Legal Aspects of Finance Slide Set 3 Markets

Legal Aspects of Finance Slide Set 3 Markets, Parties and Trading • The Stock Exchange and Other Public Trading in Securities • (National) Regulation: Sources, Overview Matti Rudanko

FINANCIAL MARKETS IN EXTENSIVE MEANING MONEY MARKET SECURITIES MARKET DERIVATIVES MARKET INVESTMENT FIRMS Legal Aspects of Finance 3 2

Money Market for short-term (usually less than a year) financial instruments Governments, banks and companies obtain their short -term funding and deal with fluctuations in their liquidity treasury bills, certificates of deposit and commercial papers Legal Aspects of Finance 3 3

Derivatives Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties or that can be physically settled provided that they are traded on a regulated market and/or an MTF (Multilateral Trading Facilities) Legal Aspects of Finance 3 4

Securities markets regulation 1 Legal Aspects of Finance 3 5

Government Bill 32 / 2012 1) Securities Markets Act (14. 12. 2012 / 746) • Repeals: Former SMA (1989) 2) Act on Investment Services (14. 12. 2012 / 747) • Repeals: Act on Investment Service Companies (2007) 3) Act on Trading in Financial Instruments (14. 12. 2012 / 748) • Repeals: Act on Trading in Standardised Options and Futures (1988) 4) Act on Book Entry System and Settlement Activity (14. 12. 2012 / 749 / 2012) 5) Act on Securities Accounts (14. 12. 2012 / 750) Legal Aspects of Finance 3 6

Securities Markets Act 1 Part 1: General Part 3: Disclosure Duty Part 2: Prospectus General Provisions Scope of Application Ongoing Duty Definitions Publication Contents Regular Duty Role of FSA Other Duties of the Issuer Disclosure of Holdings Legal Aspects of Finance 3 7

Securities Markets Act 2 Part 4: Public Bids and Mandatory Bids Part 6: Part 5: Market Abuse Sanctions Appeal General Provisions Insider Registers Market Abuse: Insider Trading Market Distortion Legal Aspects of Finance 3 8

Act on Investment Services 1 Part 1: General Provisions Ch. 1 Scope of Application Definitions: Firms, Customers (classification), Financial instruments, Services Ch. 2 - 5 Right to offer services Need for licence Foreign companies Legal Aspects of Finance 3 9

Act on Investment Services 2 Part 2: Business Activities Ch. 6 - 7 Minimum Capital, Economic Stability, Risk Management, Interest Conflicts Management Supervision Ch. 8 - 9 Accounting and Auditing Customer Funds Legal Aspects of Finance 3 10

Act on Investment Services 3 Part 3: Customer Relations, Compensation Fund Part 4: Miscellaneous Ch. 10 Ch. 12 – 14 Customer Practices Classification of Customers Secrecy ”Know your customer” Branches Abroad Foreign Companies Ch. 11 Ch. 15 – 16 Administrative Sanctions Investor Compensation Fund Damages and Punishments Legal Aspects of Finance 3 11

Act on Trading in Financial Instruments Part 1 (Ch 1) Part 4 (Ch 8 – 12) • Scope of application • Definitions • Supervision and Appeal • Administrative penalties • Compensation of Damages • Punishments Part 3 Part 2 (Ch 2 -5) Marketplaces • Stock Exchange • Licence • Supervision • Management • Trading rules • Listing etc. • Multilateral Trading • Internalizing Transparency of Trading • Disclosure Duty of Marketplace Company • Disclosure Duty of Investment Company • Trading • Internalizing Legal Aspects of Finance 3 12

NASDAQ OMX Nordic The NASDAQ OMX Group, Inc. An integrated marketplace for listing, trading and clearing of securities as well as information services, NASDAQ OMX Nordic includes the exchanges in Copenhagen, Stockholm, Helsinki, and Iceland. NASDAQ OMX Nordic offers ease of access to more than 75 percent of the exchange trading in the Nordic countries. Legal Aspects of Finance 3 13

Listing in OMX Legal Aspects of Finance 3 14

Listing in OMX, cont. Legal Aspects of Finance 3 15

Listing in OMX, cont. Legal Aspects of Finance 3 16