A new regime for third-country firms’ provision of investment services into Norway

On 11 September 2023, Norway introduced an amendment to the Securities Trading Regulation ("STR"), leading to the addition of section 9-39a.

In short, the new section 9-39a of the STR allows regulated entities in countries outside the EU/EEA (third-country firms) to provide investment services to so-called 'eligible counterparties' in Norway without the need for an otherwise appropriate license in Norway or relying on reverse solicitation.

The route set out in the STR will replace the temporary regulation for UK investment firms following Brexit, the Regulation No. 2204 of 20 December 2018 ("TPR"), which expires on 1 October 2023. The contents of the new section are largely in line with the proposal previously presented by the Norwegian Financial Supervisory Authority ("NFSA") in their consultation letter circulated in April 2023.

Preconditions for Third-country Firms

For third-country firms to provide services under section 9-39a of the STR, they must satisfy the following conditions:

• Home Country Licensing & Supervision: The firm must have a relevant license from its home country that covers the services it intends to offer in Norway. Also, it should be under the supervision of its home state's regulatory authorities.
• MoUs with the NFSA: The NFSA and the supervisory authorities in the firm's home state must have a bilateral or multilateral agreement on supervisory cooperation related to the securities sector. The NFSA has confirmed in the consolation letter that the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information ("IOSCO MMoU") meets this requirement. The IOSCO MMoU has currently 129 signatories, including i.a. the UK FCA.
• FATF Compliance: If the firm's home state is listed by the Financial Action Task Force, i.e. on either the "black list" or the "grey list", the firm may not provide investment services in Norway for the duration of such listing.

The new route do not require any notifications or reporting to the NFSA, but is strictly limited to provision of investment services to eligible counterparties.

Who are the Eligible Counterparties?

While the provision as such do not refer to a definition of eligible counterparties, its wording refers to the same expression as its used in the Securities Trading Act section 10-23 subsection 2 (implementing MiFID II Article 30), which states that the following shall be recognised as eligible counterparties:

• investment firms,
• credit institutions,
• insurance undertakings,
• collective investment undertakings and management companies for such undertakings,
• pensions undertakings and their management companies,
• other authorised and regulated financial institutions,
• public bodies at the national level, including central banks and supranational organisations

In addition, the third subsection of section 9-39a of the STR states that the Norwegian Deposit Guarantee Scheme also should be considered an eligible counterparty for the purpose of the provision.

Conclusions

In summary, section 9-39a sets out a new permanent, and as such a more predictable, framework for all third-country firms which complies the abovementioned standards, looking to offer investment services in Norway. Unlike the TPR, which was solely applicable to UK firms with pre-Brexit client contracts, this new regime applies to all third countries with MoUs.

However, it's important to note its inherent limitation: the regime only facilitates investment service provisions to eligible counterparties, excluding also per se professional clients. It remains to be seen whether this limitation is too narrow. For example, it is not unusual that Norwegian eligible counterparties requests to 'opt-down' to professional clients under the third-country regime, and that could create legal uncertainty on whether the STR is applicable.