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Bilateral loans arranged through VPS
VPS offers registration of bilateral securities lending through VPS Settlement.
Approved investment firms and credit institutions in Norway can become clearing members of Oslo Clearing, and this will then allow them to act on behalf of borrowers and lenders as a clearing representative and account operator in VPS.
A loan may be agreed with the assistance of one or more investment firms that are clearing members of Oslo Clearing. The investors involved in the transaction give instructions to their bank or investment firm in the same way as when carrying out normal purchases and sales of equities and bonds.
The lending arrangements apply to all shares that are listed on Oslo Børs, together with Norwegian government bonds. When making a loan of securities, the lender will charge the borrower for the period that the securities are on loan.
The amount on which interest is charged can either be fixed for the period of the loan, or it can vary on the basis of the daily closing price of the securities involved. In addition to charging interest, the lender will require that the borrower provides some form of guarantee or collateral in order to ensure that the borrower will be in a position to buy back the securities and return them to the lender.
Once a loan has been approved by Oslo Clearing, Oslo Clearing acts as the guarantor of the lender and the borrower, and becomes responsible for the loan to the end-clients involved.
In its role as guarantor, Oslo Clearing is entitled to stipulate daily requirements for margin collateral, and is responsible for carrying out settlement and implementing appropriate measures in the event of default in accordance with the rules set out in the “General terms for clearing loans of financial instruments through Oslo Clearing ASA”.