The central securities system for settlement in Norwegian kroner (VPO NOK) is based on VPS carrying out multilateral netting and clearing of the trades that are notified for settlement on the agreed settlement date. Based on the net transfers that apply to each seller and buyer, the Central Bank of Norway carries out the cash settlement and VPS carries out the securities settlement between the settlement participants. Settlement payments between the settlement participants (investment firms or settlement agents) and their investors take place outside of VPO.

The following sections provide more information on the three processes of notification, netting and clearing, and the settlement of trades in securities.


Notification of settlement instructions (trades)

  • All trades and confirmations of trades must be input to the settlement system by a settlement participant using the ISO 15022 format. This applies both to trades between settlement participants and to trades between investment firms and investors (without the matching transaction).
  • The channels available for communicating this information on trades are:
    • Internet interface
    • Machine to machine, using MQ via FNN or via the VP network
    • SWIFT network
  • The VPS system searches continuously for matching trades by applying predefined criteria.
  • VPS sends status messages using the relevant ISO 15022 message formats.
  • Trades that are due to be matched will not be included in the netting and clearing process until they have been matched. If they still have not been matched by the settlement date (S), the system will continue to search for a matching trade for a further 20 days before the trade is rejected.
  • Matched trades can be cancelled by both parties to the trade giving cancellation instructions. Trades that have not been matched in the system can be cancelled unilaterally.


Netting and clearing

Netting and clearing refers to the process carried out to prepare transactions for settlement, which involves calculating the payment amounts and the securities that the various settlement participants will be required to deliver and receive on the settlement day.

  • Multilateral netting of trades 
    Netting and clearing involves multilateral netting of all notified and matched trades that are due for settlement on the same settlement day in order to calculate the net monetary and securities positions of each seller and buyer. Netting and clearing is based on a method of calculation (linear programming) designed to maximise the value of the transactions that are actually settled, taking into account any restrictions caused by the securities and liquidity that are available for settlement.
  • Automated system for borrowing and lending of securities 
    Where matched trades do not have sufficient cover in the form of securities available, the system will seek to provide the necessary securities cover by using the automated pool system for borrowing and lending of securities. This system is an integrated part of the settlement system.
  • Automatic deferral of settlement dates 
    Trades that do not have sufficient cover, either insufficient liquidity for payment or insufficient securities, will be deferred automatically for up to 20 days until sufficient cover becomes available. (Trades that have been matched will remain in the system until they are either settled or cancelled).

VPS sends details to Norges Bank of the cash payments due to be made. In doing this, VPS ensures that the net cash position of each settlement participant and equity bank will be within the available liquidity on the account in question.



Settlement refers to the process of carrying out the delivery of cash payments and securities between the various settlement participants on the settlement day.

Delivery versus payment

Payment takes place by transfers between the accounts of the settlement participants with Norges Bank on the basis of each settlement participant’s net cash position in NOK.

Delivery of securities takes place on a gross basis directly to the securities account of the end-investor or manager’s account, i.e. the securities relating to each trade are registered separately. The entries for these trades on the relevant VPS securities accounts take place as soon as the cash positions have been settled and posted to each settlement account with Norges Bank, and the registration of the securities on the VPS accounts transfers legal title with immediate effect.

Cash payments received as part of the settlement are available to the recipient from the settlement date, and in the same way the securities transferred are available to the new owners from the settlement date.