funds with different investment strategies and risk

profiles.

Unit holders are issued the number of units in the fund equal

to their share of the invested capital in relation to the fund’s

total capital.

The units can be issued (bought from) and redeemed (sold to)

by an investment management company. The units’ real value

is calculated daily by the investment management company

and based on the price developments on the financial

instruments that the fund has invested in. There are also units

in funds that can be traded on a regulated market (Exchange Traded Funds /ETFs); see Item 5 below.

One of the ideas behind a unit/mutual fund is to make

placements in several different units and other financial

instruments. This implies a reduction in risk for the unit

holders in relation to the risks taken by unit holders who only

make placements in one or a few units. The unit holders do

not need to select, buy, sell or monitor the units or manage

the funds in any way.

There are laws and regulations that govern securities funds.


UCITS funds are established according to EU regulations

which are therefore are approved for marketing in the entire

EEA zone. Most new funds are established as UCITS funds.

National funds are domestic funds governed by the

Norwegian Securities Trading Act.

Alternative Investment Funds are fund-like investments

that can be organized as limited companies or other form of

business organizations that are not a fund. These are governed

by a special act, known as the alternative investment fund act

(lov om alternative investeringsfond).

For more information, please read the section on securities

funds on our website: www.vff.no

Securities funds are also classified according to the terms for

the fund, known as an Investment Mandate. Below is a short

description of the most common securities funds:

Equity fund: a securities (mutual) fund that normally invests

at least 80 percent of the fund’s total assets in units (or

other equity instruments) which normally does not invest in

interest-bearing securities.

Interest fund: a securities fund that places funds in

interest-bearing financial instruments. Money market funds are

divided into bond funds or money market funds.

Combination fund: a securities fund that is not defined as a

pure equity fund or an interest fund. A combination fund can

have more or less permanent ratio of shares to interest-

bearing securities, but the percentage of various securities

may also change during the fund’s lifetime.

Index fund: a securities fund that is managed in a relatively

passive manner, in relation to the fund’s reference index.

Fund-of-funds: a securities fund that invests its funds in one

(or possible several) underlying securities funds.

Special fund: includes funds that are often called hedge funds.

Special funds are managed in a more flexible manner than

general securities funds. Special funds can be funds with very

different risk and protection levels. This may involve high risks.

Special funds/hedge funds often use investment techniques

such as extensive use of derivatives, short selling, financing

investments via loans and open foreign currency positions.

Units in special funds can only be offered to professional

clients.

That means special funds can neither be marketed nor sold

to Non-professional clients, and this is the rule regardless of

whether the initiative comes from the client or the investment

firm. Special funds are subject to the Financial Supervisory

Authority of Norway and are also governed by special rules

laid out in the Securities Funds Act (fondsloven). The Financial

Supervisory Authority of Norway may allow foreign hedge

funds to be marketed in Norway to Professional clients under

certain conditions.

5 Funds traded on the stock exchange and fund-like products

ETP (Exchange Traded Products) is a general term for ETF

(Exchange Traded Funds) and ETN (Exchange Traded Notes).

These products are traded through different trading systems

such as the Oslo Stock Exchange. The products make it

possible to gain exposure to shares/units, indices, currencies,

commodities etc. Some of the products include a gearing

element. The exposure can either be to a falling market (short)

or a rising market (long). There are major variations in how

these products are structured, so investors need to learn as

much as they can about the products before they are selected.

An ETN is normally issued by a financial institution (bank/

brokerage firm) and traded on the secondary market just like a

share. For these kinds of products, one normally has a credit risk against the issuer. Credit risk is the risk of the issuer’s or

counterparty’s failure to pay.

This involves the issuer does not manage to fulfil its

obligations, the securities may be worthless.

An ETF is a fund unit issued by a securities fund. This involves

the investor having direct ownership in the underlying asset

through his ownership in the fund units, and in this way

accepting no credit risk against the issuer.

Several ETPs contain derivative elements and/or have built-in

gearing that give the product a high market risk. This means

the prices on these will fluctuate more than the underlying

asset and that the products normally have a greater risk of loss

than an investment made directly on the underlying; such as

with shares. In addition, the geared products are rebalanced

on a daily basis. This means the yield over longer periods will

deviations from market developments that take the gearing

factor into consideration. The yield can be negative, even

though the underlying assets have the same value on the

purchase and sale dates. These properties make geared

products less suitable as long-term investment alternatives.

The fact that underlying assets are often sold in other

markets and listed in currencies other than NOK also

means that investors must be aware of the possible

foreign-exchange risk. This may mean that – even if the

underlying developments indicate that the security should

produce a positive return, the return may shrink, disappear or

be negative as a result of exchange-rate developments.

ETPs normally have one or more liquidity guarantors (market

makers) that are obligated to provide bid and offer prices for

the security. It can still be difficult to trade in a specific ETP

for certain periods of time. For example, there may be little

liquidity or if trading on the applicable marketplace has been

closed.

6 Short tradingShort trading means selling financial instruments one does not

own. According to Norwegian law, unsecured short selling is

prohibited, so anyone wanting to sell short must borrow the

financial instruments from an investment firm or in some other

way ensure access to the instruments on settlement day. At

the same time, the borrower shall return instruments of the

same type to the lender on a predetermined later date.

Short trading is usually used as an investment strategy when

one anticipates that the financial instrument will fall in value.

At the time of sale, the borrower expects to purchase the

borrowed instrument later at a lower price at the time of its

return than the price it was sold for. Loss occurs when the

price rises, such as when a sharp rise in the price is significant.

Loan agreements on financial instruments stipulate that the

lender may at any time demand the return of the financial

instruments by giving two-three days’ notice. This increases

the risk of short selling.


7 Trading frequency and costsThe more frequent the trading, the higher the brokerage costs

will be, because there are usually costs and fees associated

with each individual trade (purchase or sale). If the brokerage

costs over time are greater than the yield, the client will

experience a loss. It should be noted that there are also

brokerage costs for loan-financed trading.

When trading in securities, the brokerage costs will normally

increase proportionally to the amount of trading being done.

If the client e.g. sells shares at a value of NOK 50 000 and

the brokerage rate is 0.2 % , the sale itself will cost NOK 100.

If shares are sold worth 500 000, the brokerage cost will be

NOK 1000. There are also minimum brokerage rates, so selling

or purchasing securities for small amounts can be more

expensive than buying/selling larger amounts, due to the

percentage.

8 Loan-financed tradingFinancial instruments can in many situations be bought for

partially borrowed capital. Since both the capital invested

by the client and the borrowed capital affect the return, the

client may make a larger gain through debt financing if the

investment develops positively compared to an investment

made using only the client’s own capital. The debt associated

with the borrowed capital is not affected by a rise or fall in the

prices of the bought instruments, which is an advantage if

prices rise. However, if the price of the purchased instruments

falls, this results in a corresponding disadvantage since the

debt remains the same. In the case of a price drop, therefore,

the client’s own invested capital may be entirely or partly

lost while the debt has to be repaid in whole or in part from

the revenues from the sale of the financial instruments that

have fallen in value. The debt must be paid, even if the sales

incomes do not cover the whole debt.

The risk of loan-financed purchases increases with the degree

of financing. For example, a portfolio that is financed 80 %

by a loan can lose all its capital if the rate falls by 20 %. If the

portfolio is 60 % financed by a loan, the equity will be lost at a

rate fall of 40 %.

The return on equity in a partially debt-financed portfolio

will fluctuate more than in a corresponding equity-financed

portfolio and the debt financing will only produce an additi-

onal return when the return on the investment is higher than

the borrowing rate.


An illustration of a positive return in the case of partial debt financing is provided below.

Assumptions:

• 20% positive yield

• NOK 1 000 000 placed on the market

• 5% brokerage commission (20 transactions at 0.25% brokerage commission)

• 5% interest cost

• 50% loan-financed

An illustrative example of a negative yield on an investment partially financed by a loan is shown below.

Assumptions:

• As above, but 20% negative yield

Positive yield.

Negative yield.

Negative yield.

Positive yield.

Broker’s commission




Interest

Interest

Own capital

Own capital

Loan

Loan

Own capital

Own capital

Ordinary trade

Ordinary trade

Loan-financed

trade

Loan-financed

trade

EQ = 1 150 000

Net yield on

equity:

15%

EQ = 750 000

Net yield on

equity:

minus 25%

EQ = 625 000

Net yield on

equity:

25%

EQ = 225 000

Net yield on

equity:

minus 55%

Oversikt over omkostninger for rente, valuta- og råvarederivater

• Alle rente-, valuta- og råvarederivater handles ved

forespørsel om priskvotering (request for quote/RFQ). Når

SR-Bank Markets handler slike derivater med profesjonelle

og ikke-profesjonelle kunder vil SR-Bank opptre som

prinsipal. Det innebærer at SR-Bank Markets er kundens

motpart.

• SR-Bank Markets vil kvotere (stille) en pris, bestående av

en markedsbasert bid og/ eller ask pris med tillegg av en

margin.

• I vår pris, vil den inkluderte marginen dekke bankens kost-

nader knyttet til markedsrisiko, motpartsrisiko, finansiering,

kapitalkrav, operasjonelle kostnader, skatter og avgifter,

omsetning på markedsplasser, clearing, oppgjørskostnader

og bankens fortjeneste.

• Marginen vil variere fra kunde til kunde og fra instrument til

instrument avhengig av blant annet transaksjonens størrelse

og løpetid, den motpartsrisiko kunden representerer, likvi-

ditet i det relevante markedet, samt historisk og forventet

omsetning, inkludert handelsadferd, for hver enkelt kunde.

Oversikt over omkostninger obligasjoner og sertifikater

• Obligasjoner og sertifikater handles ved forespørsel om

priskvotering (request for quote/RFQ). Når SR-Bank Markets

handler slike produkter med kunder vil SR-Bank Markets

opptre som prinsipal. Det innebærer at SR-Bank Markets er

kundens motpart.

• SR-Bank Markets vil kvotere (stille) en pris, bestående av

en markedsbasert bid og/ eller ask pris med tillegg av en

margin.

• I vår pris, vil den inkluderte marginen dekke bankens kost-

nader knyttet til markedsrisiko, motpartsrisiko, finansiering,

kapitalkrav, operasjonelle kostnader, skatter og avgifter,

omsetning på markedsplasser, clearing, oppgjørskostnader

og bankens fortjeneste.

• Marginen vil variere fra kunde til kunde og fra instrument til

instrument avhengig av blant annet transaksjonens størrelse

og løpetid, den motpartsrisiko kunden representerer, likvi-

ditet i det relevante markedet, samt historisk og forventet

omsetning, inkludert handelsadferd, for hver enkelt kunde.

• Margin på et Investment Grade obligasjonslån vil typisk

tilsvare 0,005%-0,05% per år. For eksempel vil 0,01% margin

per år for et obligasjonslån med 3 års løpetid gi en kostnad

på ca. 0,03% av pålydende beløp

• For High Yield obligasjoner vil marginen typisk ligge på

0,125%-0,25% av pålydende beløp

• Marginen kan også variere, for eksempel ved handel i

obligasjoner som omsettes sjelden, i urolige markeder og

ved andre hendelser som kan ha påvirkning på prising av

obligasjonslån, både markeds-, sektor og selskapsspesifikt.

Trading in Financial Instruments€¦ · 6 placing of financial instruments without underwriting...

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