Compliance Report ISSA Recommendations 2000

ISSA - International Securtities Services Association

Compliance to the ISSA Recommendations 2000

Market: Sweden

Status: October 29, 2001

Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4

Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8

Market selection

Recommendation 8

Local laws and regulations should ensure that there is segregation of client assets from the principal assets of their custodian; and no possible claim on client assets in the event of custodian bankruptcy or a similar event. Regulators and markets, to further improve investor protection, should work:

to ensure clarity on the applicable law on cross border transactions
to seek international agreement on a legally enforceable definition of finality in a securities transaction
to ensure that local law fully protects the rights of beneficial owners
to strengthen securities laws both to secure the rights of the pledgee and the protection accorded to client assets held in Securities Systems.

1. Under local rules and regulations, what are the segregation requirements for keeping client assets and custodian assets in the depository? Segregation of clients assets from custodian and brokers assets is enforced by Swedish law.

2. How are clients' assets protected in the event of insolvency of a custodian or depository? Clients securities are by law always separated and protected in the event of insolvency of a custodian or depository. Client funds are secured in case of insolvency of the bank up to SEK 250 000.

3. Does local law recognise the existence of beneficial owners who may differ from the legal owner of a security? Yes.

4. Does local law clearly define the point of time when a settlement, both for the security and the cash involved, achieves finality and thus cannot be unwound? Yes, the EU directive of finality of settlement is implemented in Swedish law.

5. Does a pledgee have an absolute right to realise their security at all times? Yes.

6. Does the depository have loss sharing provisions in its rules, and how would these be applied? VPC has a guarantee scheme granted by its owners which, in case of a default situation, gives access to extra SEK 200 million.

1.	Under local rules and regulations, what are the segregation requirements for keeping client assets and custodian assets in the depository?	Segregation of clients assets from custodian and brokers assets is enforced by Swedish law.
2.	How are clients' assets protected in the event of insolvency of a custodian or depository?	Clients securities are by law always separated and protected in the event of insolvency of a custodian or depository. Client funds are secured in case of insolvency of the bank up to SEK 250 000.
3.	Does local law recognise the existence of beneficial owners who may differ from the legal owner of a security?	Yes.
4.	Does local law clearly define the point of time when a settlement, both for the security and the cash involved, achieves finality and thus cannot be unwound?	Yes, the EU directive of finality of settlement is implemented in Swedish law.
5.	Does a pledgee have an absolute right to realise their security at all times?	Yes.
6.	Does the depository have loss sharing provisions in its rules, and how would these be applied?	VPC has a guarantee scheme granted by its owners which, in case of a default situation, gives access to extra SEK 200 million.