Valid from 1 December 2011 part of Oslo Børs ASA. Nordic ABM. The Oslo Børs alternative marketplace for fixed income instruments

Transcription

1 Valid from 1 December 2011 part of Oslo Børs ASA Nordic ABM The Oslo Børs alternative marketplace for fixed income instruments

2

3 Access to a large base of investors Simplified listing process Speedy processing of listing applications

4 Nordic ABM Nordic ABM was established in 2005 as an alternative marketplace for listing and trading of bonds and short-term fixed income instruments. The marketplace provides an alternative to the stock exchange market (the Oslo Børs marketplace) for both new and existing borrowers and investors. Nordic ABM is a self-regulated marketplace that is not subject to authorisation under the terms of the Norwegian Stock Exchange Act, and it can therefore operate independently of EU directives. The listing process is somewhat simplified relative to listing on the stock exchange market, and issuers have greater flexibility in respect of their choice of accounting standard. However, the rules on disclosure of information and the trading rules are very largely the same as for the stock exchange market. Nordic ABM is organised and operated by Oslo Børs. WHY WAS Nordic ABM ESTABLISHED? The decision to establish Nordic ABM in 2005 resulted from new EU directives that imposed changes on the regulatory framework for the European securities market. New requirements for financial instruments that are listed on a stock exchange were more restrictive than the traditional stock exchange rules in Norway. This was particularly the case for issuers of fixed income instruments, who would become subject to additional requirements such as those of the new Prospective Directive, and would be obliged to produce their consolidated accounts in accordance with International Financial Reporting Standards (IFRS). Oslo Børs decided to establish a new marketplace to give borrowers an alternative venue that did not require them to make the changes imposed by the EU directives. The new marketplace adopted the regulatory framework that previously applied to the Norwegian stock exchange market, with some simplification in respect of the process for admission to listing. Nordic ABM s rules and procedures are tailor-made for the borrowers that participate in this market and are designed to meet their requirements, independent of EU directives. At the same time, the marketplace ensures that secondary market trading takes place in a proper and orderly manner, satisfying the same requirements and quality standards that apply to the stock exchange market.

5 THE MARKETPLACE Trades carried out on Nordic ABM are reported as trades on a separate marketplace, but are carried out using the TradElect trading system in the same way as for trades carried out on the Oslo Børs marketplace. Broking firms require separate membership of Nordic ABM in order to trade on this marketplace. Nordic ABM accounts for a significant proportion of the total amount of loan capital raised by borrowers on the fixed income marketplaces operated by Oslo Børs Nordic ABM is divided into two submarketplaces in order to differentiate between bonds that are assumed to be traded by the general public (Nordic ABM Retail) and bonds traded by professional investors (Nordic ABM Professional), with the nominal value of the bonds traded of less than NOK 500,000 for Nordic ABM Retail and a minimum of NOK 500,000 for Nordic ABM Professional NOK MRD Oslo ABM Oslo Børs HOW DOES THE MARKET OPERATE? The rules for Nordic ABM are set by Oslo Børs following consultation with market participants. Nordic ABM is not subject to authorisation pursuant to the Norwegian Stock Exchange Act, and in terms of the definitions used by MiFID (Markets in Financial Instruments Directive) Nordic ABM is not a regulated marketplace. All transactions carried out in instruments that are listed on Nordic ABM where one or both of the counterparties is a member of Nordic ABM must be reported through the trading system. LISTING ON Nordic ABM Borrowers can gain access to a broader investor base by listing their bond issues on one of the fixed income marketplaces operated by Oslo Børs. The process for admission to listing on Nordic ABM is somewhat simpler than the process for admission to the regulated market. In addition, it is possible to transfer listings from Oslo Børs to Nordic ABM. Both Norwegian and foreign borrowers can apply to have their bonds and short-term fixed income instruments listed on Nordic ABM. Why apply for listing on Nordic ABM? Access to more investors Publication of the borrower s logo and descriptive text on the Nordic ABM website Potential to achieve borrowing costs that are lower than the rates available for unlisted bonds Simplified listing process relative to the stock exchange market Unless a borrower has changed its corporate structure, business concept or other material features of its activities over the course of the last three years, it will normally be possible

6 for a new borrower to use its annual report to meet the requirements for a description of the company. In addition, the borrower must prepare a loan description. A standard format for a loan description is available on request from Oslo Børs. This means that the documentation required for an application for admission to listing on Nordic ABM normally requires little additional work. By listing their fixed income securities on Nordic ABM, borrowers gain access to a larger investor base because some investors will only invest in securities that have a listing. There are several reasons for some investors to accept only listed securities, and these include: Availability of an approved listing document, which ensures that the investor has access to all the information relevant for investment decisions Borrowers have a duty to disclose information, and must publish their financial statements and inform the market of events that may affect the price of their bonds Organised trading using the Oslo Børs trading system helps to ensure efficient pricing Systematic and effective market surveillance ensures fair trading conditions Information on the marketplace in general and the securities listed on it is available on the Nordic ABM website CONDITIONS FOR LISTING Each issue of bonds that is to be listed on Nordic ABM must satisfy specific conditions. These include requirements for the bonds to be registered with a central securities depository, to be fully paid-up and fully transferable. In addition, the borrower must provide sufficient information to the market to allow market participants to determine a fair market price for its bonds. Since it was established in 2005, the Nordic ABM marketplace has seen a steady increase in the number of listed bond loans Oslo ABM 600 Listing bond loans 500 Prior to listing, the borrower must produce 400 a listing document that forms the basis for evaluating whether the bonds are suitable for 300 listing on Nordic ABM. The evaluation takes 200 into account factors such as the presentation 100 of the borrower and the provisions in the Antall terms and conditions of the bonds in respect of equal treatment of bondholders. A listing document normally comprises a loan description and a copy of the loan agreement, and in some cases also a borrower description in addition to financial statements. The loan Oslo Børs

7 description describes the issue itself, while the borrower description provides information on the borrower. The contents of both these documents must satisfy specific requirements. The borrower s annual report can be used as the borrower description subject to certain minimum requirements being satisfied. Listing short-term bonds Fixed income debt instruments with original maturity of up to 12 months are known in the Norwegian market as commercial papers. Listing of this kind of short-term bonds on Nordic ABM normally only requires a loan agreement and a listing application. Continuing obligations for borrowers When a bond loan is admitted to listing, the borrower becomes subject to a continuing duty to disclose information that is very similar to the duty of disclosure that applies to issuers in the stock exchange market, but Nordic ABM borrowers are not subject to certain requirements such as IFRS accounting, establishing an audit committee and producing corporate governance reports. Transfer of listing from the stock exchange market The Nordic ABM listing rules make it possible for borrowers to apply to transfer a bond loan that is listed on the stock exchange market to listing on Nordic ABM without having to make application for delisting from the stock exchange market and for a new listing on Nordic ABM. Some investors will only hold bonds in their portfolio that meet the requirements for a stock exchange listing, and accordingly a borrower must satisfy certain minimum requirements before Oslo Børs will consider an application to transfer its bonds to Nordic ABM. The listing process The listing document must be sent to Nordic ABM, usually by the manager. Nordic ABM will review the listing document and give their comments and feedback in writing before the formal approval of the document. The review of the listing document is considered completed and approval is given when the document fulfills all the requirements. The listing document must be approved before the loan can be admitted to trading. The loan is applied for listing on Nordic ABM (no later than 3 p.m. the day before listing). The loan will be listed (the day after disbursement date at the earliest). The listing document will be made public at the same time as the listing. In addition to the information above new borrowers must send some supplementary information prior to listing directly to Oslo Børs. Nordic ABM will use a maximum of five days before commenting on the first draft of the listing document. Usually the response will be given sooner and Nordic ABM will do its very best to carry out an efficient, yet thorough, examination of the documents. For further information regarding listing requirements please see

8 part of Oslo Børs ASA OSLO BØRS asa Box 450 Sentrum NO-0105 Oslo Visiting adress: Tollbugata 2, Oslo Enquiries may be directed to Listing