Changes in VPS’ Rules

Euronext Securities Oslo had to proposals with amendments to the VPS’ Rules on consultation in before the summer.

The consultations were on amendments to facilitate correct handling of US withholding tax and ensure compliance with the AML Act and international sanctions.

In short, the proposals included:

  • Account operator issuer and account operator investor for financial instruments subject to US withholding tax must be registered as QI with the US tax authorities
  • Account operator investor registered as QI approve registration of financial instruments subject to US withholding tax on a VPS account. Account operator investor must collect tax documentation and consent to receive and distribute payments from US source to the account holder
  • There are special rules for registration of derivates subject to US withholding tax to ensure compliance with IRC s. 871 (m)
  • Clarification that account operator and not Euronext Securities Oslo is responsible to comply with anti-money laundering legislation
  • A party carrying out a transfer of fund units must obtain an approval for the transfer from the fund management company, and assist the fund management company in collecting customer information
  • Euronext Securities Oslo shall on a continual basis perform searches in international sanctions lists and inform account operator of any finds. Account operator shall implement the required measures. Account operator shall inform Euronext Securities Oslo if the account operator becomes aware that an issuer or account holder may be subject to international sanctions.

Euronext Securities Oslo has now adopted the amendments. We have made some adjustments in the proposals due to received comments. The provision on transfer of information to the fund management company has been taken out. Further, the obligation for account operators to inform Euronext Securities Oslo is limited to circumstances where the account operator is aware that issuer or account holder is subject to international sanctions. Technical changes to reduce administrative burdens for account operators have also been requested. For AML it is requested functionality to hinder the transfer of fund shares to a recipient that has no customer relationship with the fund management company. For financial instruments subject to US withholding tax, functionality to handle the US source payments from account operator investor to the account holder has been requested. We are working to examine this technical changes, and we may not at the present time say when such changes may be implemented. Euronext Securities Oslo will develop technical changes to ensure that financial instruments subject to US withholding tax only can be transferred to approved VPS accounts operated by an account operator investor which is registered as QI.

Account operator issuers must determine whether their issuers are subject to US withholding tax and inform Euronext Securities Oslo. Euronext Securities Oslo will inform account operator investor on which issuers that are subject to US withholding tax, with a list of account holders who holds such instruments and more detailed information on how the instruments must be handled. Account operator investor that is not registered as a QI must ensure that registered financial instruments subject to US withholding tax are transferred to an account operator investor that is a QI. The account operator investor must confirm to Euronext Securities Oslo that they will become a QI or that the instruments will be transferred to an account operator that is a QI. Euronext Securities Oslo may provide a system tool to handle documentation and reporting to US tax authorities. Euronext Securities Oslo is registered as a QI and uses this system tool. Please contact us if you want more information on this system tool.

We will provide more information on the handling of the QI system and financial instruments subject to US withholding tax on regional meetings this autumn. We will also make a written description of process flows of US source payments that we will distribute to all customers.

The NFSA will due to the CSDR application approve all changes before they can enter into force. We have sent the changes to the NFSA and await their feedback. We want to implement the above-mentioned changes at the same time and about 1. December 2021.

Changes in VPS’ Rules