749/2012. Act on the Book-entry System and Clearing Operations 1(44) Issued in Helsinki on 14 December 2012

Transcription

1 (44) 749/2012 Versions of the document Issued in Helsinki on 14 December 2012 Act on the Book-entry System and Clearing Operations Pursuant to the decision of Parliament, the following is enacted: PART I GENERAL PROVISIONS AND DEFINITIONS Chapter 1 General provisions Section 1 Scope of application This Act shall apply to the maintenance of a book-entry system and the carrying out of clearing operations in Finland as well as to the carrying out of the operations of a foreign clearing house referred to in this Act. A central securities depository and a clearing house shall be governed by the Limited-Liability Companies Act (624/2006) unless otherwise provided for in this Act or in other legislation relating to a central securities depository or a clearing house. Section 2 Supervision Compliance with this Act and the provisions and regulations issued thereunder shall be supervised by the Financial Supervisory Authority as provided for in the Act on the Financial Supervisory Authority (878/2008) and in this Act. Section 3 Definitions For the purposes of this Act: 1) a book entry means a share or other right referred to in chapter 2 section 1 of the Securities Markets Act (746 /2012), other financial instrument referred to in chapter 1, section 10 of the Investment Services Act (747/2012 ) or a right comparable thereto or another security incorporated in the book-entry system; 2) the book-entry system means an information system entity consisting of book-entry accounts and related lists referred to in the Act on Book-Entry Accounts (827/1991);

2 2(44) 3) a book-entry register means a register kept in a central securities depository in Finland of bookentry accounts, book-entries registered in book-entry accounts as well as of rights and obligations pertaining to book-entry accounts and book entries; 4) a central securities depository means a Finnish limited-liability company licensed in accordance with this Act to attend to the duties of a central securities depository; 5) a central counterparty means an organisation that interposes itself between the counterparties to the transactions concluded on a regulated market or on an MTF referred to in the Act on Trading in Financial Instruments (748/2012), by becoming the buyer to every seller and the seller to every buyer and that is liable for establishing the transaction; 6) a clearing party means an organisation which has been granted the right to lodge transactions or other transfers relating to financial instruments for clearing by a clearing house or a foreign clearing house; 7) clearing means the establishing or execution of obligations arising from a transaction in financial instruments; 8) a clearing house means a Finnish limited-liability company licensed in accordance with this Act to carry out clearing operations professionally and in a regular procedure; 9) an account operator means an organisation that has been granted the right to make registrations in the book-entry register by a central securities depository; 10) outsourcing means an arrangement relating to the activities of a central securities depository or a clearing house by which another service provider performs a process or service for the central securities depository or the clearing house which would otherwise be executed by the central securities depository or the clearing house itself; 11) an EEA Member State means a Member State of the European Economic Area. PART II THE ACTIVITIES OF A CENTRAL SECURITIES DEPOSITORY, A CLEARING HOUSE, A FOREIGN CLEARING HOUSE AND A CLEARING PARTY Chapter 2 The license, owners, administration and activities of a central securities depository Section 1 Requirement of license of the activity of a central securities depository and its head office The activities of a central securities depository may not be carried out without a license granted by the Ministry of Finance. The head office of the central securities depository has to be located in Finland.

3 3(44) Section 2 Application for a license The Ministry of Finance shall, on application, grant the license to carry out the activity of a central securities depository to a Finnish limited-liability company. The license may also be applied for a company to be established. The license application shall be appended with a plan relating to the central securities depository activity as well as the other possible activity referred to in section 16 (3) closely related to the activity of the central securities depository as well as an application for the confirmation of the rules of the central securities depository. The plan shall especially clarify the manner in which a central securities depository can handle all the book entries incorporated in the book-entry system and perform all the duties referred to in section 16 in a way that is reliable and ensures the appropriate development of the book-entry system. The application shall also be appended with the necessary accounts regarding the central securities depository on its: 1) ownership; 2) management and auditors; 3) internal control and risk management; 4) handling of possible conflicts of interests and close links; 5) solvency, liquidity and other financial operating conditions; 6) ensuring of continuance of activities also in exceptional circumstances; 7) arrangement of supervisory functions. If the license is applied for a company to be established, the application shall also be appended with adequate accounts on the applicant. On request of the Ministry of Finance, the applicant shall submit to the Ministry the additional accounts necessary for the granting of the license. Section 3 Preconditions for the granting of a license The Ministry of Finance shall grant the license if, on the basis of the account received, it can be ascertained that: 1) the applicant and the activity planned by it meet the requirements provided and regulated for reliable central securities depository activity in this Act and the provisions and regulations issued thereunder; 2) the owners of the central securities depository meet the requirements provided for in section 4; as well as

4 4(44) 3) ownership of the central securities depository does not endanger the management of the business operations of the central securities depository in compliance with sound and prudent business principles. Section 4 Reliability of the major owners of a central securities depository Anyone who, directly or indirectly, holds at least ten percent of the share capital of a central securities depository or a share producing at least ten percent of the votes carried by its shares shall be reliable. A person shall not be deemed reliable if he has: 1) within the last five years prior to the assessment been sentenced to imprisonment or within the last three years prior to the assessment to a fine for a crime which can be deemed to indicate that he is manifestly unsuitable to own a central securities depository; or if he has 2) otherwise, through his earlier activity, indicated that he is manifestly unsuitable to own a central securities depository. If the judgement referred to in subsection 2 (1) has not become non-appealable, the person sentenced may, however, continue to exercise the decision-making power in the central securities depository belonging to the owner of the central securities depository if this, when assessing his earlier actions, the circumstances leading to the judgement and other relevant factors as a whole, can be deemed manifestly well-founded. Section 5 Decision on a license and commencement of the activity of the central securities depository A license application shall be decided on within six months from receipt of the application or, if the application has been defective, from the date on which the applicant has submitted the documents and accounts necessary to decide the matter. A decision on the license shall, however, always be made within 12 months of receipt of the application. The filing of an appeal on grounds that a decision has not been issued within the period laid down shall be governed by the provisions of chapter 8, section 5. The Ministry of Finance shall, prior to deciding the issue, request an opinion thereon of the Bank of Finland and the Financial Supervisory Authority. The Ministry of Finance shall, after hearing the applicant for the license, have the right to include in the license restrictions and conditions relating to the business activity of the central securities depository and necessary for the supervision or the stability of the financial markets. Unless otherwise ordered in the terms of the license, a central securities depository may commence its activities as soon as the license is granted and the rules of the central securities depository have been confirmed. If the license is granted for a company to be established, the activity may be started after the central securities depository has been registered.

5 5(44) Section 6 License to a European company A license to carry out central securities depository activity shall also be granted to a European company referred to in Council Regulation (EC) No 2157/2001 on the Statute for a European company (SE), hereinafter the SE Regulation, which has been granted a corresponding license in another EEA Member State and which is aiming to transfer its registered office to Finland in accordance with Article 8 of the said Regulation. The Ministry of Finance shall, in addition, request an opinion of the authority supervising the securities markets of the State in question on the license application. The transfer of a registered office may not be registered before the issue of the license. The same shall apply to the establishment of a European company by merger so that the receiving company whose registered office is in another State will be registered as an SE in Finland. Section 7 Financial operating conditions A central securities depository shall have adequate financial operating conditions vis-à-vis the scope and nature its activities. The fully-paid share capital of a central securities depository shall be at least five million euros. The assets of a central securities depository shall be invested prudently and in a manner safeguarding the liquidity of the organisation. Section 8 Notification of acquisition of shares Anyone who intends to acquire, directly or indirectly, shares of a central securities depository shall notify the Financial Supervisory Authority thereof in advance if: 1) his holding, as a result of the acquisition, would be equal to at least 10 percent of the share capital of the central securities depository; 2) his holding would be such that it would correspond to at least 10 percent of the voting rights carried by all the shares; or if 3) his holding would otherwise entitle him to exercise influence comparable to a holding referred to in paragraph 2 or otherwise significant influence over the management of the central securities depository. If the purpose is to increase the holding to at least 20, 30 or 50 percent of the share capital of the central securities depository or of the voting rights carried by its shares, the Financial Supervisory Authority shall be notified also of this acquisition in advance. A corresponding notification shall be submitted also if the holding would fall below the threshold referred to in this subsection or in subsection 1.

6 6(44) In calculating the proportion of the holding and voting rights referred to in subsections 1 and 2, the provisions of chapter 2, section 4 and chapter 9, sections 4-7 of the Securities Markets Act shall be applied. The central securities depository shall notify the Financial Supervisory Authority at least one time annually of the names of the owners of holdings referred to in subsections 1 and 2 as well as of the sizes of the holdings, if they are known to the central securities depository. The central securities depository shall immediately notify the Financial Supervisory Authority of any changes in the holdings that have come to its knowledge. The notifications shall include sufficient information on the size of a holding and its holders as well as other information ordered by the Financial Supervisory Authority. The notification referred to in subsections 1 and 2 shall indicate the necessary information and reports on: 1) the party liable to notify as well as his reliability and financial situation; 2) the holdings and other close links in the central securities depository of the party liable to notify; 3) acquisition contracts, financing of acquisitions and, in a case referred to in subsection 2, the purpose of holding. The provisions of this section on the notification of acquisition of a holding in a central securities depository shall also apply to an organisation which has control in the central securities depository in the manner referred to in chapter 2, section 4 of the Securities Markets Act (the holding company of a central securities depository). Section 9 Prohibition of an acquisition of shares The right of the Financial Supervisory Authority to prohibit the acquisition of a holding shall be governed by section 32 a of the Act on the Financial Supervisory Authority. The Financial Supervisory Authority shall make the decision referred to in subsection 1 within three months from receipt of the notification referred to in section 8. Prior to the termination of the period set in subsection 2, the party liable to notify may acquire the shares referred to in section 8 only if the Financial Supervisory Authority has consented thereto. Section 10 Revocation of a license The Ministry of Finance may revoke the license of a central securities depository in part or in full if: 1) the activities of the central securities depository have involved a material breach of an Act or any provisions or regulations issued thereunder, the conditions of the license or the rules of the central securities depository;

7 7(44) 2) the central securities depository has ceased to operate for more than six months; 3) the material preconditions for the granting of the license of a central securities depository no longer exist; 4) the activities of the central securities depository or a part thereof have not been started within 12 months from the granting of the license; or if 5) materially false or defective information on factors with central importance to the activities of the central securities depository has been given when applying for a license. The Ministry of Finance shall, prior to making a decision referred to in subsection 1, request an opinion of the Bank of Finland and the Financial Supervisory Authority unless otherwise required by the urgency of the matter. Prior to revoking the license of a central securities depository on grounds referred to in subsection 1 (1) or (3), the Ministry of Finance shall, prior to making the decision, set a reasonable period for the central securities depository for correcting the defects detected in the activities unless the immediate revocation of the license is necessary due to the urgency of the matter or in order to safeguard the stability and reliability of the operations of the securities markets. The Ministry of Finance may, on application by the central securities depository, revoke its license if the central securities depository has decided to terminate its activities. Prior to making the decision, the Ministry of Finance shall request an opinion of the Bank of Finland and the Financial Supervisory Authority. If the Ministry of Finance revokes the license of the central securities depository under subsection 1 or 3, the Ministry may simultaneously issue orders on the manner in which the activities shall be terminated. Section 11 Restriction and suspension of activities The Ministry of Finance may restrict the activities of a central securities depository for a specific period or suspend the activities of a central securities depository for a specific period or until further notice if incompetence or carelessness has been found in the activities or if the activities of the central securities depository have otherwise been disturbed. A further precondition shall be that the continuance of the activities would be likely to seriously endanger the position of the investors or clearing parties or the stability or reliability of the financial markets. The Ministry of Finance may issue orders on the arrangement of the activities of the central securities depository while the activities are suspended. The Ministry of Finance shall, prior to making a decision referred to in subsection 1, hear the central securities depository and request an opinion of the Bank of Finland and the Financial Supervisory Authority unless otherwise required by the urgency of the matter. Section 12 Management of a central securities depository

8 8(44) The Board of Directors, the Managing Director and the other senior management of a central securities depository shall manage the central securities depository with professional skill as well as in accordance with sound and prudent business principles. The members and deputy members of the Board of Directors, the Managing Director and Deputy Managing Director as well as another member of the senior management shall be trustworthy persons who are not bankrupt and whose capacity has not been restricted. These persons shall also possess such general knowledge of securities market activity as is deemed necessary with regard to the nature and scope of the activities of the central securities depository. A person shall not be deemed reliable if he has: 1) been sentenced to imprisonment within the last five years preceding the assessment or to a fine within the last three years preceding the assessment for a crime which can be deemed to indicate that he is manifestly unsuitable as a member or deputy member of the Board of Directors or as Managing Director or Deputy Managing Director or as a member of other senior management of a central securities depository; or if 2) he has otherwise through his earlier actions indicated that he is manifestly unsuitable to a task referred to in paragraph 1. If the judgement referred to in subsection 2 (1) has not become non-appealable, the person sentenced may, however, continue in the task, if this, when assessing his earlier actions, the circumstances leading to the judgement and other relevant factors as a whole, can be deemed manifestly well-founded. The central securities depository shall, without delay, notify the Financial Supervisory Authority of any changes relating to the persons referred to in subsection 1. The provisions of this Act on a central securities depository shall correspondingly be applied to a holding company of a central securities depository. Section 13 Transfer of registered office of a central securities depository in the European Economic Area If a central securities depository intends to transfer its registered office to another EEA Member State as provided for in Article 8 of the SE Regulation, the central securities depository shall submit to the Financial Supervisory Authority a copy of the transfer proposal referred to in Article 8 (2) and of the report referred to in paragraph 3 immediately after the central securities depository has declared the proposal for registration. The registration authority may not issue a certificate referred to in section 9 (5) of the Act on European Companies (742/2004) if the Financial Supervisory Authority has notified the registration authority prior to the granting of the permission referred to in subsection 2 of the same section that the central securities depository has not complied with the provisions on the transfer of the registered office or the termination of operations in Finland. The permission may be granted before one month has passed from the due date referred to in chapter 16, section 6 (2) of the Limited-Liability Companies Act only if the Financial Supervisory Authority has notified that it does not oppose the transfer of the registered office.

9 9(44) Section 14 Participation of a central securities depository in a merger or division in the European Economic Area If a central securities depository participates in cross-border merger or cross-border division in the European Economic Area, the registration authority may not issue a certificate relating to such merger referred to in section 4, subsection 3 of the Act on European Companies or in chapter 16, section 26 of the Limited-Liability Companies Act or a certificate relating to division referred to in chapter 17, section 25 of the Limited-Liability Companies Act if the Financial Supervisory Authority has notified the registration authority prior to the granting of the permission that the central securities depository has not complied with the provisions on merger or division or the termination of operations in Finland. The permission may be granted before one month has passed from the due date referred to in chapter 16, section 6 (2) or in chapter 17, section 6 (2) of the Limited-Liability Companies Act only if the Financial Supervisory Authority has notified that it does not oppose the merger, the division or the transfer of the registered office relating to the establishment of a SE. Section 15 Arrangement of activities of a central securities depository A central securities depository shall arrange its activities in a reliable manner taking into account the nature and scope of its business operations. A central securities depository shall ensure the management of risks relating to its activities, the functioning of its internal control and the continuance of activities in all circumstances. A central securities depository shall have operating principles for identifying the conflicts of interests relating to its activities and for their prevention. The operating principles shall especially take into account conflicts of interests that may affect the reliable attendance to the supervisory duty provided for the central securities depository in section 20. In attending to its duties provided therefor in this Act, the activities of a central securities depository shall not be governed by the Administrative Procedure Act (434/2003), the Act on the Openness of Government Activities (621/1999), the Language Act (423/2003) or the Sámi Language Act (1086/2003). In that case, a member of an administrative body of the central securities depository or an employee of the central securities depository shall neither be governed by the provisions of penal liability as a public official. The provisions of subsection 1 on a central securities depository shall correspondingly apply to its holding company. The Financial Supervisory Authority may grant the holding company exemptions from the obligations provided for in subsection 1, if the holding company is subject to supervision corresponding to this Act in another EEA Member State. Section 16 Duties of the central securities depository In order to attend to the joint duties of the book-entry system, the central securities depository shall: 1) be responsible for the maintenance of the central data systems necessary for the operation of the book-entry system;

10 10(44 2) attend to the book-entry system referred to in this Act and provide services relating thereto; 3) keep the lists referred to in chapter 6, section 3 as well as in sections 3 and 4 of the Act on Book- Entry Accounts (827/1991) and provide services materially related to the utilization and handling of the data in the lists; 4) monitor that the number of book-entries registered in the book-entry accounts corresponds to the number in circulation in the book-entry system; 5) act as a clearing house in accordance with this Act; 6) attend to the arrangements that are uniform in the book entry system and required by the payment of yield relating to book entries and related transactions in accordance with its rules; 7) attend to other measures necessary for the reliable functioning and development of the bookentry system and, where necessary, issue instructions relating thereto. In addition to the duties referred to in subsection 1, the central securities depository may collect information from the book-entry system to the insider register referred to in chapter 13 of the Securities Markets Act, the insider register of the central securities depository referred to in section 28, the insider register of an investment firm referred to in chapter 7, section 19 of the Act on Investment Services, the insider register of a stock exchange referred to in chapter 2, section 43 of the Act on Trading in Financial Instruments and the insider register of a management company referred to in section 101 a of the Act on Common Funds as well as act as an intermediary referred to in section 2, subsection 1 (2) of the Act on Securities Accounts. The central securities depository may, in addition to the activities referred to in subsection 1 and the operations permitted for a clearing house, carry out activities closely related thereto. The other activities may not endanger the performance of the duties referred to in subsection 1 or the operation of the book-entry system. Section 17 International cooperation A central securities depository shall act in cooperation with foreign stock exchanges, operators of multilateral trading, securities determination, clearing and deposit institutions, central securities depositories, parties maintaining systems comparable to the book-entry system and custodians. The central securities depository shall maintain the accounts and lists required by international cooperation in the book-entry register. The cooperation shall be governed by the rules of the central securities depository. Section 18 Close link of a central securities depository A close link between a central securities depository and another legal person or natural person may not prevent the effective supervision of the central securities depository. Nor may efficient supervi-

11 11(44 sion be prevented by the provisions and administrative provisions of a third country applicable to a natural person or legal person with such a link. After the granting of the license, the Financial Supervisory Authority shall immediately be notified of any changes in the information relating to close links declared in the license application. A close link shall in this section refer to that provided for in section 37 (2) - (4) of the Act on Credit Institutions (121/2007). Section 19 Preparedness A central securities depository shall ensure maintenance of the information in the book-entry system with as little disturbance as possible also in exceptional circumstances with adequate data systems in Finland or by other arrangements that are adequate with regard to uninterrupted operations, by participating in the preparedness planning of financial markets and by preparing in advance the actions to be taken in exceptional circumstances as well as by other measures. If the tasks resulting from subsection 1 require measures which clearly differ from the activities of a central securities depository to be considered ordinary and which entail considerable additional costs, such costs may be reimbursed from the National Emergency Supply Fund referred to in the Act on the Protection of National Emergency Supply (1390/1992). Section 20 Supervisory duty of a central securities depository A central securities depository shall arrange adequate and reliable supervision to ensure compliance with this Act and the provisions and regulations issued thereunder as well as with the rules of the central securities depository within the book-entry system. The central securities depository shall inform the Financial Supervisory Authority of a procedure that is likely to be in violation of the provisions or regulations referred to in subsection 1 or the rules of the central securities depository unless the procedure is rectified without delay or unless the state of the matters is otherwise corrected. If the provisions, regulations or rules have been materially or repeatedly violated, this shall, however, always be notified. The account operators and other parties using the services of the central securities depository shall, on request, submit to the central securities depository the detailed information necessary for the fulfilment of the supervisory duty in accordance with this section. Section 21 Outsourcing of the activities of a central securities depository A central securities depository may, by permission of the Ministry of Finance, outsource an operational function in accordance with section 16 (1) if the outsourcing does not impair the risk management, internal control or supervision of the activities of the central securities depository or at-

12 12(44 tendance to another function significant with regard to the business or other activity of the central securities depository. A function shall be significant with regard to the activities of a central securities depository if an error or deficiency in its performance may materially impair compliance with the Acts relating to the activities of the central securities depository or with the provisions or regulations issued thereunder or with the terms of the license of the central securities depository or the financial position of the central securities depository or the continuance of its activities. A written agreement shall be drafted on the outsourcing of a function significant with regard to the activities of the central securities depository indicating the contents of the assignment and the period of validity of the agreement. The central securities depository shall ensure that it continuously receives from the party carrying out the outsourced activities the necessary information required by supervision by the authorities, risk management and internal control of the central securities depository and that it has the right to convey the information further to the Ministry of Finance, the Bank of Finland and the Financial Supervisory Authority. A central securities depository which, after the granting of the license, intends to outsource a function significant with regard to its activities other than one referred to in section 16 (1), shall notify the Financial Supervisory Authority of the outsourcing in advance. The Financial Supervisory Authority shall be notified of any significant changes in the contractual relationship between the central securities depository and the party carrying out the outsourced activity. Section 22 The rules of the central securities depository A central securities depository shall draw up and keep available to the public rules concerning its activities containing provisions at least on the following: 1) rules and principles relating to the exchange of information between the central securities depository and the account operators as well as on the distinctive codes used in the identification of the book entries and the holders of rights and other uniform practices required by the book-entry system; 2) the minimum opening hours of account operators; 3) the procedure to be complied with in the rectification of errors and discrepancies in registration operations; 4) the data security and register security procedures to be complied with in the activities of account operators as well as on the keeping of the documents relating to decisions made by the account operators or of copies thereof; 5) the granting of the rights of an account operator and the information required upon their application;

13 13(44 6) the manner of attending to the supervisory duties belonging to the central securities depository under the law; 7) the distribution of competence between the Board of Directors and the Managing Director relating to the issue of decisions supplementing the rules; 8) the amendment of the rules and notification of the amendment; 9) on other issues relating to the activities of the central securities depository. Section 23 Confirmation of the rules of a central securities depository The rules of a central securities depository shall be confirmed by the Ministry of Finance on application. The rules shall be confirmed if they comply with this Act and the provisions and regulations issued thereunder and if, on the basis of the account obtained, it can be deemed probable that they ensure the reliable arrangement of the activities of the central securities depository and maintenance of the book-entry system. The application shall be decided on within three months from receipt thereof or, if the application has been defective, from the date on which the applicant has submitted the documents and accounts necessary for deciding the issue. The decision shall, however, always be made within six months from receipt of the application. The Ministry of Finance shall, prior to confirming the rules, request an opinion of the Bank of Finland and the Financial Supervisory Authority on the application. If the opinion of the Bank of Finland is disapproving with regard to issues belonging to the statutory duties of a bank, the rules shall not be confirmed for that part. The Ministry of Finance may, in order to enhance trust in the book-entry system or for another especially weighty reason, order that the contents of the provisions of the rules it has confirmed be amended or supplemented. The Ministry of Finance shall, prior to issuing the order, request an opinion thereon of the Bank of Finland and the Financial Supervisory Authority. The account operator shall undertake to comply with the rules of the central securities depository. The issuer of a book entry shall undertake to comply with the rules of the central securities depository before a book entry may be incorporated in the book-entry system on application by the issuer Section 24 The fees to be charged for the services of a central securities depository Taking into consideration the different customer groups, the fees to be charged for the services of a central securities depository shall be reasonable and equal, which it shall, on request, be able to demonstrate to the Financial Supervisory Authority. Section 25 Personal transactions

14 14(44 The central securities depository shall, with adequate measures, aim at preventing any relevant person in the central securities depository from making personal transactions if this may result in a conflict of interest or if the said person has inside information referred to in the Act on Securities Markets or confidential information relating to issuers or clearing parties or to their transactions. The aim shall be to ensure confidentiality of such information. The central securities depository shall store the information on personal transactions. The central securities depository shall, on a yearly basis, submit to the Financial Supervisory Authority an account of the manner in which the central securities depository has supervised compliance with the provisions, regulations and internal instructions of the central securities depository concerning personal transactions and of the measures which the central securities depository has undertaken in the event of non-compliance with the said provisions, regulations or instructions. A relevant person and personal transactions shall be governed by the provisions of chapter 7, section 11 of the Act on Investment Services on relevant persons in an investment firm and their personal transactions. Section 26 Obligation to file an insider declaration An insider of a central securities depository shall declare the information on shares, admitted to trading on a regulated market or on an MTF in Finland, and such financial instruments, the value of which is determined on the basis of the said shares, to the insider register of an investment firm referred to in section 28 as provided for in section 27, hereinafter an insider declaration. An insider of a central securities depository means: 1) a member or deputy member of the Board of Directors or the Supervisory Board, the Managing Director or Deputy Managing Director of a central securities depository or an auditor, deputy auditor or an employee of an audit organisation with main responsibility for the audit of the accounts of the company; 2) another person employed by a central securities depository who, as part of his position or duties, has access to insider information relating to the shares or financial instruments referred to in subsection 1 on a regular basis. Section 27 Insider declaration An insider of a central securities depository shall submit an insider declaration within fourteen days from the date on which he was appointed to the duty referred to in section 26 (2). The insider declaration shall state: 1) a minor whose guardian the insider is;

15 15(44 2) an organisation or foundation in which the insider or the minor referred to in subsection 1 directly or indirectly exercises control; 3) the shares admitted to trading on a regulated market or on an MTF in Finland and such financial instruments, the value of which is determined on the basis of the said shares, held by the insider himself as well as by the minor referred to in paragraph 1 and the organisation or foundation referred to in paragraph 2. An insider shall, while in his function, within seven days, declare to the central securities depository: 1) acquisitions and disposals of shares and financial instruments referred to in subsection 2 (3) when the change in the holding is at least EUR 5 000; 2) other changes in the information referred to in this section. The information referred to in subsection 2 (2) and (3) need not be declared in so far as they relate to a limited-liability housing company, a limited-liability joint-stock property company referred to in chapter 28, section 2 of the Limited Liability Housing Companies Act (1599/2009), a voluntary association or an economic association or a non-profit association. If an association trades in financial instruments on a regular basis, information relating thereto shall, however, be declared. The declaration shall contain the information necessary to individualise the person, organisation or foundation in question as well as information relating to the shares and other financial instruments. If the shares or financial instruments referred to in subsection 2 (3) have been incorporated in the book-entry system, the central securities depository may make an arrangement through which the information is available from the book-entry system. In that case, no separate declarations need be submitted. Section 28 Insider register of a central securities depository A central securities depository shall keep a register of the insider declarations referred to in section 27 (an insider register of a central securities depository), indicating, with regard to each insider, the shares and financial instruments referred to in section 27, subsection 2 held by the insider, the minor referred to in paragraph 1 and the organisation or foundation referred to in paragraph 2 as well as an itemization of the acquisitions and disposals. If the declarations are submitted in accordance with section 27 (6), the insider register of a central securities depository may, for that part, be construed of the information available from the bookentry system. The maintenance of the insider register of a central securities depository shall be arranged in a reliable manner. Information entered in the register shall be kept for five years from the making of the entry. Anyone shall have the right to get extracts and copies of the information in the register against costs. The personal identity number and address of a natural person as well as the name of a natural person other than an insider shall, however, not be public.

16 16(44 The central securities depository shall annually submit to the Financial Supervisory Authority an account on the arrangement of the maintenance of the insider register, the supervision of the obligation to declare of the insiders of a central securities depository as well as on the measures undertaken by the central securities depository in case of non-compliance with the provisions, regulations or internal instructions of the central securities depository concerning an insider declaration. Section 29 Audit and the duty to submit copies of certain documents At least one of the auditors of the central securities depository shall be an auditor or an audit firm approved by the Central Chamber of Commerce referred to in section 2, subsection 2 of the Audit Act (459/2007). The central securities depository shall, without undue delay, submit to the Financial Supervisory Authority a copy of: 1) its annual accounts documents; 2) its audit report; 3) the minutes of the Annual General Meeting of the Shareholders. The provisions of subsection 2 on a central securities depository shall correspondingly apply to its holding company. The Financial Supervisory Authority may grant the holding company an exemption from the duty provided for in subsection 2 if the holding company is subject to supervision corresponding to this Act in another EEA Member State. Section 30 Authority to issue regulations of the Financial Supervisory Authority The Financial Supervisory Authority may issue further regulations on the reliable arrangement of the activities of a central securities depository referred to in section 15 as well as on the issues to be observed in the operating principles to be complied with in the identification and prevention of conflicts of interests so that the regulations shall, where applicable, correspond to the regulations issued to investment firms under chapter 7, section 23, subsection 1 (3) and (4) of the Act on Investment Services. The Financial Supervisory Authority may issue further regulations on the transactions referred to in section 25 (1) and on the account referred to in subsection 2 and its submission to the Financial Supervisory Authority, the contents and manner of submission of the insider declaration referred to in section 27, the contents and manner of entering information in the insider register of a central securities depository referred to in section 28 as well as on the account referred to in section 28 (4) and its submission to the Financial Supervisory Authority. The provisions shall, where applicable, correspond to the regulations issued to investment firms under chapter 7, section 23, subsection 1 (5) and subsection 2 of the Act on Investment Firms. Chapter 3

17 17(44 The license, owners, administration and operations of a clearing house Section 1 The license of a clearing house and the application of the provisions on a central securities depository to a clearing house The operations of a clearing house may not be carried out without a license granted by the Ministry of Finance. The provisions of chapter 2, sections 1-15 on a license, the financial operating conditions, the acquisition of shares, management, restriction and suspension of activities, transfer of registered office, participation in a merger and division in the European Economic Area, arrangement of activities as well as the provisions of sections 20, 21, 25 and 29 of the same chapter on the supervisory duty, outsourcing of functions, personal transactions and audit of a central securities depository shall correspondingly be applied to a clearing house. The provisions of chapter 2, section 15 (3) on a central securities depository as well as on a member of its management body and its employee shall correspondingly apply to a clearing house as well as to a member of its management body and its employee when the clearing house carries out its statutory duties under this Act. The provisions of chapter 2, section 8 (6) on the holding company of a central securities depository shall correspondingly apply to an organisation which has control in the clearing house in the manner referred to in chapter 2, section 4 of the Securities Markets Act (the holding company of a clearing house). The Financial Supervisory Authority may issue further regulations on the reliable arrangement of operations of a clearing house, the issues to be observed in the operating principles to be complied with in the identification and prevention of conflicts of interests as well as on personal transactions, the account relating to their supervision and the submission of the account to the Financial Supervisory Authority correspondingly in compliance with the provisions of chapter 2, section 30. The license application of the clearing house shall also be appended with adequate accounts on the distribution of losses possibly arising from the operation of the clearing house as well as on the cover of the risk of loss. Section 2 Operations of a clearing house A clearing house may, in addition to the clearing operations, under the conditions attached to its license: 1) offer data processing services relating to the transfer and custody of securities as well as training, information and data processing services relating to the development of the securities and financial markets; 2) carry out central securities depository operations and maintain a book-entry register; 3) act as a clearing party. 4) act as a central counterparty.

18 18(44 A clearing house may not own shares or participations in an organisation other than one providing the services referred to in this section unless the Financial Supervisory Authority, for a special reason, grants an exemption from this restriction. The exemption may be granted if the ownership does not endanger the reliability of the operations of the clearing house. A clearing house may, in addition to the operations referred to in this section and the activities allowed for a central securities depository, carry out also operations closely related thereto. Such other operations may not endanger the operation of a clearing house as a central securities depository, performance of the tasks referred to in subsection 1 or the clearing operations. Section 3 Safeguarding the operations of a clearing house In order to safeguard its operations, a clearing house may conclude a contract with the clearing parties on the distribution of losses possibly arising from the operation of the clearing house. The liability of a clearing party may be restricted in the contract to only a part of the operations of a clearing house and a maximum amount may be set for the liability of a clearing party. Confirmation of the Ministry of Finance shall be applied for the contract. The Ministry shall, prior to the confirmation of the contract, request an opinion thereon of the Bank of Finland and the Financial Supervisory Authority. If the operations of the organisation include the clearing of securities incorporated in the book-entry system, a statement of the central securities depository shall be requested, where necessary. A clearing party may compensate part or all of its commitment to the contract on the distribution of loss by taking out an insurance or by placing a guarantee safeguarding the operations of the clearing house. A clearing house shall continuously cover its liabilities arising from the clearing operations with collateral to be required from the clearing parties. A clearing house shall have a clearing fund if, in the operations of the clearing house, obligations to deliver or to pay relating to securities are netted in accordance with the Act on Certain Conditions of Securities and Currency Trading as well as Settlement Systems (1084/1999). The clearing fund may be used to cover the losses of the clearing house arising from clearing operations as well as to fulfil an obligation resulting from the clearing operations of the clearing house or a clearing party unless the clearing house or clearing party itself fulfils the obligation. Contributions shall be paid to the clearing fund by the clearing parties that participate in the netting. The administration, rules, management of assets as well as refund of profit and assets of a clearing fund shall, where applicable, be governed by the provisions of this Act on the registration fund of the central securities depository, its rules, management of assets as well as refund of profit and assets. The fund may be entered as a separate equity-capital item in the balance sheet of the clearing house. Assets shall be transferred to the clearing fund as provided for in the rules of the fund and the clearing house or, if the fund is entered in the balance sheet of the clearing house, as provided for in the Articles of Association. The general meeting of the shareholders of the clearing house may decide that a certain amount of the unrestricted equity capital shown in the balance sheet shall be transferred to the clearing fund. The rules of the clearing house may further provide that the clearing parties shall be liable to pay contributions to the clearing fund. The assets of the clearing fund may be refunded to the clearing parties or used for the distribution of profit only by permission of the Financial Supervisory Authority or in the event of the dissolution of the clearing house.

19 19(44 The own funds of the clearing house, the possible contract on the distribution of loss, the clearing fund as well as the collateral deposited, insurance taken out and guarantees placed in favour of the clearing house as well as any other measures taken in advance and safeguarding the operations of the clearing house shall together be sufficient to ensure the reliability of the clearing operations. Section 4 The rules of a clearing house A clearing house shall draw up and keep available to the public rules on its operations containing regulations at least on the following: 1) the type of securities transactions and other transfers to be accepted for clearing carried out by the clearing house; 2) the manner and time for the arrangement of clearing; 3) the manner and the grounds for approval as a clearing party and for revocation of these rights; 4) the manner in which the obligations arising from a securities transaction or other transfer are determined in clearing; 5) the time at which an obligation shall be deemed entered for clearing; 6) the manner in which the clearing house shall be liable for the fulfilment of the obligations; 7) the manner in which the obligations shall be fulfilled; 8) the manner for ensuring the liquidity of the clearing house; 9) the manner for depositing the collateral referred to in section 3 safeguarding the clearing operations; 10) the manner for covering the risk of loss resulting from clearing; 11) the manner for arranging clearing in disturbance situations or when a clearing party neglects its obligations belonging to clearing; 12) the manner in which the clearing parties shall be liable for clearing; 13) the manner for dividing the issuing of decisions supplementing the rules between the Board of Directors and the Managing Director; 14) the manner for attending to the supervisory duties belonging to the clearing house; 15) the special requirements to be set on an organisation acting as an agent on behalf of a clearing party;