AY,

ARTA,

an,

The Riksbank may, with or without interest com-
pensation, receive deposits in foreign currency or
gold from, and make such deposits with, banks,
foreign bank companies, centrai banks, credit market
companies, foreign credit institutions, the Bank for
international Settlements and the International Bank
for Reconstruction and Development. The Riksbank
may also receive such deposits from other sovereign
states and intergovernmental bodies.

The Riksbank may also reach agreements with re-
spect to obligations and rights that are linked to the
deposits described in the preceding paragraph.

cHaPTeR 8 OTHER TASKS

The Riksbank shall accept payments to and make
disbursements for the state.

The Riksbank may accept deposits from the state.

The Riksbank shall not extend credit to or purchase
debt instruments directly from the state, another
public body or an institution of the European Union.

The Riksbank may, however, pursuant to Chapter

6, Article 7 paragraph 2, grant intraday credit to

the state. Subject to other provisions in this Act, the
Riksbank may also grant credit to and purchase debt
instruments from financial institutions owned by the
state or another public body.

Within the framework of the Riksbank's tasks as
central bank, the Riksbank may purchase equity,

162)


L 201/12

Lan

Official Journal of the European Union

27.7.2012

(81)

(82)

(83)

(84)

(85)

(86)

should compensate the competent authorities for
carrying out a delegated task in accordance with a regu-
lation on fees to be adopted by the Commission by
means of a delegated act. ESMA should not be able to
delegate the power to adopt decisions on registration.

It is necessary to ensure that competent authorities are
able to request that ESMA examine whether the
conditions for the withdrawal of a trade repository’s
registration are met. ESMA should assess such requests
and take any appropriate measures.

ESMA should be able to impose periodic penalty
payments to compel trade repositories to put an end
to an infringement, to supply complete and correct
information required by ESMA or to submit to an inves-
tigation or an on-site inspection,

ESMA should also be able to impose fines on trade
repositories where it finds that they have committed,
intentionally or negligently, an infringement of this Regu-
lation, Fines should be imposed according to the level of
seriousness of the infringement. Infringements should be
divided into different groups for which specific fines
should be allocated. In order to calculate the fine
relating to a particular infringement, ESMA should use
a two-step methodology consisting of setting a basic
amount and adjusting that basic amount, if necessary,
by certain coefficients, The basic amount should be
established by taking into account the annual turnover
of the trade repository concerned and the adjustments
should be made by increasing or decreasing the basic
amount through the application of the relevant coef-
ficients in accordance with this Regulation.

This Regulation should establish coefficients linked to
aggravating and mitigating circumstances in order to
give the necessary tools to ESMA to decide on a fine
which is proportionate to the seriousness of the
infringement committed by a trade repository, taking
into account the circumstances under which that
infringement has been committed.

Before taking a decision to impose fines or periodic
penalty payments, ESMA should give the persons
subject to the proceedings the opportunity to be heard
in order to respect their rights of defence.

ESMA should refrain from imposing fines or periodic
penalty payments where a prior acquittal or conviction
arising {rom identical facts, or from facts which are
substantially the same, has acquired the force of res
judicata as a result of criminal proceedings under
national law.

(87)

(88)

(89)

(90)

(91)

ESMA's decisions imposing fines and periodic penalty
payments should be enforceable and their enforcement
should be subject to the rules of civil procedure which
are in force in the State in the territory of which it is
carried out. Rules of civil procedure should not include
criminal procedural rules but could include adminis-
trative procedural rules.

In the case of an infringement committed by a trade
repository, ESMA should be empowered to take a
range of supervisory measures, including requiring the
trade repository to bring the infringement to an end,
and, as a last resort, withdrawing the registration where
the trade repository has seriously or repeatedly infringed
this Regulation. The supervisory measures should be
applied by ESMA taking into account the nature and
seriousness of the infringement and should respect the
principle of proportionality. Before taking a decision on
supervisory measures, ESMA should give the persons
subject to the proceedings an opportunity to be heard
in order to comply with their rights of defence.

It is essential that Member States and ESMA protect the
tight to privacy of natural persons when processing
personal data, in accordance with Directive 95/46/EC
of the European Parliament and of the Council of
24 October 1995 on the protection of individuals with
regard to the processing of personal data and on the free
movement of such data(!) and with Regulation (EC)
No 45/2001 of the European Parliament and of the
Council of 18 December 2000 on the protection of
individuals with regard to the processing of personal
data by the Community institutions and bodies and of
the free movement of such data (*).

It is important to ensure international convergence of
requirements for CCPs and trade. repositories. This Regu~
lation follows the existing recommendations developed
by the Committee on Payment and Settlement Systems
(CPSS) and International Organization of Securities
Commissions (IOSCO) noting that the CPSS-IOSCO prin-
ciples for financial market infrastructure, including CCPs,
were established on 16 April 2012. It creates a Union
framework in which CCPs can operate safely. ESMA
should consider these existing standards and their
future developments when drawing up or proposing to
revise the regulatory technical standards as well as the
guidelines and recommendations foreseen in this Regu-
lation.

The power to adopt acts in accordance with Article 290
of the Treaty on the Functioning of the European Union
(TFEU) should be delegated to the Commission in respect
of amendments to the list of entities exempt from this

( OFL 281, 23.11.1995, p. 31.
@) O}L 8, 12.1.2001, p. 1.


posing to Nasdaq Clearing.

Nasdaq Clearing identifies the material risks it bears from other types of entities,
such as investment and counterparties for investments, settlement banks, nostro
agents, custodians, liquidity providers and other services providers. In the
implemented risk framework, Nasdaq Clearing has processes to address the
different types of risk stemming from these entities, such as financial-, operational-,
legal- and concentration risk.

As with all other parties in the financial markets, Nasdaq Clearing poses risks on its
members and on its key providers such as settlement banks. The risks Nasdaq
Clearing poses to others are in essence the same type of risks it is exposed to itself
as a clearing house, i.e. credit risk, operational risk and liquidity risk. Thus, in building
a robust infrastructure to manage the risks it bears from others, Nasdaq Clearing
also builds arrangements that protect interdependent entities. Service providers are
regulated through service level agreements (SLAs) with the clearing house and
quarterly meetings with the settlement banks are held to go through services and
BCP’s.

To manage and minimize the risks Nasdaq Clearing bears from and poses to other
entities, Nasdaq Clearing has different arrangements in place to handle incidents
and risk arising from the clearing activity, e.g.;

e  inrelation to settlement risk, Nasdaq Clearing has liquidity arrangements in
place and access to the underlying markets for physical settlement. Well
defined processes and routines are in place to handle a default situations,
including involvement of participants to secure an efficient close out process
thereby mitigating the spill-over effect on other participants;

© credit risk stemming from its members this is managed via the margin and
collateral regime and also via robust and tested financial resources;

e for system or business disturbances, Emergency Response Team, and
business continuity plans are in place including back-up site outside the main
office to secure continuous operations.

These arrangements are monitored and reviewed by the Clearing Risk Committee
and the Local Risk Management Forum.

In the established Risk Self-Assessment (“RSA”) process and the review of the
Recovery and Resolution Plan (“RRP”), Nasdaq Clearing has identified and
continuously assesses scenarios which could have an impact on the clearing house’s
possibility to perform as going concern, These include various disaster scenarios and
Nasdaq Clearing has BCPs for its critical operations and services that is tested every
other month and reviewed continuously by the Clearing Operations Department.
The identified scenarios include both independent as well as related risks, and
entities which have multiple roles towards the clearing house is monitored in the
liquidity risk framework and mitigation actions proposed if the risk is assessed to be
non-acceptable.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

17


Exhibit D-3 to Supplement S-1 to Form FBOT

A detailed description of the manner in which the clearing organization observes each of the RCCPs or
successor standards and documentation supporting the representations made, including any relevant

rules or written policies or procedures of the clearing organization. Each RCCP should be addressed
separately within the exhibit.

For a detailed description of the manner in which Nasdaq Clearing observes each of the Principles
for Financial Infrastructure (“PFMIs”) published in February 2012 and developed jointly by the
Committee on Payments and Market Infrastructures (“CPMI”) and the Technical Committee of the
International Organization of Securities Commissions (“IOSCO”) please see Nasdaq Clearing’s
Disclosure Framework attached hereto as Document S-4.

LONO1_8129629v2


annual cycle.

Operational management; the CEO, the CRO and the CTO, of the clearing house are
responsible for making sure there are independent controls of operational
procedures. Management is supported in its responsibilities to identify, evaluate and
control risks in their respective areas, supported by the Enterprise Risk Manager and
by risk- and security professionals from Nasdaq Group level.

The Internal Audit function of the parent company of Nasdaq Clearing is responsible
for making independent reviews of the adequacy of operational risk controls,
reporting to the Nasdaq Group Inc.’s Audit Committee. The members of the Audit
Committee are appointed by the Board of Directors of Nasdaq Group Inc. Internal
Audit is governed by an annually approved charter. The Internal Audit function
performs continuous reviews of the adequacy of operational risk controls based on
an annual audit plan.

The Internal Audit function reviews systems, operational policies, procedures and
controls as well as operational risk management based on risks and in accordance
with Internal Audit’s annual planning. Procedures covered by SOX requirements for
Nasdaq Clearing’s operational and system related controls are part of both Internal
Audit and External Audit annual testing.

Manual as well as automated control procedures have been built into the day-to-day
clearing and settlement process to reveal any operational risk issues at an early
stage. These procedures are reviewed on a continuous basis by the clearing house.
All significant deviations from normal operations are registered in a system for
follow-up and resolution.

Operation objectives are defined in the service agreement between Nasdaq Clearing
and the IT service provider within Nasdaq. The current system uptime objective of
the central clearing system is at least 99.90%, and at least 98.50% for the custody
and settlement system. To achieve this, the clearing house’s systems are designed to
be fault tolerant and with fail over capabilities to at least one, and sometimes two,
standby instances. The system uptime is measured and calculated monthly as a
percentage value of the time the system was available compared to the expected
time during the availability hours for the respective month. In addition, the services
agreement contains quantitative service levels such as service desk response time,
incident management priority levels, volumetric parameters, hours of operations
and load profile parameters. Qualitative service levels include adherence to internal
policies such as the Code of Ethics and the Information Security Policy.

Reports on the IT service are produced on a monthly basis. Technical operational
meetings take place every second week, in which performance issues can be brought
up if needed. Quarterly Service Level Review meetings are held by the outsourcing
supplier. Outsourcing objectives are audited through Internal Audit procedures
according to the annual audit plan.

In the service agreement the minimum capacity demands on all key systems are
clearly defined. In order to make sure that these demands are met, tests are

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

48


positions and collateral from a defaulting participant to an alternative participant.

Nasdaq Clearing’s segregation and portability arrangements are disclosed in its
R&Rs. In addition, segregation and portability arrangements are described in the
brochure “Nasdaq as a counterparty” which can be found on the website.

A participant’s customer can establish whether its collateral is protected on an
individual or omnibus basis through the type of account it has chosen and the type
of agreement it has signed, in addition to asking its clearing participant to explain
the level of segregation is being provided.

Customers that have not signed specific agreements with Nasdaq Clearing do not
have a legal relationship with Nasdaq Clearing and must rely on the information
provided by the participant to determine what level of protection they have.
Provided the customer has information about the type of account being used, the
customer can refer to the Nasdaq Clearing website to read more about the level of
protection that is provided for each account type.

The risks, costs and uncertainties associated with Nasdaq Clearing’s segregation and
portability arrangements are identified in an “Investor Risk Document” published on
Nasdaq Clearing’s website.”°

Principle 15: General business risk

An FMI should identify, monitor, and manage its general business risk and hold
sufficient liquid net assets funded by equity to cover potential general business
losses so that it can continue operations and services as a going concern if those
losses materialise. Further, liquid net assets should at all times be sufficient to
ensure a recovery or orderly wind-down of critical operations and services.

Nasdaq Clearing has an overall Enterprise Risk Management (“ERM”) framework,
which involves identifying and assessing all risks in terms of probability and potential
impact, as well as deciding on action plans to mitigate the risks. Scenarios
considered posing a risk to the clearing house ‘s critical operations and services are
to be identified through the RSA process. This is done on a yearly basis as a
minimum, but also in connection to major changes or whenever deemed necessary.
Normally a large review is done at least twice a year. Significant risks should always
be added to this process (whenever identified) and well documented. Through this
work-shop based process involving a large number of people from all relevant
departments (generally department heads and senior staff), risks are identified,
discussed and allocated a mitigation plan. These are then monitored by the
Enterprise Risk Manager and by the Group Risk Management department.

The RSA framework consists of the following:

*© http://www.nasdagomx.com/europeanclearing/accounts

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

43


O CFTC-registered DCO.

If the clearing organization is registered with the Commission in good standing as

DCO, the clearing organization need not complete the remainder of the Supplement S-1.

GENERAL INFORMATION
1. Name under which the business of the clearing organization will be conducted, if

different than name specified above:

2. List of principal office(s) where clearing organization activities are/will be conducted

(please use multiple entries, when applicable):

Office (name and/or location): _ Stockholm

Address: Tullvaktsvigen 15
105 78 Stockholm
Phone Number: +46 8 405 6000
Fax Number: +46 8 405 6001
Website Address : hitp://business.nasdag.com/trade/clearing/nasdaq-clearing/

3. Contact Information.

3a. Primary Contact for Supplement S-1 (i.e., the person authorized to receive Commission

correspondence in connection with this Supplement S-1 and to whom questions regarding the

submission should be directed):
Name: Gham
Title: VP - Deputy General Counsel

Email Address: foes cree el



organization, including the different committees’ roles, from the business
organization, compliance and Internal Audit organization working independently
from the business line, and reporting directly to the relevant Board of Directors of
Nasdaq Clearing, Nasdaq Nordic Ltd and the Nasdaq Group, Inc., respectively.

The legal basis for the responsibilities for the Board is derived from the Swedish
Companies Act (Sw. Aktiebolagslagen (2005:551)), the Articles of Association and
EMIR. All board members must pass the Swedish FSA’s test in respect of being fit
and proper, which focuses on three areas: (1) personal conduct; (2) competence;
and (3) conflicts of interest.

The Board has legal responsibility for major decisions related to Nasdaq Clearing, as
well as for the legal and regulatory compliance of Nasdaq Clearing. All major
decisions of legal or regulatory concern to Nasdaq Clearing need to be taken by the
Board and consequently decisions by another Nasdaq entity would not be self-
executing with respect to Nasdaq Clearing. The role and the responsibilities of the
Board, and its individual members, especially the Chairman, are further defined in
the Rules of Procedure adopted by the Board. The Board has also adopted
Instructions for the President, which define the division of responsibilities between
the Board and the President.

The Board shall make all major decisions in respect of investments, organization and
agreements, provided they are not defined as matters that should be resolved by
the shareholders’ general meeting in the Articles of Association or the Swedish
Companies Act. The Board shall also ensure that Nasdaq Clearing complies with its
obligations under the Swedish FSA’s regulatory framework, including the obligations
of Nasdaq Clearing as a licensed entity and the regulatory requirements under EMIR.
In addition, the Board adopts policies and reviews reports on operational and
clearing risk management, internal control, regulatory capital, compliance,
remuneration and security, and internal audit. The Board also adopts the internal
audit plan. Furthermore, the Board shall make decisions on amendments to the
R&Rs where the amendment is of principle significance or major importance.

Any conflict of interest issues with respect to the Board are managed by a policy
with the same name. This policy ensures that the CCP assumes final responsibility
and accountability for managing the CCP’s risks as well as ensuring that the Board
members understand their responsibilities with regard to personal conflicts.

The members of the Board, including the independent board members, and the
committees, the president and the management have all appropriate skills,
experience and integrity to carry out their duties and tasks. The remuneration
principles and the performance review procedure have been implemented to ensure
the integrity of Nasdaq Clearing’s central counterparty clearing operations. Nasdaq
seeks to strengthen the integrity of its managers by requiring them to go through
regular training regarding the code of conduct and regulatory issues. Moreover, all
managers are required to certify annually their compliance with the code of ethics
and related code of conduct policies. The CCP has an annual performance review
process for the Board of the CCP which assesses both the performance and

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

13


im

27.7.2012

Official Journal of the European Union

L 201/21

The reporting obligation shall apply to derivative contracts
which:

(a) were entered into before 16 August 2012 and remain
outstanding on that date;

(b) are entered into on or after 16 August 2012.

A counterparty or a CCP which is subject to the reporting
obligation may delegate the reporting of the details of the
derivative contract.

Counterparties and CCPs shall ensure that the details of their
derivative contracts are reported without duplication.

2. Counterparties shall keep a record of any derivative
contract they have concluded and any modification for at
least five years following the termination of the contract.

3. Where a trade repository is not available to record the
details of a derivative contract, counterparties and CCPs shall
ensure that such details are reported to ESMA.

In this case ESMA shall ensure that all the relevant entities
referred to in Article 81(3) have access to all the details of
derivative contracts they need to fulfil their respective respon-
sibilities and mandates.

4. A counterparty or a CCP that reports the details of a
derivative contract to a trade repository or to ESMA, or an
entity that reports such details on behalf of a counterparty or
a CCP shall not be considered in breach of any restriction on
disclosure of information imposed by that contract or by any
legislative, regulatory or administrative provision.

No liability resulting from that disclosure shall lie with the
reporting entity or its directors or employees.

5. In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the details and type of the reports referred to in para-
graphs 1 and 3 for the different classes of derivatives.

‘The reports referred to in paragraphs 1 and 3 shall specify at
least:

(a) the parties to the derivative contract and, where different,
the beneficiary of the rights and obligations arising from it;

(b) the main characteristics of the derivative contracts, including
their type, underlying maturity, notional value, price, and
settlement date.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

6. In order to ensure uniform conditions of application of
paragraphs 1 and 3, ESMA shall develop draft implementing
technical standards specifying:

(a) the format and frequency of the reports referred to in para-
graphs 1 and 3 for the different classes of derivatives;

(b) the date by which derivative contracts are to be reported,
including any phase-in for contracts entered into before the
reporting obligation applies.

ESMA shall submit those draft implementing technical standards
to the Commission by 30 September 2012.

Power is conferred on the Commission to adopt the imple-
menting technical standards referred to in the first subparagraph
in accordance with Article 15 of Regulation (EU)
No 1095/2010.

Article 10
Non-financial counterparties

1, Where a non-financial counterparty takes positions in
OTC derivative contracts and those positions exceed the
clearing threshold as specified under paragraph 3, that non-
financial counterparty shall:

(a) immediately notify ESMA and the competent authority
referred to in paragraph 5 thereof

(b) become subject to the clearing obligation for future
contracts in accordance with Article 4 if the rolling
average position over 30 working days exceeds the
threshold; and

(¢) clear all relevant future contracts within four months of.
becoming subject to the clearing obligation.

2. A non-financial counterparty thar has become subject to
the clearing obligation in accordance with paragraph 1(b) and
that subsequently demonstrates to the authority designated in
accordance with paragraph 5 that its rolling average position
over 30 working days does not exceed the clearing threshold,
shall no longer be subject to the clearing obligation set out in
Article 4.


*eg. The Riksbank has the right to compensation for
amounts, corresponding to input tax in accordance
with the Value Added Tax Act (mervardesskattelagen
1994:200), which are attributable to its activities.

However, the Riksbank does not have the right to
compensation if the input tax is covered by limita-
tions in the right to deduction in accordance with
Chapter 8, Articles 9, 10, 15 or 16 of the Value
Added Tax Act.

+9, The Riksbank may make charges for copies, du-
plicates and printouts of public documents. These
charges shall be determined under the guidance of
the regulations applying to authorities under the
Government.

‘CHAPTER 4 BUDGET, ALLOCATION OF PROFIT
AND DISCHARGE FROM LIABILITY

4874. The Riksbank shall have capital in an amount of one
thousand million kronor, a reserve fund of 500 mil-
lion kronor and a contingency fund.

afta. The Riksbank’'s activities shall endeavour to attain a
high level of efficiency and good economy.

4872, The Riksbank’s accounting year is the calendar year.

Each year before the end of December, the Executive
Board shall draft a budget for the Riksbank’s
administrative activities during the following
accounting year. The Executive Board shall submit

te7]


Assets that are used by Nasdaq Clearing to support its regulatory capital or that have
been provided by members to secure their obligations to Nasdaq Clearing are all
secured by or are claims on high quality obligors as stipulated in Nasdaq Clearing’s
Investment Policy. The credit quality is ensured by strict rating requirements on
eligible investments.

The investment policy is processed by the Clearing Risk Committee and approved by
the Board which ensures that it is aligned with Nasdaq Clearing’s overall risk
management strategy.

Nasdaq Clearing has limits on how large the exposure towards an individual
counterparty or towards a type of counterparty may be. The size of the limit is
determined by the counterparty’s credit rating and investment type. All investments
except exposures towards AAA-rated government bonds are subject to limits,
controlled by Treasury Risk Management on a daily basis. Nasdaq Clearing does not
invest in participants’ own securities or those of its affiliates.

All Nasdaq Clearing’s investments are either highly liquid securities and/or have a
short term maturity which ensures a quick liquidation. Nasdaq Clearing invests in
assets with a maximum average maturity of two (2) years. This limitation on the
maturity risk in the portfolio ensures that no significant adverse price effect can arise
in the portfolio in the event a defaulting party has long positions in fixed income
products. Furthermore, due to the limitations in its investment policy Nasdaq
Clearing cannot invest in other underlying instruments to the derivative contracts
cleared by Nasdaq Clearing, or invest in securities issued by any participants (or its
affiliates), which ensures that Nasdaq Clearing’s investments are exposed to little, if
any, adverse price effects.

Nasdaq Clearing discloses a summary of its investment policy on its website’.

Principle 17: Operational risk
An FMI should identify the plausible sources of operational risk, both internal and

procedures, and controls. Systems should be designed to ensure a high degree of
security and operational reliability and should have adequate, scalable capacity.
Business continuity management should aim for timely recovery of operations and
fulfilment of the FMI’s obligations, including in the event of a wide-scale or major
disruption.

external, and mitigate their impact through the use of appropriate systems, policies,

Operational risks are identified, monitored and managed through the RSA
procedure. This is carried out as an integral part of an overall ERM approach in
alignment with the COSO ERM Framework which involves identifying and assessing

TM http://www.nasdaqomx.com/europeanclearing/risk-management/investment-policy

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

46


L 201/32

Official Journal of the European Union

27.7.2012

2. The competent authority shall refuse to authorise a CCP
where it is not satisfied as to the suitability of the shareholders
or members that have qualifying holdings in the CCP, taking
into account the need to ensure the sound and prudent
management of a CCP.

3. Where close links exist between the CCP and other natural
or legal persons, the competent authority shall grant authori-
sation only where those links do not prevent the effective
exercise of the supervisory functions of the competent auth-
ority.

4, Where the persons referred to in paragraph 1 exercise an
influence which is likely to be prejudicial to the sound and
prudent management of the CCP, the competent authority
shall take appropriate measures to terminate that situation,
which may include the withdrawal of the authorisation of the
Cccp.

5. The competent authority shall refuse authorisation where
the laws, regulations or administrative provisions of a third
country governing one or more natural or legal persons with
which the CCP has close links, or difficulties involved in their
enforcement, prevent the effective exercise of the supervisory
functions of the competent authority.

Article 31
Information to competent authorities

1, ACCP shall notify its competent authority of any changes
to its management, and shall provide the competent authority
with all the information necessary to assess compliance with
Article 27(1) and the second subparagraph of Article 27(2).

Where the conduct of a member of the board is likely to be
prejudicial to the sound and prudent management of the CCP,
the competent authority shall take appropriate measures, which
may include removing that member from the board.

2. Any natural or legal person or such persons acting in
concert (the ‘proposed acquirer), who have taken a decision
either to acquire, directly or indirectly, a qualifying holding in
a CCP or to further increase, directly or indirectly, such a qual-
ifying holding in a CCP as a result of which the proportion of
the voting rights or of the capital held would reach or exceed
10 %, 20 %, 30 % or 50 % or so that the CCP would become its
subsidiary (the ‘proposed acquisition’), shall first notify in
writing the competent authority of the CCP in which they are
seeking to acquire or increase a qualifying holding, indicating
the size of the intended holding and relevant information, as
referred to in Article 32(4).

Any natural or legal person who has taken a decision to
dispose, directly or indirectly, of a qualifying holding in a
CCP (the ‘proposed vendor’) shall first notify the competent
authority in writing thereof, indicating the size of such
holding. Such a person shall likewise notify the competent
authority where it has taken a decision to reduce a qualifying
holding so that the proportion of the voting rights or of the
capital held would fall below 10 %, 20 %, 30 % or 50% or so
that the CCP would cease to be that person's subsidiary.

The competent authority shall, promptly and in any event
within two working days of receipt of the notification
referred to in this paragraph and of the information referred
to in paragraph 3, acknowledge receipt in writing thereof to the
proposed acquirer or vendor.

The competent authority shall have a maximum of 60 working
days as from the date of the written acknowledgement of
receipt of the notification and all documents required to be
attached to the notification on the basis of the list referred to
in Article 32(4) (the assessment period), to carry out the
assessment provided for in Article 32(1) (the assessment),

The competent authority shall inform the proposed acquirer or
vendor of the date of the expiry of the assessment period at the
time of acknowledging receipt.

3. The competent authority may, during the assessment
period, where necessary, but no later than on the 50th
working day of the assessment period, request any further
information that is necessary to complete the assessment.
Such request shall be made in writing and shall specify the
additional information needed,

The assessment period shall be interrupted for the period
between the date of request for information by the competent
authority and the receipt of a response thereto by the proposed
acquirer. The interruption shall not exceed 20 working days.
Any further requests by the competent authority for completion
or clarification of the information shall be at its discretion but
may not result in an interruption of the assessment period.

4. The competent authority may extend the interruption
referred to in the second subparagraph of paragraph 3 up to
30 working days where the proposed acquirer or vendor is
either:

(a) situated or regulated outside the Union;

(b) a natural or legal person not subject to supervision under
this Regulation or Directive 73/239/EEC, Council Directive
92/49/EEC of 18 June 1992 on the coordination of laws,
regulations and administrative provisions relating to direct
insurance other than life assurance(!) or Directives
2002/83/EC, 2003/41/EC, 2004/39/EC, 2005/68/EC,
2006/48/EC, 2009/65/EC or 2011/61/EU.

5. Where the competent authority, upon completion of the
assessment, decides to oppose the proposed acquisition, it shall,
within two working days, and not exceeding the assessment
period, inform the proposed acquirer in writing and provide
the reasons for that decision. The competent authority shall

() OP L 228, 11.8.1992, p. 1.


Exhibit A-7 to Supplement S-1 to Form FBOT

A summary of any disciplinary or enforcement actions or proceedings that have been brought against

the clearing organization, or any of the senior officers thereof, in the past five years and the resolution
of those actions or proceedings.

The Clearinghouse confirms that there neither are nor have been any disciplinary or enforcement
actions or proceedings brought against the Clearinghouse or any of the senior officers thereof in the past
five years. Please also see enclosed as Document S-3 a confirmation from FI with respect to this.

LONO1_8129617¥4


shares in economic associations and similar rights
and assume the obligations linked to such rights.

The Riksbank may not, without authorisation from
the Riksdag make such acquisitions or enter into such
obligations as referred to in the first paragraph if this
is done to fulfil other tasks than the Riksbank's tasks
as central bank.

+87 2a,The Riksbank may decide to sell equity, shares in
economic associations and similar rights.

If these sales are made to fulfil other tasks than
the Riksbank’s tasks as central bank, however, the
Riksdag must give authorisation in cases where the
sale entails a reduction in the state's ownership of
companies where the state has at least half of the
votes or if the sale is of significant public interest.

4813, The Riksbank may, itself or through a company
owned by the Riksbank, conduct printing operations,
paper manufacture and the production of bank-
notes as well as the manufacture of coins, medals
and similar objects.

ARTA, The Riksbank may acquire and sell premises and

equipment intended for activities which are conduc-

ted by the Riksbank or in which it takes part.

If the acquisition or sale is made to fulfil other tasks
than the Riksbank's tasks as central bank, the Riks-
dag must give authorisation in cases where the value
of property exceeds SEK 20 million.


1§

25

2a§

4g

9". ADMINISTRATIVA BESTAMMELSER.

Riksbanken bedriver verksamhet vid ett huvudkontor
i Stockholm, dar ocksa fullmaktige och direktionen
har sitt sate.

Riksbanken far dessutom bedriva verksamhet vid
tiksbankskontor till det antal och pa de orter som
Riksbanken bestammer.

Vid huvudkontoret skall det finnas en revisionsenhet
samt de 6vriga enheter som Riksbanken beslutar.

Verksamheten vid revisionsenheten leds av fullmak-
tige.

Férdelningen av arenden mellan enheterna skall
framga av den arbetsordning som avses i 4 §.

Verksamhet vid revisionsenheten skall avse sjalvstan-
dig granskning av Riksbankens interna styrning och
kontroll och hur Riksbanken fuilgér sina ekonomiska
redovisningsskyldigheter. Revisionen skall bedrivas i
enlighet med god sed fér internrevision.

Riksbanken faststaller revisionsplan fér sin verksam-
het efter samrad med Riksrevisionen.

Enligt forutsattningar som anges i 6 § punkterna 2
och 3 lagen (1994:260) om offentlig anstallning far
Riksbanken i sarskilda fall besluta att endast svenska
medborgare far vara anstallda inom Riksbanken.

Fullmaktige beslutar om arbetsordning i Riksbanken.
Riksbanken beslutar i Svrigt i enskilda fall i fragor

[30


Nasdaq Clearing only accepts highly liquid collateral with readily available market
prices and with low market and credit risk. The haircuts on collateral are applied
according to a conservative method to ensure that they can withstand volatility
during times of market stress and to avoid pro-cyclical adjustments. Nasdaq Clearing
avoids wrong way risk by not allowing securities issued by the counterparty itself, or
securities issued by any subsidiary of the counterparty, or any other company in the
same group. Eligible collateral, applicable haircuts and valuation principles can be
found in Appendix 10 of Nasdaq COM R&R and in Appendix 14 of Nasdaq FIN R&R.

A broad range of acceptable collateral provides diversification and allows for
ensuring the best collateralization for each type of participant, client, and position
and market conditions at each time. The following are accepted types of collateral in
the Eligible Collateral List of Nasdaq Clearing:

1. Cash funds in pre-set currencies (only currencies in which Nasdaq Clearing is
clearing products or in currencies which are a natural part of Nasdaq
Clearing’s day to day operation)

2. Covered bonds issued by Swedish and Danish mortgage institutions (with
restrictions)

3. Bonds issued by the Swedish Municipalities Agency, “Kommuninvest” (with
restrictions)

4. Government bonds and bills (for selected countries and with credit rating
restrictions)

5. Shares (a selection admitted for trading on Nasdaq Stockholm exchange).

6. ETF’s (Exchange Traded Funds) (for selected issuers listed on The Nasdaq
Nordic Exchange. Approved on an ISIN by ISIN basis)

7. Net sellers of EUAs (European Union Allowances) and El-Certs may pre-
deliver allowances to Nasdaq Clearing registered accounts to use it as
collateral to cover net sold positions

According to Appendix 14 of Nasdaq FIN R&R and Appendix 10 of Nasdaq COM R&R;
all securities accepted as collateral shall have daily prices available. If daily prices are
missing, the security is valued at zero. All collateral is valued in Nasdaq Clearing’s
proprietary Collateral Management Service (“CMS”). The collateral valuation is
based on the previous business day’s prices. The evaluation of collateral in respect to
the corresponding margin requirement is done in real time.

The risk of valuing collateral based on previous business day’s prices is mitigated by
setting conservative haircuts on the collateral. If Clearing Risk Management
considers it necessary, collateral prices can be updated intraday and also manually
entered into the systems if required. Nasdaq Clearing can monitor posted collateral
and any surpluses/deficits in real time and can easily and quickly make changes to
the set-up in terms of limits and haircuts.

Haircuts are applied according to Nasdaq Clearing’s Collateral List (Appendix 14 to
Nasdaq FIN R&R and Appendix 10 of Nasdaq COM R&R). The haircuts are designed

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

22


higher volumes are primarily SEK-contracts.

Nasdaq Clearing’s liquidity model (“LaR”) is a robust framework for liquidity risk
management which measures and monitors, on an daily basis, the Minimum
Requirements (“MR”) and Additional Requirements (“AR”) in all relevant currencies
(both total cross-currency need and in each applicable currency). The liquidity
requirements are calculated based on rigorous stress testing using a wide range of
relevant scenarios, including the default of the two participants and their affiliates
that would generate the largest aggregate payment obligation to Nasdaq Clearing in
extreme but plausible market conditions.

Nasdaq Clearing maintains sufficient Qualifying Liquid Resources (“QLR”), Additional
Liquid Resources (“ALR”) and other liquid resources to meet the total liquidity
requirements with a significant excess. Nasdaq Clearing measures the MR and the
AR as well as the size of QLR and ALR on a daily basis in each currency. Finally,
Nasdaq Clearing has established rules and procedures and suitable governance
arrangements to enable it to affect same-day or intraday and multiday settlement of
payment obligations on time following any default of its participant(s).

In SEK the QLR is composed of: (i) committed credit facilities among four liquidity
providers; (ii) cash and cash equivalent and (iii) highly liquid Swedish government
bonds. The securities are all eligible as collateral in the Central Bank of Sweden and
the most liquid and credit worthy instruments in the Swedish financial market.
Securities defined as QLR can, according to the Nasdaq's Liquidity Policy maximum
amount to 50% of QLR for all currencies. QLR in DKK, NOK and GBP are composed of
(i) committed multi-currency credit facilities; which enable a very quick utilization
with minimal time delay and direct liquidity supply in the applicable currency and (ii)
cash and cash equivalent. QLR for EUR and USD is composed of (i) committed credit
facilities; (ii) cash and cash equivalent and (iii) highly liquid securities issued or
explicitly guaranteed by government, central bank or supranational. All securities are
available to sell or repo, under prearranged Global Master Repurchase Agreement
(GMRA), with same day value.

Moreover, the providers of the QLR are three Nordic banks as credit facility
providers with direct access to the Central Bank of Sweden and also access to central
banks in almost all of the other applicable currencies. Their status as approved
counterparties in the Swedish Central Bank’s monetary policy operation forms the
basis for the assessment that they understand and can manage their liquidity risk. A
fourth credit facility provider is an international bank which also provides a
multicurrency credit facility. In the currencies the bank does not have direct central
bank access several options are available. The Nasdaq Clearing Liquidity Policy
stipulates a lowest credit rating threshold for Nasdaq Clearing’s liquidity providers.
Since the credit facilities providers also are settlement banks of Nasdaq Clearing, the
clearing house performs ongoing monitoring of these entities as service providers.
Nasdaq Clearing ensures that all credit facilities are utilized minimum once a year.

In addition to QLR, Nasdaq Clearing has ALR in the form of highly liquid investments
in securities issued or explicitly guaranteed by government, central bank or

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

28


1§

28

35

4§

5 4", SEDLAR OCH MYNT

Enligt 9 kap. 14 § regeringsformen har Riksbanken
ensam ratt att ge ut sedlar och mynt. Fullmaktige
skall bestamma utformningen av de sedlar och mynt
som banken ger ut.

Sedlar och mynt som ges ut av Riksbanken 4r lagliga
betalningsmedel.

Penningenheten i Sverige Kallas krona. Kronan delas i
etthundra dre.

Sedlar far ges ut med valérerna tjugo, femtio, ett-
hundra, femhundra och ettusen kronor.

Mynt far ges ut med valdrerna femtio dre, en krona,
fem kronor och tio kronor.

Dessutom far minnes- och jubileumsmynt med andra
valdrer ges ut.

Riksbanken skall svara fér landets férsérjning med
sedlar och mynt.

Verksamhet som avses i férsta stycket far Riksbanken
bedriva i samarbete med annan.

| syfte att effektivisera kontantcirkulationen far
Riksbanken utge ersattning eller ge rantefri kredit till
féretag som avskilt och lagrat sedlar och mynt enligt
Riksbankens anvisningar.

Sedlar och mynt som ar skadade eller férslitna far
ldsas in av Riksbanken. Fér sedlar som blivit helt
forstérda far Riksbanken betala ersattning.


4§

28

3§

4g

Regeringen har enligt 9 kap. 12 § regeringsformen
ansvaret fr évergripande valutapolitiska fragor.

Regeringen skall besluta om det system som skall
gala for att faststalla kronans varde i férhallande till
utlandska valutor (vaxelkurssystem).

Riksbanken far hos regeringen hemstilla att reger-

ingen skall fatta beslut om vaxelkurssystem. En sadan
hemstallan skall regeringen behandla skyndsamt.

Regeringen skali innan den beslutar om vaxelkurs-
system samrada med Riksbanken.

mn


27.7.2012

LEN |

Official Journal of the European Union

L 201/27

(g) the relevant members of the ESCB responsible for the
oversight of the CCP and the relevant members of the
ESCB responsible for the oversight of the CCPs with
which interoperability arrangements have been established;

(h) the central banks of issue of the most relevant Union
currencies of the financial instruments cleared.

3. The competent authority of a Member State which is not
a member of the college may request from the college any
information relevant for the performance of its supervisory
duties,

4, The college shall, without prejudice to the responsibilities
of competent authorities under this Regulation, ensure:

(a)

the preparation of the opinion referred to in Article 19;

(b) the exchange of information, including requests for
information pursuant to Article 84;

(©) agreement on the voluntary entrustment of tasks among its
members;

(d) the coordination of supervisory examination programmes
based on a risk assessment of the CCP, and

(©) the determination of procedures and contingency plans to
address emergency situations, as referred to in Article 24,

5, The establishment and functioning of the college shall be
based on a written agreement between all its members.

That agreement shall determine the practical arrangements for
the functioning of the college, including derailed rules on voting
procedures as referred to in Article 19(3), and may determine
tasks to be entrusted to the CCP’s competent authority or
another member of the college.

6. In order to ensure the consistent and coherent functioning
of colleges across the Union, ESMA shall develop draft regu-
latory technical standards specifying the conditions under which
the Union currencies referred to in paragraph 2(h) are to be
considered as the most relevant and the details of the practical
arrangements referred to in paragraph 5.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 19

Opinion of the college

1, Within four months of the submission of a complete
application by the CCP in accordance with Article 17, the

CCP's competent authority shall conduct a risk assessment of
the CCP and submit a report to the college.

Within 30 calendar days of receipt, and on the basis of the
findings in, that report, the college shall reach a joint opinion
determining whether the applicant CCP complies with all the
requirements laid down in this Regulation.

Without prejudice to the fourth subparagraph of Article 17(4)
and if no joint opinion is reached in accordance with the
second subparagraph, the college shall adopt a majority
opinion within the same period,

2. ESMA shall facilitate the adoption of the joint opinion in
accordance with its general coordination function under
Article 31 of Regulation (EU) No 1095/2010.

3. A majority opinion of the college shall be adopted on the
basis of a simple majority of its members, For colleges up to
and incliding 12 members, a maximum of two college
members belonging to the same Member State shall have a
vote and each voting member shall have one vote. For
colleges with more than 12 members, a maximum of three
members belonging to the same Member State shall have a
vote and each voting member shall have one vote, ESMA
shall have no voting rights on the opinions of the college.

Article 20
Withdrawal of authorisation

1. Without prejudice to Article 22(3), the CCP's competent
authority shall withdraw authorisation where the CCP:

(a) has not made use of the authorisation within 12 months,
expressly renounces the authorisation or has provided no
services or performed no activity for the preceding six
months;

(b) has obtained authorisation by making false statements or by
any other irregular means;

Ss

is no longer in compliance with the conditions under which
authorisation was granted and has not taken the remedial
action requested by the CP's competent authority within a
set time frame;

(@) has seriously and systematically infringed any of the
requirements laid down in this Regulation.

2. Where the CCP’s competent authority considers that one
of the circumstances referred to in paragraph 1 applies, it shall,
within five working days, notify ESMA and the members of
college accordingly.


clearly determined mandate and governance arrangements to ensure its independence. For further details
of Nasdaq Clearing’s member risk committee, as well as the other new board committees, please see
Exhibit C to Supplement S-1 to Form FBOT.

A CCP is also required to have effective written organizational and administrative arrangements to
identify and manage any potential conflicts of interest between itself and its clearing members or their
clients known to the CCP.

Under EMIR, a CCP must have an adequate business continuily policy and disaster recovery plan. These
should aim at ensuring that its functions are preserved, its operations can be recovered, and its obligations
fulfilled, in a timely manner. The CCP should also have a procedure for the settlement or transfer of
positions and assets in the event of its authorization being withdrawn.

Delegated Regulation 153 also sets out requirements in relation to the remuneration policy, information
technology systems, disclosure, internal audit, record keeping, margins, the default fund, liquidity risk
controls, the default waterfall, collateral, the investment policy, model review, stress testing and back
testing.

Segregation and Porting

EMIR sets out a number of requirements to allow members to ensure client positions are sufficiently
segregated, and the procedures to allow for clients to move their positions from one clearing member to
another in the event of a default by their original member. In particular:

© aCCP must keep separate records and accounts to allow it to distinguish the assets and positions
of different clearing members.

* a CCP must offer to keep separate records and accounts to allow each clearing member to
distinguish its own assets and positions from such member’s clients’ assets and positions
(“omnibus client segregation”).

e a CCP must offer to keep separate records and accounts to allow each clearing member to
distinguish assets and positions of one client from those of another client (“individual client
segregation”).

In the event of a default by a clearing member, EMIR requires the CCP to have in place procedures to
transfer any assets and positions held by such clearing member for underlying clients to the equivalent
client accounts of another clearing member (so called ‘porting’ of assets and positions); i.e. where assets
and positions are held in an omnibus client account, they should be moved to an omnibus client account in
another clearing member’s name, and where assets and positions are held in an individual client account,
they should be moved to an individual client account in another clearing member. The new clearing
member is only obliged to accept these assets and positions where it has previously entered into a
contractual relationship with the clients to do so. If the assets and positions cannot be ported (as no new
clearing member is willing to accept them) within a predefined transfer period, the CCP may take steps to
actively manage its risk in relation to such assets and positions, including their liquidation.

LONO1_8129630v4


ARTA

ARTS,

Financial institutions, as referred to in this Act, are
banking institutions, credit market companies, securi-
ties institutions, the First to Fourth National Swedish
Pension Funds according to the National Swedish
Pension Funds Act (2000:192), the Sixth Natio-

nal Swedish Pension Fund according to the Sixth
National Swedish Pension Fund Act (2000:193),
insurance companies with Swedish licences, the rural
mortgage institution, Swedish Ships' Mortgage Bank
and foreign companies which, pursuant to Chapter 4,
Article 1,3 or 4 of the Act on banking and financing
business (lagen (2004:297) om bank- och finan-
sieringsrorelse), conduct business activities from a
branch registered in Sweden.

. The Riksbank shall follow developments on the

foreign exchange and credit markets and implement
necessary monetary policy measures.

. Prior to the Riksbank making a monetary policy

decision of major importance, the minister appointed
by the Government shall be informed.

The Riksbank shall submit a written report on mone-
tary policy to the Riksdag Committee on Finance at
least twice a year.

The Riksbank shall make public statistical data con-
cerning foreign exchange and credit conditions on a
continual basis.

In pursuance of its monetary policy, the Riksbank
may

(57)


L 201/56 xm

Official Journal of the European Union

27,7.2012

A trade repository established in a third country, which is
allowed to collect and maintain the records of derivatives in a
Member State in accordance with the national law of that
Member State before all the regulatory and implementing
technical standards under Articles 9, 56 and 81 are adopted
by the Commission, shall apply for recognition under Article 77
within six months of the date of entry into force of those
regulatory and implementing technical standards.

7. Until a decision is made under this Regulation on the
registration or recognition of a trade repository, the respective
national rules on authorisation, registration and recognition of
trade repositories shall continue to apply and the trade
repository shall continue 10 be supervised by the competent
authority of its Member State of establishment or recognition.

8. A trade repository that has been authorised or registered
in its Member State of establishment to collect and maintain the
records of derivatives in accordance with the national law of
that Member State before the regulatory and implementing
technical standards under Articles 56 and 81 are adopted by
the Commission, can be used to meet the reporting requirement
under Article 9 until the time a decision is made on the regis-
tration of the trade repository under this Regulation.

A trade repository established in a third country which has been
allowed to collect and maintain the records of derivatives in
accordance with the national law of a Member State before
all the regulatory and implementing technical standards under

Articles 56 and 81 are adopted by the Commission, can be used
to meet the reporting requirement under Article 9 until the time
a decision is made on the recognition of the trade repository
under this Regulation.

9. Notwithstanding Article 81(3)(f), where no international
agreement is in place between a third country and the Union
as referred to in Article 75, a wade repository may make the
necessary information available to the relevant authorities of
that third country until 17 August 2013 provided that it
notifies ESMA.

Article 90
Staff and resources of ESMA

By 31 December 2012, ESMA shall assess the staffing and
resources needs arising from the assumption of its powers
and duties in accordance with this Regulation and submit a
report to the European Parlament, the Council and the
Commission.

Article 91
Entry into force

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Strasbourg, 4 July 2012.

For the European Parliament
The President
M, SCHULZ

For the Council
The President
‘A. D, MAVROYIANNIS


Exhibit F-2 to Supplement S-1 to Form FBOT

A description of the clearing organization’s rules and how they are enforced, with reference to any
rules provided as part of Exhibit A-5 that require the clearing organization to comply with one or more

of the RCCPs.

NASDAQ COM have adopted internal rulebooks that further regulate the obligations and rights of
the market participants in clearing and settlement processes and assure compliance with the extemal
government regulations.

The current NASDAQ COM Rules are attached hereto as follows:

Trading Rules:

General Terms — Trading Rules: Document 18
Trading Appendix 1 — Definitions (joint with the Clearing Rules): Document 19

Trading Appendix 2 — Contract Specifications (joint with the Clearing Rules): Document
20

Trading Appendix 3 — Trading and Clearing Schedule (joint with the Clearing Rules):
Document 21

Trading Appendix 4 — Trading procedures: Document 22
Trading Appendix 5 — ETS User Terms: Document 23

Trading Appendix 6 — Market Conduct Rules (joint with the Clearing Rules): Document
24

Trading Appendix 7 — Fee List (joint with the Clearing Rules): Document 25

Trading Appendix 8 — Block Trade Facility Procedure: Document 22a

Clearing Rutes:

LONO1_8129632v5

General Terms — Clearing Rules: Document 26
Clearing Appendix 1 — Definitions (joint with the Trading Rules): Document 19
Clearing Appendix 2 — Contract Specifications (joint with Trading Rules): Document 20

Clearing Appendix 3 — Trading and Clearing Schedule (joint with the Trading Rules):
Document 21

Clearing Appendix 4 — Non Exchange Clearing Procedure: Document 27

Clearing Appendix 5 — Clearing System User Term: Document 28


disclosure requirements found in the CPMI-IOSCO disclosure framework for financial
market infrastructures and other relevant regulations, now and in the future.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

58


cm)

27.7.2012

Official Journal of the European Union

L 201/17

2. In relation to a financial counterparty, an intragroup
transaction is any of the following:

(a) an OTC derivative contract entered into with another
counterparty which is part of the same group, provided
that the following conditions are met:

(i) the financial counterparty is established in the Union
or, if it is established in a third country, the
Commission has adopted an implementing act under
Article 13(2) in respect of that third country;

(ii

the other counterparty is a financial counterparty, a
financial holding company, a financial institution or
an ancillary services undertaking subject to appropriate
prudential requirements;

(iii) both counterparties are included in the same consoli-
dation on a full basis; and

(iv) both counterparties are subject to appropriate
centralised risk evaluation, measurement and control
procedures;

(b) an OTC derivative contract entered into with another
counterparty where both counterparties are part of the
same institutional protection scheme, referred to in
Article 80(8) of Directive 2006/48/EC, provided that the
condition set out in point (a)(ii) of this paragraph is met;

an OTC derivative contract entered into between credit
institutions affiliated to the same central body or between
such credit institution and the central body, as referred to in
Article 3(1) of Directive 2006/48/EC; or

Ss

(@) an OTC derivative contract entered into with a non-financial
counterparty which is part of the same group provided that
both counterparties are included in the same consolidation
on a full basis and they are subject to an appropriate
centralised risk evaluation, measurement and control
procedures and that counterparty is established in the
Union or in a third-country jurisdiction for which the
Commission has adopted an implementing act as referred
to in Article 13(2) in respect of that third country.

3. For the purposes of this Article, counterparties shall be
considered to be included in the same consolidation when they
are both either:

(a) included in a consolidation in accordance with Directive
83/349/EEC or International Financial Reporting Standards
(IFRS) adopted pursuant to Regulation (EC) No 1606/2002
or, in relation to a group the parent undertaking of which
has its head office in a third country, in accordance with
generally accepted accounting principles of a third country
determined to be equivalent to IFRS in accordance with

Regulation (EC) No 1569/2007 (or accounting standards
of a third country the use of which is permitted in
accordance with Article 4 of that Regulation); or

S

covered by the same consolidated supervision in accordance
with Directive 2006/48/EC or Directive 2006/49/EC or, in
relation to a group the parent undertaking of which has its
head office in a third country, the same consolidated super-
vision by a third-country competent authority verified as
equivalent to that governed by the principles laid down in
Article 143 of Directive 2006/48/EC or in Article 2 of
Directive 2006/49/EC.

TITLE I

CLEARING, REPORTING AND RISK MITIGATION OF OTC
DERIVATIVES

Article 4
Clearing obligation

1. Counterparties shall clear all OTC derivative contracts
pertaining to a class of OTC derivatives that has been
declared subject to the clearing obligation in accordance with
Article 5(2), if those contracts fulfil both of the following
conditions:

(a) they have been concluded in one of the following ways:

(i) between two financial counterparties;

(i) between a financial counterparty and a non-financial
counterparty that meets the conditions referred to in
Article 10(1)(b);

(iii) between two non-financial counterparties that meet the
conditions referred to in Article 10(1)(b);

(iv) between a financial counterparty or a non-financial
counterparty meeting the conditions referred to in
Article 10(1)(b) and an entity established in a third
country that would be subject to the clearing obligation
if it were established in the Union; or

between two entities established in one or more third
countries that would be subject to the clearing
obligation if they were established in the Union,
provided that the contract has a direct, substantial
and foreseeable effect within the Union or where such
an obligation is necessary or appropriate to prevent the
evasion of any provisions of this Regulation; and

=

(b) they are entered into or novated either:

() on or after the date from which the clearing obligation
takes effect; or


som sags i lagen (1989:186) om déverklagande av
administrativa beslut av riksdagsférvaltningen och
riksdagens myndigheter.

1361


is not protected from “fellow-Indirect Pledging Customer risk”.

For customers that use Omnibus Accounts (account type 2), Nasdaq Clearing does
not generally have information on the customers in this account. Netting of margin
requirements is performed within the omnibus account, i.e. between customers in
the account, subject to the prohibition of netting with any connected Single-client
Account (however, please note that there is no netting of positions on the Omnibus
Account). Margin is thus obtained on an aggregate net basis for the Omnibus
Account and the Single-client Account, but no netting is done between different
Omnibus Accounts. Customers in an Omnibus Account, including those customers
that have a Single-client Account within the Omnibus Account, may be exposed to
“fellow-customer risk”, as collateral posted can be used by Nasdaq Clearing to cover
losses on the account, irrespective of which customer has caused the loss.

Accordingly, account types 2, 3 and 4 fulfill the segregation requirements in Article
39.2 of EMIR, i.e. omnibus client segregation.

Nasdaq Clearing has arrangements in place to enable porting of a customer's
positions and collateral in the event of a participant’s default. Porting is possible for
all different account types even though the likelihood of porting for Direct Pledging
Customers, Clearing Clients and customers having an Individual Client Segregated
Account is slightly higher as such porting is only subject to the customer's and the
back-up clearing member's consent.

For customers in an Omnibus Account or in an Indirect Pledge Account, portability
can be achieved if the customers agree on the same back up participant and if such
back up participant is willing to accept all positions and collateral belonging to the
Omnibus Account and, with respect to the Indirect Pledging Account, all positions
and collateral belonging to all Indirect Pledging Accounts administered by the
defaulting participant.

In all cases above, portability is dependent on the customer having a backup
participant on standby or the customer being able to find a back-up participant that
is willing to receive the positions and collateral of the customer.

The R&Rs include provisions regarding the porting of participants’ customers’
positions and collateral to a back-up participant. The R&Rs specify that Nasdaq
Clearing shall in the first instance attempt to port the customer’s positions and
collateral to another participant, rather than forcibly settling the customer's
positions.

It is the responsibility of the customer to initiate the porting of positions and
collateral to a back-up participant. It is up to the customer to find a back-up
participant, if the customer hasn’t already a back-up participant on stand-by. When
the customer has requested the clearing house to initiate the porting the clearing
house is required to take certain actions to start the porting. The process for this is
detailed in the R&Rs. However, it is never the responsibility of Nasdaq Clearing to
find a back-up participant or obtain the consent of the back-up participant.

Nasdaq Clearing has actual experience from performing the transfer of customer

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

42


(vi) The regulatory regime/authority’s inspection, investigation and surveillance powers; and
the program pursuant to which the regulatory regime/authority uses those powers to inspect,
investigate, sanction, and enforce rules applicable to the clearing organization.

In order to enable monitoring of compliance with the provisions of EMIR and other relevant laws
and regulations, FI may request that the Clearinghouse provides relevant information, documents or other
material about the clearing organization. If the Clearinghouse to comply with a request from FI
regarding the above, FI may order the Clearinghouse to make rectification.

FI may also conduct site inspections in order to investigate the Clearinghouse compliance with
applicable laws and regulations.

(vii) The financial protection afforded customer funds.

Nasdaq Clearing has a Collateral Management Service (“CMS”) with prompt access and
direct control of the collateral. Below follows a description of the system.

The CMS is the service managing collateral and payments for clearing on _Nasda

Financial and Commodities derivatives markets.

The provisions of the collateral are governed by the clearing rules and the Custody
Account Agreement with the supporting General Terms for Collateral Custody Accounts (the
“General Terms for Collateral”). The General Terms for Collateral are attached hereto as
Document 8 - General Terms for collateral custody accounts.

A Securities Account is an account with a Central Securities Depository (“CSD”) opened in the
name of Nasdaq Clearing in its capacity as nominee, alternatively opened in the name of Nasdaq Clearing
on behalf of clients with a CSD or with any sub-custodians appointed by Nasdaq Stockholm (see
definition of “Securities Account” in Section 2.1 of the General Terms for Collateral).

LONO1_8129630v4


=

L 201/20

Official Journal of the European Union

27.7.2012

(@) the classes of OTC derivatives identified by ESMA in
accordance with Article 5(3);

@)

the minimum remaining maturity of the derivative contracts
referred to in Article 4(1)(b)(ii);

(f) the CCPs that have been notified to ESMA by the competent
authority for the purpose of the clearing obligation and the
date of notification of each of them.

3. Where a CCP is no longer authorised or recognised in
accordance with this Regulation to clear a given class of deriva-
tives, ESMA shall immediately remove it from the public register
in relation to that class of OTC derivatives.

4, In order to ensure consistent application of this Article,
ESMA may develop draft regulatory technical standards spec-
ifying the details to be included in the public register referred to
in paragraph 1.

ESMA shall submit any such draft regulatory technical standards
to the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 7
Access to a CCP

1, A CCP that has been authorised to clear OTC derivative
contracts shall accept clearing such contracts on a non-discrimi-
natory and transparent basis, regardless of the trading venue.

A CCP may require that a trading venue comply with the oper-
ational and technical requirements established by the CCP,
including the risk-management requirements.

2. ACCP shall accede to or refuse a formal request for access
by a trading venue within three months of such a request.

3. Where a CCP refuses access under paragraph 2, it shall
provide the trading venue with full reasons for such refusal.

4, Save where the competent authority of the trading venue
and that of the CCP refuse access, the CCP shall, subject to the
second subparagraph, grant access within three months of a
decision acceding to the trading venue's formal request in
accordance with paragraph 2.

The competent authority of the trading venue and that of the
CCP may refuse access to the CCP following a formal request by
the trading venue only where such access would threaten the
smooth and orderly functioning of the markets or would
adversely affect systemic risk.

5. ESMA shall settle any dispute arising from a disagreement
between competent authorities in accordance with its powers
under Article 19 of Regulation (EU) No 1095/2010.

Article 8
Access to a trading venue

1. A trading venue shall provide trade feeds on a non-
discriminatory and transparent basis to any CCP that has
been authorised to clear OTC derivative contracts traded on
that trading venue upon request by the CCP.

2. Where a request to access a trading venue has been
formally submitted to a trading venue by a CCP, the trading
venue shall respond to the CCP within three months.

3. Where access is refused by a trading venue, it shall notify
the CCP accordingly, providing full reasons.

4. Without prejudice to the decision by competent auth-
orities of the trading venue and of the CCP, access shall be
made possible by the trading venue within three months of a
positive response to a request for access.

Access of the CCP to the trading venue shall be granted only
where such access would not require interoperability or threaten
the smooth and orderly functioning of markets in particular due
to liquidity fragmentation and the trading venue has put in
place adequate mechanisms to prevent such fragmentation.

5, In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the notion of liquidity fragmentation.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 9
Reporting obligation

1. Counterparties and CCPs shall ensure that the details of
any derivative contract they have concluded and of any modi-
fication or termination of the contract are reported to a trade
repository registered in accordance with Article 55 or
recognised in accordance with Article 77. The details shall be
reported no later than the working day following the
conclusion, modification or termination of the contract.


5§

1§

2§

3§

Om sarskilda skal finns, far Riksbanken ldsa in sedlar
‘och mynt som upphort att vara lagliga betalnings-
medel.

Sedlar och mynt som férandrats eller bearbetats far
inte spridas.

6 **" PENNINGPOLITIK OCH BETALNINGSSYSTEM

Med bankinstitut forstas i denna lag bankaktiebolag,
sparbanker, medlemsbanker och utlandska bank-
féretag som med stéd av 4 kap. 1 eller 4 § lagen
(2004:297) om bank- och finansieringsrérelse driver
bankrérelse fran filial har i landet.

Med finansinstitut forstas bankinstitut, kreditmark-
nadsféretag, vardepappersinstitut, Férsta - Fjarde
AP-fonderna enligt lagen (2000:192)om allmanna
pensionsfonder (AP-fonder), Sjatte AP-fonden enligt
lagen (2000:193) om Sjatte AP-fonden, férsakrings-
féretag med svensk koncession, landshypoteksin-
stitutionen, Svenska skeppshypotekskassan samt
utlandska foretag som med stéd av 4 kap. 1,3 eller
4 § lagen (2004:297) om bank- och finansieringsr6-
relse driver verksamhet fran filial i Sverige.

Riksbanken skall f6lja utvecklingen pa valuta- och
kreditmarknaderna samt vidta erforderliga penning-
politiska atgarder.

Riksbanken skall infor alla viktiga penningpolitiska
beslut informera det statsrad som regeringen utser.

(23)


3§

4s

5§

Om férsaljningen sker for att fullgora andra uppgif-
ter n Riksbankens uppgifter som centralbank kravs
dock riksdagens bemyndigande i de fall férsaljningen
innebar en minskning av statens 4garandel i foretag
dar staten har minst halften av rdsterna eller om
frsaliningen har ett betydande samhillsintresse.

Riksbanken far sjalv eller genom bolag som ags av

banken bedriva tryckerirdrelse, papperstillverkning
och tillverkning av sedlar samt tillverkning av mynt,
medaljer och liknande féremal.

Riksbanken far férvarva och salja fastigheter och
inventarier som ar avsedda for den verksamhet som
banken bedriver eller har del i.

Om férvarvet eller forsaljningen sker fér att full-
gora andra uppgifter an Riksbankens uppgifter som
centralbank kravs riksdagens bemyndigande i de
fall vardet av fast egendom dverstiger 20 miljoner
kronor.

Fér att skydda en fordran far Riksbanken férvarva
varje slag av egendom. Sadan egendom skall avyttras
sa snart det ar lampligt och senast nar det kan ske
utan férlust.

Riksbanken far mot betalning utféra tjanster som har
anknytning till bankens verksamhet som centralbank.

Riksbanken far efter prévning i varje enskilt fall

medge ackord samt besluta om avskrivning, nedsatt-
ning eller eftergift av fordran som banken har.

(29)


27.7.2012

(EN Official Journal of the European Union

L 201/57

L

ANNEX I

List of infringements referred to in Article 65(1)
Infringements relating to organisational requirements or conflicts of interest:

(@) a trade repository infringes Article 78(1) by not having robust governance arrangements which include a clear
organisational structure with well-defined, transparent and consistent lines of responsibility and adequate internal
contro] mechanisms, including sound administrative and accounting procedures, which prevent the disclosure of
confidential information;

(b) a trade repository infringes Article 78(2) by not maintaining or operating effective written organisational and
administrative arrangements to identify and manage any potential conflicts of interest concerning its managers, its
employees, and any person directly or indirectly linked to them by close links;

a trade repository infringes Article 78(3) by not establishing adequate policies and procedures sufficient to ensure

©
compliance, including that of its managers and employees, with all the provisions of this Regulation;

(@ a trade repository infringes Article 78(4) by not maintaining or operating an adequate organisational structure to
ensure continuity and orderly functioning of the trade repository in the performance of its services and activities;

a trade repository infringes Asticle 78(5) by not separating operationally its ancillary services from its function of
centrally collecting and maintaining records of derivatives;

)

(f) a trade repository infringes Article 78(6) by not ensuring that its senior management and the members of the
board are of sufficiently good repute and experience so as to ensure the sound and prudent management of the
trade repository;

a trade repository infringes Article 78(7) by not having objective non-discriminatory and publicly disclosed
requirements for access by services providers and undertakings subject to the reporting obligation under Article 9;

@

(h) a trade repository infringes Article 78(8) by not publicly disclosing the prices and fees associated with services
provided under this Regulation, by not allowing reporting entities to access specific services separately or by
charging prices and fees that are not cost related.

. Infringements relating to operational requirements:

(@) a trade repository infringes Article 79(1) by not identifying sources of operational risk or by not minimising those
risks through the development of appropriate systems, controls and procedures;

a trade repository infringes Article 79(2) by not establishing, implementing or maintaining an adequate business
continuity policy and disaster recovery plan aimed at ensuring the maintenance of its functions, the timely.
recovery of operations and the fulfilment of the trade repository’s obligations;

o

(Q) a trade repository infringes Article 80(1) by not ensuring the confidentiality, integrity or protection of the
information received under Article 9;

(@ 2 trade repository infringes Article 80(2) by using the data that it receives under this Regulation for commercial
purposes without the relevant counterparties having provided their consent;

a trade repository infringes Article 80(3) by not promptly recording the information received under Article 9 or
by not maintaining it for at least 10 years following the termination of the relevant contracts or by not
employing timely and efficient record-keeping procedures to document changes to recorded information;

©)

() a trade repository infringes Article 80(4) by not calculating the positions by class of derivatives and by reporting
entity based on the details of the derivative contracts reported in accordance with Article 9;

(@ a trade repository infringes Article 80(5) by not allowing the parties to a contract to access and correct the
information on that contract in a timely manner;

(h) a trade repository infringes Article 80(6) by not taking all reasonable steps to prevent any misuse of the
information maintained in its systems.




default funds. As for maintaining the adequacy of capital resources, Nasdaq Clearing
re-evaluates the size of its Clearing Capital and member-contributed default funds
ona quarterly basis.

The use of an EVT methodology and maximum available price history for individual
instruments mitigates the risk of model failure that comes with solely statistical
models, and secure coverage of historical extreme market conditions.

Finally, Nasdaq Clearing has established clear and explicit rules and procedures to
address fully any uncovered losses it may face and to ensure it can operate in a safe
and sound manner even during stress events.

Nasdaq Clearing is further performing the following routines in its framework for
managing credit risk:

® Stress parameters and assumptions used in stress testing models are
comprehensively and thoroughly reviewed, analyzed, validated and tested
on at minimum a monthly basis.

© When the products cleared or markets served display high volatility, become
less liquid, or when the size or concentration of positions held by Nasdaq
Clearing’s participants increases significantly Nasdaq Clearing performs the
analysis, validations and tests more frequently than on monthly basis.

® Reverse stress tests are performed on Nasdaq Clearing’s capital base, which
allows it to determine which market conditions would be necessary for its
Clearing Capital to be depleted.

@ Full validation of models, including validation from a party that is
independent from Nasdaq Clearing’s risk management function, is
performed on at least an annual basis.

Nasdaq Clearing considers the effect of a wide range of relevant stress scenarios in
terms of both defaulters’ positions and possible price changes in liquidation periods.
Hypothetical scenarios include relevant peak historic price volatilities, shifts in other
market factors such as price determinants and yield curves, multiple defaults over
various time horizons, simultaneous pressures in funding and asset markets, and a
spectrum of forward-looking stress scenarios in a variety of extreme but plausible
market conditions. In more detail, Nasdaq Clearing divides its instruments in stress
test markets (risk groups). The hypothetical scenarios considered shift these markets
up and down, and every combination thereof, to generate an exhaustive series of
scenarios. In that way, simultaneous stresses in the equity and funding markets,
simultaneous equity stresses across geographies, as well as idiosyncratic market
disturbances are all covered. By maximizing the market moves simultaneously
across risk groups, as well as using scenarios with both maximum correlation and
maximum anti-correlation, very extreme scenarios that have never been observed in
history are generated, thereby adding to the robustness of this methodology. In
addition, historical stress scenarios are implemented as replay of historical extreme
market events. Nasdaq Clearing has a documented methodology for identifying the
worst events per market given current cleared portfolios.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

20


to the Memorandum of Understandi

In relation to the Exchange and the Clearinghouse, both entities agree within the framework of
applicable law to cooperate and to the extent necessary share and provide information and documentation
with the Commission for the above mentioned purposes.

LONO1_8129635v4


L 201/40

Official Journal of the European Union

27.7.2012

5. Where assets and positions are recorded in the records
and accounts of a CCP as being held for the account of a
defaulting clearing member's clients in accordance with
Article 39{2), the CCP shall, at least, contractually commit
itself to trigger the procedures for the transfer of the assets
and positions held by the defaulting clearing member for the
account of its clients to another clearing member designated by
all of those clients, on their request and without the consent of
the defaulting clearing member. That other clearing member
shall be obliged to accept those assets and positions only
where it has previously entered into a contractual relationship
with the clients by which it has committed itself to do so. If the
transfer to that other clearing member has not taken place for
any reason within a predefined transfer period specified in its
operating rules, the CCP may take all steps permitted by its
rules to actively manage its risks in relation to those positions,
including liquidating the assets and positions held by the
defaulting clearing member for the account of its clients.

6, Where assets and positions are recorded in the records
and accounts of a CCP as being held for the account of a
defaulting clearing member's client in accordance with
Article 39(3), the CCP shall, at least, contractually commit
itself to trigger the procedures for the transfer of the assets
and. positions held by the defaulting clearing member for the
account of the client to another clearing member designated by
the client, on the client's request and without the consent of the
defaulting clearing member. That other clearing member shall
be obliged to accept these assets and positions only where it has
previously entered into a contractual relationship with the client
by which it has committed itself to do so. If the transfer to that
other clearing member has not taken place for any reason
within a predefined transfer period specified in its operating
niles, the CCP may take all steps permitted by its rules to
actively manage jis risks in relation to those positions,
including liquidating the assets and positions held by the
defaulting clearing member for the account of the client.

7. Clients’ collateral distinguished in accordance with
Article 39(2) and (3) shall be used exclusively to cover the
positions held for their account. Any balance owed by the
CCP after the completion of the clearing member's default
management process by the CCP shall be readily returned to
those clients when they are known to the CCP or, if they are
not. to the clearing member for the account of its clients.

Article 49
Review of models, stress testing and back testing

1. A CCP shall regularly review the models and parameters
adopted to calculate its margin requirements, default fund
contributions, collateral requirements and other risk control
mechanisms. {t shall subject the models to rigorous and

frequent stress tests to assess their resilience in extreme but
plausible market conditions and shall perform back tests to
assess the reliability of the methodology adopted. The CCP
shall obtain independent validation, shall inform its competent
authority and ESMA of the results of the tests performed and
shall obtain their validation before adopting any significam
change to the models and parameters.

The adopted models and parameters, including any significant
change thereto, shall be subject to an opinion of the college
pursuant to Article 19.

ESMA shall ensure that information on the results of the stress
tests is passed on to the ESAs to enable them to assess the
exposure of financial undertakings to the default of CCPs.

2. A CCP shall regularly test the key aspects of its default
procedures and take all reasonable steps to ensure that all
clearing members understand them and have appropriate
arrangements in place to respond to a default event.

3. A CCP shall publicly disclose key information on its risk-
management model and assumptions adopted to perform the
stress tests referred to in paragraph 1.

4, In order to ensure consistent application of this Article,
ESMA shall, after consulting EBA, other relevant competent
authorities and the members of the ESCB, develop draft regu-
latory technical standards specifying:

{a) the type of tests to be undertaken for different classes of
financial instruments and portfolios;

(o) the involvement of clearing members or other parties in the
tests;

() the frequency of the tests;
(d) the time horizons of the tests;
(¢) the key information referred to in paragraph 3.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 50
Settlement

1. A CCP shall, where practical and available, use central
bank money to settle its transactions, Where central bank
money is not used, steps shall be taken to strictly limit cash
settlement risks.


11, other issues that the annual general meeting shall deal with in accordance with the Swedish
Companies Act or the articles of association.

11§

In matters of significant financial importance, matters that concern important principles or that are
otherwise significant to the company’s operations, the board of directors shall refer the matter to a general
meeting for approval. When an investment or other disposal of the assets or means of the clearing
operations exceeds ten million (10,000,000) Swedish kronor, an approval by a general meeting is
mandatory.

12§

In addition to the restrictions set, in general, by the applicable laws, regulations or other statutes, the
company may only make or decide on a value transfer in accordance with chapter 17 section 1 of the
Swedish Companies Act, if the remaining share capital of the company after the value transfer
corresponds to the valid requirements on the company’s share capital set by the applicable laws,
regulations or other statutes.

13§

The notice of the general meeting shall be sent by mail to all shareholders entered in the share register no
earlier than four weeks and no later than two weeks prior to the general meeting.

LONO1_8129617¥4.


Exhibit A-1 to Supplement S-1 to Form FBOT

A description of location, history, size, ownership and corporate structure, governance and committee
structure, current or anticipated presence of offices or staff in the United States.

Nasdaq Clearing AB (“Nasdaq Clearing”) (organization number: 556383-9058) is a private
limited liability company incorporated and having its principal place of business in Stockholm, Sweden.

Nasdaq Clearing is authorized as a central counterparty (“CCP” or “Clearinghouse”) and is
licensed to conduct clearing operations by the Swedish FSA (Finansinspektionen, “FI” or “SFSA”)
pursuant to EMIR. The European Market Infrastructure Regulation (Regulation (EU) No 648/2012 of the
European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and
trade repositories) (“EMIR”) came into force on August 16, 2012. The operations of Nasdaq Clearing are
also governed by the Swedish Securities Market Act. The Swedish FSA has also approved and designated
Nasdaq Clearing as a system for settlement and notified this to the European Securities and Markets
Authority (“ESMA”) pursuant to the Swedish Act (1999:1309) concerning Systems for the Settlement of
Obligations on the Financial Market (Sw: lagen (1999:1309) om system for avveckling av forpliktelser pa
finansmarknaden) (the Swedish Act implementing the Settlement Finality Directive (98/26/EC)).

Nasdaq Clearing’s competent authority is the Swedish FSA under EMIR. Nasdaq Clearing is
overseen by college of European regulators, which includes Riksbanken, the Central Bank in Sweden,
which also has financial stability responsibilities for Nasdaq Clearing.

Clearing of commodities and commodity derivatives is primarily operated through the Norwegian
branch of Nasdaq Clearing, Nasdaq Clearing Oslo NUF. The branch is registered in the Norwegian
company register, but is not a separate legal entity.

Nasdaq Clearing is authorized and supervised as a central counterparty by the Swedish FSA, and
is also authorized to conduct clearing operations via its Norwegian branch (“Nasdaq Clearing Oslo”) by
the Norwegian Ministry of Finance. The commodity clearing operations are jointly supervised by
Finansinspektionen and Finanstilsynet, the Norwegian Supervisory Authority, with Finansinspektionen
being appointed as the principal supervisor pursuant to a memorandum of understanding between the two
supervisors. Similarly, the Norwegian FSA has approved and registered Nasdaq Clearing Oslo as a
designated settlement system in accordance with Norwegian Payment System Act 17 December 1999 No
95.

1. Location and history

NASDAQ OMX Stockholm (former name of Nasdaq Clearing before de-merger with the
Exchange, with organization number 556383-9058) started in 1986 when the options market OM (Sw.
Optionsmarknaden) established its clearing operations and assumed the counterparty risk of its members.
Over the years the Clearinghouse expanded into new products and asset classes through business
development and through mergers.

Derivatives trading in Finland started when the Finnish Securities and Derivatives
Exchange/Clearinghouse (“SOM”) was established in 1987 and served as an integrated exchange and
clearinghouse for the trading and clearing of standardized derivative instruments. In 1997, the Helsinki
Stock Exchange Ltd and SOM merged to form Helsinki Exchange Ltd (“HEX”). In 2003, OM and HEX,
including the Tallinn and Riga exchanges, merged and established OMX (“OMX”). The acquisition of
the Vilnius Stock Exchange took place in 2004. Al trading and clearing of Finnish derivatives conducted
at HEX was migrated to NASDAQ OMX Stockholm.

LONO1_8129617v4


© Identify and document essential risks

© Assess risks by evaluating impact and probability

© Decide on mitigating strategy and assign responsibilities

®  Assess/document existing controls and decide on due dates for actions
e Manage and control

e Review

In addition to this, the quarterly Local Risk Management Forum is designed to take
all risks into consideration and when deemed critical escalate to the Board. In this
forum major changes to products and services are discussed as well as existing
operations and general business risks. Also in the capital calculation, different
scenarios are also defined in relation to the business risk, which are assessed which
impact such scenarios could give rise to and whether they could jeopardize Nasdaq
Clearing’s ability to perform its critical services.

Moreover, Nasdaq Clearing has established BCPs, in which scenarios are identified in
relation to critical processes / functions (e.g. disturbances / close down of IT
systems) which potentially could prevent Nasdaq Clearing to carry out its services.
For the defined scenarios, mitigating actions have been set up in the BCP.

Nasdaq Clearing has a RRP that has been approved by the Board of Directors (23
September, 2015). The RRP describes the Recovery process for the clearing house.
This includes stress scenarios where the “business as usual” procedures are not
sufficient to cover losses encountered by the clearing house. The Recovery
procedure also includes early warnings and triggers, defining when the clearing
house should consider enter into Recovery and the decision making process in these
events. Further, the RRP sets out proposed Recovery tools that can be used to
restore Nasdaq Clearing in such a way that it can continue to perform its
responsibilities as a clearing house. Orderly wind-down of the clearing house is also
covered in the final section of the RRP. A separate Resolution plan is to be
maintained by a Resolution Authority (to be appointed). The RRP will be reviewed on
an annual basis or more often if deemed necessary due to, inter alia, major changes
in recommendations and/or regulations or the operations of Nasdaq Clearing.

Nasdaq Clearing will ensure it holds sufficient capital at all times to cover for general
business risk and the potential losses from an orderly wind-down. The capital is fully
funded by shareholders’ equity. According to Nasdaq Clearing’s investment policy
the capital shall be invested in highly liquid securities in SEK only. The method for
assessing the quality and liquidity of the net assets is fully integrated in Nasdaq
Clearing’s other investment operations i.e. an ongoing monitoring of the credit
quality of the investments and the annual review of the investment policy. These
funds are held in addition to the Waterfall and are consequently held outside the
resources of the Waterfall.

In addition to the regulatory capital, Nasdaq Clearing holds a buffer in non-

© 2016, The Nasdaq Group, Inc. All Rights Reserved.



e enforce, appropriate, realize and otherwise apply its rights in relation to any collateral
posted by or on behalf of the account holder;

retain and sell any assets held on behalf of the account holder and take possession of any
assets delivered to or deposited with the Clearinghouse in relation to the account holder;

e set off or otherwise apply any open positions related to a clearing account against any
other claims from the Clearinghouse related to the other clearing accounts of the account
holder

e set off or otherwise apply all profits, pending settlements and other claims owed by the
account holder to the Clearinghouse and by the Clearinghouse to the account holder so as
to produce a single net sum payable by or to the account holder, irrespective of whether
such claims are in different currencies and regardless of their origin or character; and/or

© terminate the membership agreement and exclude the account holder from clearing with
fifteen (15) days’ written notice, provided that non-repeated material default events that
do not clearly indicate that the account holder is unfit for membership shall normally not
be grounds for termination.

The following constitute material default of events under the Clearing Rules:

a) The account holder no longer meets the membership criteria for its applicable
membership category.

b) The account holder fails to meet a collateral call within the applicable time limit as set out
in the Clearing Rules.

c) (i) The account holder fails to meet any of its settlement obligations under the Clearing
Rules; (ii) the account holder, its collateral provider, its Settlement Bank or its parent
company is subject to an insolvency event; (iii) the account holder is in breach of, or
omits to observe, any other obligations towards the Clearinghouse or the Exchange under
the Clearing Rules or applicable law; (iv) the account holder causes or is subject to any
event with respect to it, which in the reasonable opinion of the Clearinghouse has an
analogous effect to any of the events specified in (a), (b) and (c)(i)-(iii) above; and (v) the
account holder takes any action in furtherance of, or indicating its consent to approval of,
or acquiescence in, any of the events referred to in (a), (b) and (c)(i)-(iv) above; provided
that the default event, in the reasonable opinion of the Clearinghouse, seriously affects the
account holder’s ability to fulfill its current or future obligations under the Clearing Rules,
or clearly indicates that the account holder is unfit for further clearing.

d) The account holder is in breach of any of its representations or warranties set out in the
Clearing Rules, provided that the breach of the representation or warranty is material in
the reasonable opinion of the Clearinghouse and has not been remedied within fifteen (15)
calendar days following written notice from the Clearinghouse, or the breach clearly
indicates that the account holder is unfit for further clearing.

No court order or filing or any other legal act shall be required for any of the actions stated above.

Please see Document 26 (Clearing Rules — General Terms) for further information in relation to
this.

LONO1_8129632v5


established. For example, Nasdaq Clearing reviews the CSD arrangements in order to
ensure that the DvP requirement for deliveries can be fulfilled by the CSDs. Nasdaq
Clearing further verifies that liquidity can be sent into the CSDs (the settlement
headroom) in a secure and efficient way by evaluating a good liquidity provider for
the respective CSD.

Nasdaq Clearing also verifies that the technical requirements imposed on the CSDs in
order to ensure a good and efficient CMS system for management of the deliveries
are fulfilled. Such verification is made through different performance tests. All
performance tests shall be successfully completed before the final implementation
of the link and production use.

After the establishment of the link, Nasdaq Clearing continuously evaluates and
monitors the linked FMIs and the risks associated with such links.

Nasdaq Clearing has established links with CSDs in Sweden (Euroclear Sweden),
Finland (Euroclear Finland), Belgium (Euroclear Bank), Denmark (VP Securities),
Norway (VPS) and Luxembourg (Clearstream Bank). All linked FMls (i.e. CSDs) are
licensed and supervised by Financial Supervisory Authorities and/or Central Banks.
Also, all linked CSDs are located within the EEA, which ensures that the CSDs’
activities are governed by local laws which have implemented relevant EU legislation
and that the CSDs are obliged to comply with international standards and
recommendations for securities settlement systems. By only establishing links with
CSDs that fulfills the above, Nasdaq Clearing ensures that the links have a well-
founded legal basis which provides adequate protection for the parties involved.

The relevant legal frameworks that form the legal basis for the links are local laws
(which have implemented EU legislation) including international standards and
participant agreements.

Principle 21: Efficiency and effectiveness

An FMI should be efficient and effective in meeting the requirements of its
participants and the markets it serves.

The design of Nasdaq Clearing has been done with high attention to achieving
efficiency and effectiveness in relation to inter alia margin models, cash settlement,
securities settlement, account structure and technology.

Nasdaq Clearing is an international clearing house in a competitive landscape. It is of
utmost importance to the clearing house to constantly keep in touch with market
developments, competitors’ movements and participants’ views and requirements
with regard to new developments and the efficiency of the clearing services offered.

With regard to participants’ views, there are a number of ways in which Nasdaq
Clearing organizes the collection of these. These include regular meetings with the

2016, The Nasdaq Group, Inc. All Rights Reserved.

55


G4

L 201/26

Official Journal of the European Union

27.7.2012

2. The applicant CCP shall provide al{ information necessary
to satisfy the competent authority that the applicant CCP has
established, at the time of authorisation, all the necessary
arrangements to meet the requirements laid down in this Regu-
lation. The competent authority shall immediately transmit all
the information received from the applicant CCP to ESMA and
the college referred to in Article 18(1).

3. Within 30 working days of receipt of the application, the
competent authority shall assess whether the application is
complete. If the application is not complete, the competent
authority shall set a deadline by which the applicant CCP has
to provide additional information. After assessing that an appli-
cation is complete, the competent authority shall notify the
applicant CCP and the members of the college established in
accordance with Article 18(1} and ESMA accordingly.

4, The competent authority shall grant authorisation only
where it is fully satisfied that the applicant CCP complies
with all the requirements laid down in this Regulation and
that the CCP is notified as a system pursuant to Directive
98/26]EC.

The competent authority shall duly consider the opinion of the
college reached in accordance with Article 19, Where the CCP’s
competent authority does not agree with a positive opinion of
the college, its decision shall contain full reasons and an expla-
nation of any significant deviation from that positive opinion.

The CCP shall not be authorised where all the members of the
college, excluding the authorities of the Member State where the
CCP is established, reach a joint opinion by mutual agreement,
pursuant to Article 19(1), that the CCP not be authorised. That
opinion shall state in writing the full and detailed reasons why
the college consider that the requirements laid down in this
Regulation or other Union law are not met.

Where a joint opinion by mutual agreement as referred to
in the third subparagraph has not been reached and a
majority of two-thirds of the college have expressed
negative opinion, any of the competent authorities concerned,
based on that majority of two-thirds of the college, may, within
30 calendar days of the adoption of that negative opinion, refer
the matter to ESMA in accordance with Article 19. of Regulation
(EU) No 1095/2010.

The referral decision shall state in writing the full and detailed
reasons why the relevant members of the college consider that
the requirements laid down in this Regulation or other parts of
Union Jaw are not met. fn that case the CCP's competent
authority shall defer its decision on authorisation and await
any decision on authorisation that ESMA may take in
accordance with Article 19(3) of Regulation (EU)
No 1095/2010, The competent authority shall take its
decision in conformity with ESMA’s decision. The matter shall
not be referred to ESMA after the end of the 30-day period
referred to in the fourth subparagraph.

Where all the members of the college, excluding the authorities
of the Member State where the CCP is established, reach a joint
opinion by mutual agreement, pursuant to Article 19(1), that
the CCP not be authorised, the CCP's competent authority may
refer the matter to ESMA in accordance with Article 19 of
Regulation (EU) No 1095/2010.

The competent authority of the Member State where the CCP is
established shall transmit the decision to the other competent
authorities concerned.

5. ESMA shall act in accordance with Article 17 of Regu-
lation (EU) No 1095/2010 in the event that the CCP's
competent authority has not applied the provisions of this
Regulation, or has applied them in a way which appears to
be in breach of Union law.

ESMA may investigate an alleged breach or non-application of
Union faw upon request from any member of the college or on
its own initiative, after having informed the competent auth-

ority.

6. While performing their duties, any action taken by any
member of the college shall not, directly or indirectly,
discriminate against any Member State or group of Member
States as a venue for clearing services in any currency.

7, Within six months of the submission of a complete appli-
cation, the competent authority shall inform the applicant CCP
in writing, with a fully reasoned explanation, whether authori-
sation has been granted or refused.

Article 18
College

1, Within 30 calendar days of the submission of a complete
application in accordance with Article 17, the CCP’s competent
authority shall establish, manage and chair a college to facilitate
the exercise of the tasks referred to in Articles 15, 17, 49, 51
and 54.

2. The college shall consist of:
(a) ESMA;
(b) the CCP'’s competent authority;

() the competent authorities responsible for the supervision of
the clearing members of the CCP that are established in the
three Member States with the largest contributions to the
default fund of the CCP referred to in Article 42 on an
aggregate basis over a one-year period;

d)

the competent authorities responsible for the supervision of
trading venues served by the CCP;

@)

the competent authorities supervising CCPs with which
interoperability arrangements have been established:

(f) the competent authorities supervising central securities
depositories to which the CCP is linked;


=

27.7.2012

Official Journal of the European Union

L 201/35

(e) outsourcing does not result in depriving the CCP from the
necessary systems and controls to manage the risks it faces;

() the service provider implements equivalent business
continuity requirements to those that the CCP must fulfil
under this Regulation;

(g) the CCP retains the necessary expertise and resources to
evaluate the quality of the services provided and the organi-
sational and capital adequacy of the service provider, and to
supervise the outsourced functions effectively and manage
the risks associated with the outsourcing and supervises
those functions and manages those risks on an ongoing
basis;

(h) the CCP has direct access to the relevant information of the
outsourced functions;

(i) the service provider cooperates with the competent
authority in connection with the outsourced activities;

(j) the service provider protects any confidential information
relating to the CCP and its clearing members and clients
or, where that service provider is established in a third
country, ensures that the data protection standards of that
third country, or those set out in the agreement between the
parties concerned, are comparable to the data protection
standards in effect in the Union.

A CCP shall not outsource major activities linked to risk
management unless such outsourcing is approved by the
competent authority.

2. The competent authority shall require the CCP to allocate
and set out its rights and obligations, and those of the service
provider, clearly in a written agreement.

3. A CCP shall make all information necessary to enable the
competent authority to assess the compliance of the
performance of the outsourced activities with this Regulation
available on request.

CHAPTER 2
Conduct of business rules
Article 36
General provisions

1. When providing services to its clearing members, and
where relevant, to their clients, a CCP shall act fairly and profes-
sionally in accordance with the best interests of such clearing
members and clients and sound risk management.

2. ACCP shall have accessible, transparent and fair rules for
the prompt handling of complaints.

Article 37
Participation requirements

1. A CCP shall establish, where relevant per type of product
cleared, the categories of admissible clearing members and the
admission criteria, upon the advice of the risk committee
pursuant to Article 28(3). Such criteria shall be non-discrimi-
natory, transparent and objective so as to ensure fair and open
access to the CCP and shall ensure that clearing members have
sufficient financial resources and operational capacity to meet
the obligations arising from participation in a CCP. Criteria that
restrict access shall be permitted only to the extent that their
objective is to control the risk for the CCP.

2. A CCP shall ensure that the application of the criteria
referred to in paragraph 1 is met on an ongoing basis and
shall have timely access to the information relevant for such
assessment. A CCP shall conduct, at least once a year, a compre-
hensive review of compliance with this Article by its clearing
members.

3. Clearing members that clear transactions on behalf of
their clients shall have the necessary additional financial
resources and operational capacity to perform this activity.
The CCP's rules for clearing members shall allow it to gather
relevant basic information to identify, monitor and manage
relevant concentrations of risk relating to the provision of
services to clients. Clearing members shall, upon request,
inform the CCP about the criteria and arrangements they
adopt to allow their clients to access the services of the CCP.
Responsibility for ensuring that clients comply with their
obligations shall remain with clearing members.

4, ACCP shall have objective and transparent procedures for
the suspension and orderly exit of clearing members that no
longer meet the criteria referred to in paragraph 1.

5. A CCP may only deny access to clearing members
meeting the criteria referred to in paragraph 1 where duly
justified in writing and based on a comprehensive risk analysis.

6. A CCP may impose specific additional obligations on
clearing members, such as the participation in auctions of a
defaulting clearing member's position. Such additional
obligations shall be proportional to the risk brought by the
clearing member and shall not restrict participation to certain
categories of clearing members.

Article 38
Transparency

1. ACCP and its clearing members shall publicly disclose the
prices and fees associated with the services provided, They shall
disclose the prices and fees of each service provided separately,
including discounts and rebates and the conditions to benefit
from those reductions. A CCP shall allow its clearing members
and, where relevant, their clients separate access to the specific
services provided.


—

COMMODITY FUTURES TRADING COMMISSION

SUPPLEMENT S-1 to FORM FBOT
CLEARING ORGANIZATION SUPPLEMENT TO
FOREIGN BOARD OF TRADE APPLICATION FOR REGISTRATION

Name of applicant as specified in organizational document

Address of principal executive office

Name of the foreign board of trade on associated Form FBOT

1 If this Supplement S-1 is accompanying a new application for registration, please

complete in full and check here.

If this Supplement S-1 is an amendment to a pending application for registration, or
to a final application that resulted in the issuance of an Order of Registration,

please list all items that are amended or otherwise updated and check here.

When appropriate. _please_attach additional page(s) containing a_list_and

explanatory statement of amendment(s) or update(s).

For ease of reference, this application has been completely updated from the one
originally sent to the Commission on August 20, 2012. A blacklined version of the

relevant documents is available upon request.

REGISTERED DERIVATIVES CLEARING ORGANIZATIONS
If the clearing organization is registered with the Commission in good standing as a

derivatives clearing organization (DCO), please indicate by checking here:


Contents
|. Executive summary.......
ll. Summary of major changes since the last update of the disclosure ..

Me General background on the FMI
General description of the FMI and the markets it serves.
General organisation of the FMI
Legal and regulatory framework.
System design and operations.......

WV. Principle-by-principle summary narrative disclosure......

V. List of publicly available resources........

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


1§

26

3§

4g

4. "**. VERKSAMHETSMAL OCH LEDNING

Riksbanken, som enligt 9 kap. 13 § regeringsformen
r rikets centralbank och en myndighet under riksda-
gen, far endast bedriva eller ta del i sadan verksam-
het som enligt lag ankommer pa Riksbanken.

Riksbanken har enligt 9 kap. 13 § regeringsformen
ansvaret f6r penningpolitiken.

Malet for Riksbankens verksamhet skall vara att
uppratthalla ett fast penningvarde.

Riksbanken skall ocksd framja ett sékert och effektivt
betalningsvasende.

Riksbanken far meddela féreskrifter inom ramen fér
sitt ansvar fér penningpolitiken. Riksbanken far aven
meddela féreskrifter savitt avser verksamhet med
anknytning till Riksbankens betalningssystem eller
kontantférsérjningsuppdrag.

Enligt 9 kap. 13 § regeringsformen har Riksbanken
elva fullmaktige, som valjs av riksdagen.

Fullmaktige valjer inom sig en ordférande samt en
vice ordférande.

Enligt 9 kap. 13 § regeringsformen leds Riksbanken
av en direktion, som utses av fullmaktige. Direktio-
nen bestar av sex ledamdter som utses fér en tid av
fem eller sex ar. Fullmaktige utser ordférande i direk-
tionen, som samtidigt skall vara chef for Riksbanken,
och minst en vice ordférande, som samtidigt skall
vara vice riksbankschef.

1151


of the annual independent model validations.

Nasdaq Clearing has the capacity to manually enter prices into the system used for
margin calculations. In such cases prices are either calculated by models or retrieved
from a third-party (Reuters, Bloomberg or Market makers). A manual check
following the four-eye principle is conducted in those occasions by Clearing
Operations.

Nasdaq Clearing has procedures and sound valuation models for addressing
circumstances in which pricing data are not readily available or reliable.

Nasdaq Clearing has initial margin models and parameters that are risk-based and
generate margin requirements sufficient to cover its potential future exposure to
participants in the interval between the last margin collection and the close out of
positions following a participant default.

Initial margin calculated by Nasdaq Clearing meets an established single-tailed
confidence level of at least 99 percent with respect to the estimated distribution of
future exposure. Currently 99.2% confidence level or higher is applied by Nasdaq
Clearing. Where correlation netting between products are allowed it is ensured that
that the confidence level requirement is met for all portfolios.

The models employed uses highly conservatives estimates of the time horizons for
the effective hedging or close out of the particular types of products cleared by
Nasdaq Clearing (including in stressed market conditions). Nasdaq Clearing considers
liquidity, presence of close-out arrangements, hedging possibilities in underlying
contracts or equivalent products in other markets, price reliability and required
confidence level as the main factors for determination of the size of the liquidation
period. Nasdaq Clearing’s minimum liquidation period is 2 days for listed derivatives
and 5 days for OTC derivatives. The liquidation period is reviewed at least on an
annual basis and more often if deemed necessary. Concentration risk which could
have an impact on the liquidation period is handled by requiring additional margin
for positions in a market segment which poses a concentration risk to the clearing
house.

Re-estimation of risk parameters is made at minimum monthly or more frequently in
case market conditions are stressed or changed crucially in the opinion of Risk
Management.

Nasdaq Clearing has appropriate methods for measuring credit exposure that
accounts for relevant product risk factors and portfolio effects across products.
Nasdaq Clearing estimates parameters to the margin models based on historical
prices, market information and the established confidence level. To estimate the
parameters, distribution-free or robust estimation methods are applied to address
the fact that price changes are not Gaussian distributed.

Nasdaq Clearing limits the need for destabilizing, pro-cyclical changes. Nasdaq
Clearing uses margin parameter floors to mitigate tail risks and make the margin
system more robust with respect to the systemic risks, originated from unexpected
events influencing the markets Nasdaq Clearing are involved in. This helps to avoid

2016, The Nasdaq Group, Inc. All Rights Reserved.

25


Nasdaq Clearing has a dedicated Member Service team that handles all applications
from prospective members and direct clearing clients. The Member Service team
reviews all applications and assesses together with the Legal Department, the
Surveillance team and Clearing Risk Management whether the applicant has the
necessary operational capability, meets Nasdaq Clearing’s technical standards and
financial requirements, and otherwise deemed to be fit and proper for the intended
membership- or direct clearing client category.

Members and direct clearing clients are monitored by Clearing Risk Management
and Clearing Operations, with support from the Legal Department, in order to
ensure that the membership or direct clearing client requirements are fulfilled at all
times.

In the default procedures of Nasdaq Clearing, the process and actions to be taken if
a participant does not fulfill the participation requirements are described. The
default procedures are publically available on the website. If a member no longer
fulfills. the membership requirements, Nasdaq Clearing may terminate the
membership agreement. Such termination right is provided for in the respective
R&R. Furthermore, if a member no longer fulfills the requirements stipulated in the
R&Rs, and no exemption has been made by the Clearing Risk Committee for such
member, the Clearing Default Committee will assemble and take a decision to
temporary suspend or declare the participant into default. The Clearing Operations
Department will execute the suspension in the system if requested by the Clearing
Default Committee. This can be done with immediate effect.

Principle 19: Tiered participation arrangements

An FMI should identify, monitor, and manage the material risks to the FMI arising
from tiered participation arrangements.

Nasdaq Clearing offers both agency and member clearing to its participants. Within
these two clearing structures different types of tiered participation exists, with
different liabilities and obligations between Nasdaq Clearing, the direct participant
and the indirect participants. The right to gather information on indirect participants
is included in the R&Rs of Nasdaq Clearing.

Nasdaq Clearing has identified the following risks from tiered participation
arrangements:

1. Counterparty risk, i.e. the risk that a default of an indirect participant would
spill over and lead to a default of the direct participant.

2. Settlement risk, i.e. the risk that a failure in settlement (payment or delivery)
of an indirect participant will not be managed by the direct participant and
hence disturb the general settlement process.

Most of the tiered participants are set up with individual accounts or sub accounts in

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

53


SIGNATURES

By signing and submitting this Supplement S-1, the clearing organization agrees to and consents
that the notice of any proceeding before the Commission in connection with the associated
foreign board of trade’s application for registration or registration with the Commission may be
given by sending such notice by certified mail or similar secured correspondence to the persons
specified in sections 3a and 3b above.

Nasdaq Clearing AB has duly caused this Supplement S-1 to be signed on its behalf by the
undersigned, hereunto duly authorized, the 28 of February, 2017.

Nasdag Clearing AB_and the undersigned represent that all information and representations
contained in this Supplement S-1 (and exhibits) are true, current, and complete. It is understood
that all information, documentation, and exhibits are considered integral parts of this Supplement
S-1. The submission of any amendment to a Supplement S-1 represents that all items and
exhibits not so amended remain true, current, and complete as previously filed.

Signature of Chief Executive Officer (or functional ¢
Organization

Tide Presi 424 J tla

Nesdag Clearing AB

Name of Clearing Organization


4§ Riksbanken skall minst tva ganger om aret lamna en

5§

6§

skriftlig redogérelse till riksdagens finansutskott om
penningpolitiken.

Riksbanken skall |6pande offentliggéra statistiska
uppgifter om valuta- och kreditférhallanden.

Riksbanken far i penningpolitiskt syfte

4, bevilja kredit mot betryggande sakerhet och ta
emot inlaning,

2. képa, salja och formedia vardepapper, valuta samt
rattigheter och skyldigheter som anknyter till
sAdana tillgangar,

3. ge ut egna skuldebrev.

Allmant gallande rantevillkor fér Riksbankens in- och
utldning enligt férsta stycket 1 skall offentliggéras.

Riksbanken far i penningpolitiskt syfte uppstalla kas-
sakrav gentemot finansinstitut.

Med kassakrav avses att viss andel, hégst femton
procent, av finansinstitutets placeringar eller forbin-
delser, beraknade pa det satt Riksbanken bestammer,
skall under angiven tid motsvaras av medel som med
eller utan rantegottgérelse skall innesta pa rakning
fér institutet i Riksbanken. | den utstrackning Riks-
banken bestammer likstalls med sadana medel det
finansinstitutets inneliggande kassa.

For ett utlandskt finansinstitut som har ratt att driva
verksamhet fran filial hari landet beraknas kassakra-
vet pa filialens placeringar eller forbindelser.

(241




Responding institution:
Nasdaq Clearing AB
Jurisdiction(s) in which the FMI operates:

Sweden
Norway (the FMI has a branch in Norway)

Authority(ies) regulating, supervising or overseeing the FMI:

Nasdaq Clearing AB’s competent authority is Finansinspektionen under EMIR. Nasdaq
Clearing AB is overseen by college of European regulators, which includes Riksbanken,
the central bank in Sweden, which also has financial stability responsibilities for
Nasdaq Clearing AB.

The date of this disclosure is March 2016.

This disclosure can also be found at:
http://www.nasdaqomx.com/transactions/posttrade/clearing/europeanclearing

For further information, please contact Linn Lones Luthman,
linn.luthman@nasdaq.com.

I. Executive summary

This document (“Disclosure Framework”) is prepared in accordance with the
Principles for Financial Market Infrastructure” (“PFMIs”) published in February 2012
and developed jointly by the Committee on Payments and Market Infrastructures
(“CPMI") and the Technical Committee of the International Organization of
Securities Commissions (“IOSCO”). No disclosure is provided with respect to
Principles 11 and 24 as they do not apply to CCPs. The objective of this Disclosure
Framework is to provide relevant disclosure to market participants with respect to
Nasdaq Clearing AB (hereinafter referred to as “Nasdaq Clearing’, the “clearing
house” or the “CCP”) and its role as a central counterparty and its management of
different types of risk. The scope of the Disclosure Framework is limited to the
clearing activities performed by Nasdaq Clearing under its current clearing license:
ie. (i) Nasdaq Derivatives Markets which is the clearing of financial instruments
(“Nasdaq Financial”), and (ii) Nasdaq Commodities which is the clearing of
commodities instruments (“Nasdaq Commodities”).

Nasdaq Clearing is part of the Nasdaq Group — an international group that inter alia
offers services for trading in securities and technical systems for trading and

1 in June 2014, the Committee on Payment and Settlement Systems (CPSS), changed name to the Committee on Payments and Market
Infrastructures (CPM).

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


With respect to each relevant regulatory regime or authority governing the clearing organization,
attach:

(2) The regulatory regime/authority’s authorizing statutes, including the source of its authority to
supervise the clearing organization.

In its role as a clearinghouse, Nasdaq Clearing is authorized and supervised as a multi-asset clearinghouse
by FI (and the College), and is also authorized to conduct clearing operations via its Norwegian branch by
the Norwegian Ministry of Finance (please see paragraph 3(i) below for further information on this). As
mentioned above, the commodity clearing operations are supervised by F] and Finanstillsynet jointly, with
FI being appointed as the principal supervisor pursuant to a memorandum of understanding between the
two supervisors.FI’s authority to supervise the Clearinghouse is manifested in EMIR, which came into
force on 16 August 2012. Nasdaq Clearing was granted its EMIR license in 2014. As EMIR is an EU
regulation, it has direct effect in all member states, including Sweden. One of the objectives of EMIR is to
reinforce the role of CCP’s in mitigating certain aspects of market and counterparty risk with the aim to
protect the stability of the financial system. Accordingly, EMIR sets out a number of rules and
requirements relating to CCPs, including in relation to the following areas:

Riksbanken’s authority to supervise the Swedish financial infrastructure, and hence also the
Clearinghouse, is manifested in the Sveriges Riksbank Act. Please see an English translation of the act
attached hereto as Document $-5. According

Margin and Default Fund

Under EMIR, a CCP is required to collect margin to limit the credit exposure it has to its members. The
CCP has to collect sufficient margin to cover its potential exposure until liquidation of the relevant
positions and 99% of the exposure movement over an appropriate time horizon. Such margin must be
collateralized on a daily basis. The CCP’s models and parameters relating to margin requirements must be
validated by Finansinspektionen.

EMIR also requires CCPs to establish a pre-funded default fund to cover losses that exceed the losses to
be covered by margin requirements arising from the default of a clearing member. Such default fund must
not be allowed to fal] below a certain level (determined by the CCP). The CCP establishes the minimum
size of, and the criteria for calculating, contributions to such fund (which must be proportional to the
exposures of a clearing member). The default fund is intended to be of a sufficient size to allow the CCP
to withstand, under “extreme but plausible market conditions”, the default of either (i) the largest clearing
member, or (ii) the second and third largest clearing members.

Governance Arrangements

EMIR sets out certain governance requirements for CCPs, which are further supplemented by
Commission Delegated Regulation (EU) No 153/2013 of 19 December 2012 supplementing EMIR
(“Delegated Regulation 153”). Delegated Regulation 153 requires CCPs to have adequate staff, clear,
consistent and well-documented lines of responsibility, with different individuals fulfilling the roles of
chief risk officer, chief compliance officer and chief technology officer, and risk management policies,
procedures, systems and controls which are part of a coherent and consistent governance framework that
is reviewed and updated regularly.

LONO1_8129630v4




L 201/42 aN

Official Journal of the European Union

27.7.2012

4. The assets referred to in paragraphs 1 and 2 shall be
available to the receiving CCP only in case of default of the
CCP which has provided the collateral in the context of an
interoperability arrangement.

5. In case of default of the CCP which has received the
collateral in the context of an interoperability arrangement,
the collateral referred to in paragraphs 1 and 2 shall be
readily returned to the providing CCP.

Article 54
Approval of interoperability arrangements

1, An interoperability arrangement shall be subject to the
prior approval of the competent authorities of the CCPs
involved. The procedure under Article 17 shall apply.

2. The competent authorities shall grant approval of the
interoperability arrangement only where the CCPs involved
have been authorised to clear under Article 17 or recognised
under Article 25 or authorised under a pre-existing national
authorisation regime for a period of at least three years, the
requirements laid down in Article 52 are met and the technical
conditions for clearing transactions under the terms of the
arrangement allow for a smooth and orderly functioning of
financial markets and the arrangement does not undermine
the effectiveness of supervision.

3. Where a competent authority considers that the
requirements laid down in paragraph 2 are not met, it shall
provide explanations in writing regarding its risk considerations
to the other competent authorities and the CCPs involved. It
shall also notify ESMA, which shall issue an opinion on the
effective validity of the risk considerations as grounds for denial
of the interoperability arrangement. ESMA's opinion shall be
made available to all the CCPs involved, Where ESMA's
opinion differs from the assessment of the relevant competent
authority, that competent authority shall reconsider its position,
taking into account ESMA’s opinion.

4, By 31 December 2012, ESMA shall issue guidelines or
recommendations with a view to establishing consistent,
efficient and effective assessments of interoperability arrange-
ments, in accordance with the procedure laid down in Article 16
of Regulation (EU) No 1095/2010.

ESMA shall develop drafts of those guidelines or recommen-
dations after consulting the members of the ESCB.

TITLE VI
REGISTRATION AND SUPERVISION OF TRADE REPOSITORIES
CHAPTER 1

Conditions and procedures for registration of a trade
repository
Article 55
Registration of a trade repository

1. A trade repository shall register with ESMA for the
purposes of Article 9.

2. To be eligible to be registered under this Article, a trade
repository shall be a legal person established in the Union and
meet the requirements laid down in Title VIL.

3. The registration of a trade repository shall be effective for
the entire territory of the Union.

4, A registered trade repository shall comply at all times with
the conditions for registration. A trade repository shall, without
undue delay, notify ESMA of any material changes to the
conditions for registration.

Article 56
Application for registration

1. A trade repository shall submit an application for regis-
tration to ESMA.

2. ESMA shall assess whether the application is complete
within 20 working days of receipt of the application.

Where the application is not complete, ESMA shall set a
deadline by which the trade repository is to provide additional
information.

After assessing an application as complete, ESMA shall notify
the trade repository accordingly.

3. In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the details of the application for registration referred to in
paragraph 1.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.


1§

1a§

25

Vid beredskapsplaneringen skall Riksbanken samrada
med Finansinspektionen i fragor om finansiella
tjAnster och med Kommerskollegium i fragor som har
samband med utrikeshandeln.

Riksbanken har ratt till kompensation fér belopp,
motsvarande ingdende skatt enligt mervardesskatte-
lagen (1994:200), som hanfér sig till verksamheten.

Riksbanken har dock inte ratt till kompensation om
den ingdende skatten omfattas av begransningar i
avdragsratten enligt 8 kap. 9, 10, 15 eller 16 § mer-
vardesskattelagen.

Riksbanken far ta ut avgifter for kopior, avskrifter
‘och utskrifter av allmanna handlingar. Avgifterna
skall bestammas med ledning av de regler som galler
fér myndigheter under regeringen.

10 **". BUDGET, VINSTDISPOSITION
OCH ANSVARSFRIHET

Riksbanken skall ha en grundfond som uppgar till ett
tusen miljoner kronor, en reservfond som uppgar till
femhundra miljoner kronor samt en dispositionsfond.

| Riksbankens verksamhet skall hég effektivitet efter-
stravas och god hushallning iakttas.

Riksbankens rakenskapsar ar kalenderar.

Varje ar fore utgangen av december manad skal
direktionen faststalla en budget for Riksbankens fér-

(321


Gx]

27.7.2012

Official Journal of the European Union

L 201/37

CHAPTER 3
Prudential requirements
Article 40
Exposure management

A CCP shall measure and assess its liquidity and credit
exposures to each clearing member and, where relevant, to
another CCP with which it has concluded an interoperability
arrangement, on a near to real-time basis. A CCP shall have
access in a timely manner and on a non-discriminatory basis to
the relevant pricing sources to effectively measure its exposures.
This shall be done on a reasonable cost basis.

Article 41
Margin requirements

1. A CCP shall impose, call and collect margins to limit its
credit exposures from its clearing members and, where relevant,
from CCPs with which it has interoperability arrangements.
Such margins shall be sufficient to cover potential exposures
that the CCP estimates will occur until the liquidation of the
relevant positions. They shall also be sufficient to cover losses
that result from at least 99 % of the exposures movements over
an appropriate time horizon and they shall ensure that a CCP
fully collateralises its exposures with all its clearing members,
and, where relevant, with CCPs with which it has interoper-
ability arrangements, at least on a daily basis. A CCP shall
regularly monitor and, if necessary, revise the level of its
margins to reflect current market conditions taking into
account any potentially procyclical effects of such revisions.

2. A CCP shall adopt models and parameters in setting its
margin requirements that capture the risk characteristics of the
products cleared and take into account the interval between
margin collections, market liquidity and the possibility of
changes over the duration of the transaction. The models and
parameters shall be validated by the competent authority and
subject to an opinion in accordance with Article 19.

3. ACCP shall call and collect margins on an intraday basis,
at least when predefined thresholds are exceeded.

4, A CCP shall call and collect margins that are adequate to
cover the risk stemming from the positions registered in each
account kept in accordance with Article 39 with respect to
specific financial instruments. A CCP may calculate margins
with respect to a portfolio of financial instruments provided
that the methodology used is prudent and robust.

5. In order to ensure consistent application of this Article,
ESMA shall, after consulting EBA and the ESCB, develop draft
regulatory technical standards specifying the appropriate
percentage and time horizons for the liquidation period and
the calculation of historical volatility, as referred to in
paragraph 1, to be considered for the different classes of
financial instruments, taking into account the objective to
limit procyclicality, and the conditions under which portfolio

margining practices referred to in paragraph 4 can be imple-
mented.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 42
Default fund

1. To limit its credit exposures to its clearing members
further, a CCP shall maintain a pre-funded default fund to
cover losses that exceed the losses to be covered by margin
requirements laid down in Article 41, arising from the
default, including the opening of an insolvency procedure, of
one or more clearing members,

The CCP shall establish a minimum amount below which the
size of the default fund is not to fall under any circumstances.

2, A CCP shall establish the minimum size of contributions
to the default fund and the criteria to calculate the contributions
of the single clearing members. The contributions shall be
proportional to the exposures of each clearing member.

3. The default fund shall at least enable the CCP to with-
stand, under extreme but plausible market conditions, the
default of the clearing member to which it has the largest
exposures or of the second and third largest clearing
members, if the sum of their exposures is larger. A CCP shall
develop scenarios of extreme but plausible market conditions.
The scenarios shall include the most volatile periods that have
been experienced by the markets for which the CCP provides its
services and a range of potential future scenarios. They shall
take into account sudden sales of financial resources and rapid
reductions in market liquidity.

4. A CCP may establish more than one default fund for the
different classes of instrument that it clears.

5. In order to ensure consistent application of this Article,
ESMA shall, in close cooperation with the ESCB and after
consulting EBA, develop draft regulatory technical standards
specifying the framework for defining extreme but plausible
market conditions referred to in paragraph 3, that should be
used when defining the size of the default fund and the other
financial resources referred to in Article 43.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.


Exhibit A-5 to Supplement S-1 to Form FBOT

The current rules, regulations, guidelines and bylaws of the clearing organization.

NASDAQ COM has adopted internal rulebooks that further regulate the obligations and rights of
the market participants in trading (the “Trading Rules”) and clearing and settlement processes (the
“Clearing Rules”) to assure compliance with the external government regulations (jointly the “NASDAQ

COM Rules”).

The current NASDAQ COM Rules are attached hereto as follows:

Trading Rules:

General Terms — Trading Rules: Document 18
Trading Appendix 1 — Definitions (joint with the Clearing Rules): Document 19

Trading Appendix 2 — Contract Specifications (joint with the Clearing Rules): Document
20

Trading Appendix 3 — Trading and Clearing Schedule (joint with the Clearing Rules):
Document 21

Trading Appendix 4 — Trading procedures: Document 22
Trading Appendix 5 — ETS User Terms: Document 23

Trading Appendix 6 — Market Conduct Rules (joint with the Clearing Rules): Document
24

Trading Appendix 7 — Fee List (joint with the Clearing Rules): Document 25

Trading Appendix 8 - Block Trade Facility Procedure: Document 22a

Clearing Rules:

LONO1_8129617v4

General Terms — Clearing Rules: Document 26
Clearing Appendix 1 — Definitions (joint with the Trading Rules): see Document 19

Clearing Appendix 2 — Contract Specifications (joint with Trading Rules): see Document
20

Clearing Appendix 3 — Trading and Clearing Schedule (joint with the Trading Rules): see
Document 21

Clearing Appendix 4 — Non Exchange Clearing Procedure: Document 27

Clearing Appendix 5 — Clearing System User Term: Document 28


(38)



27.7.2012 ay] Official Journal of the European Union L 201/7

of collateral should be substituted to the CCP clearing
those transactions, where that is appropriate to mitigate
intragroup counterparty risks.

(39) However, some intragroup transactions could be
exempted, in some cases on the basis of the decision
of the competent authorities, from the collateralisation
requirement provided that their risk-management
procedures are adequately sound, robust and consistent
with the level of complexity of the transaction and there
is no impediment to the prompt transfer of own funds
or repayment of liabilities between the counterparties.
Those criteria as well as the procedures for the counter-
parties and the relevant competent authorities to be
followed while applying exemptions should be specified
in regulatory technical standards adopted in accordance
with the relevant regulations establishing the ESAs.
Before developing such draft regulatory technical stan-
dards, the ESAs should prepare an impact assessment
of their potential impact on the intemal market as well
as on financial market participants and in particular on
the operations and the structure of groups concemed. All
the technical standards applicable to the collateral
exchanged in intragroup transactions, including criteria
for the exemption, should take into account the
prevailing specificities of those transactions and existing
differences between non-financial and financial counter-
parties as well as their purpose and methods of using
derivatives.

(40) Counterparties should be considered to be included in
the same consolidation at least where they are both
included in a consolidation in accordance with Council
Directive 83/349/EEC (') or International Financial
Reporting Standards (IFRS) adopted pursuant to Regu-
lation (EC) No 1606/2002 of the European Parliament
and of the Council (?) or, in relation to a group the
parent undertaking of which has its head office in a
third country, in accordance with generally accepted
accounting principles of a third country determined to
be equivalent to IFRS in accordance with Commission
Regulation (EC) No 1569/2007 (3) for accounting
standards of a third country the use of which is
permitted in accordance with Article 4 of Regulation
(EC) No 1569/2007}, or where they are both covered
by the same consolidated supervision in accordance
with Directive 2006/48/EC or with Directive 2006/49/EC
of the European Parliament and of the Council (*) or, in

() Seventh Council Directive 83/349/EEC of 13 June 1983 based on
Article 54(3)(g) of the Treaty on consolidated accounts (O} L 193,
18.7.1983, p. 0).
Regulation (EC) No 1606/2002 of the European Parliament and of
the Council of 19 July 2002 on the application of international
accounting standards (OJ L 243, 11.9.2002, p. 1).
Commission Regulation (EC) No 1569/2007 of 2) December 2007
establishing a mechanism for the determination of equivalence of
accounting standards applicd by third country issuers of securities
pursuant to Directives 2003/71/EC and 2004/109/EC of the
European Parliament and of the Council (0) L 340, 22.12.2007,
. 66).
Directive 2006/49/EC of the European Parliament and of the
Council of 14 June 2006 on the capital adequacy of investment
firms and credit institutions (OJ 1 177, 306.2006, p. 261),

e

(

(

(41)

(42)

(43)

(44)

(45)

relation to a group the parent undertaking of which has
its head office in a third country, the same consolidated
supervision by a third country competent authority
verified as equivalent to that governed by the principles
laid down in Article 143 of Directive 2006/48/EC or in
Article 2 of Directive 2006/49/EC.

It is important thar market participants report all details
tegarding derivative contracts they have entered into to:
trade repositories. As a result, information on the risks
inherent in derivatives markets will be centrally stored
and easily accessible, inter alia, to ESMA, the relevant
competent authorities, the European Systemic Risk
Board (ESRB) and the relevant central banks of the ESCB.

The provision of trade repository services is characterised
by economies of scale, which may hamper competition
in this particular field. At the same time, the imposition
of a comprehensive reporting requirement on market
participants may increase the value of the information
maintained by wade repositories also for third parties
providing ancillary services such as trade confirmation,
trade matching, credit event servicing, portfolio recon-
ciliation or portfolio compression. It is appropriate to
ensure that a level playing field in the post-trade sector
more generally is not compromised by a possible natural
monopoly in the provision of trade repository services.
Therefore, trade repositories should be required to
provide access to the information held in the repository
on fair, reasonable and non-discriminatory terms, subject
to necessary precautions on data protection.

In order to allow for a comprehensive overview of the
market and for assessing systemic risk, both CCP-cleared
and non-CCP-cleared derivative contracts should be
reported to trade repositories.

The ESAs should be provided with adequate resources in
order to perform the tasks they are given in this Regu-
lation effectively.

Counterparties and CCPs that conclude, modify,
or terminate a derivative contract should ensure that
the details of that contract are reported to a trade
repository. They should be able to delegate the
reporting of the contract to another entity. An entity
or its employees that report the details of a derivative
contract to a trade repository on behalf of a counter-
party, in accordance with this Regulation, should not
be in breach of any restriction on disclosure. When




[aN]

27.7.2012

Official Journal of the European Union

L 201/49

(6) whether the infringement has been committed intentionally
or negligently.

3. Without undue delay, ESMA shall notify any decision
adopted pursuant to paragraph 1 to the trade repository
concerned, and shall communicate it to the competent auth-
orities of the Member States and to the Commission. It shall
publicly disclose any such decision on its website within 10
working days from the date when it was adopted.

When making public its decision as referred to in the first
subparagraph, ESMA shail also make public the right of the
trade repository concerned to appeal the decision, the fact,
where relevant, that such an appeal has been lodged, specifying
that such an appeal does not have suspensive effect, and the fact
that it is possible for ESMA’s Board of Appeal to suspend the
application of the contested decision in accordance with
Article 60(3) of Regulation (EU) No 1095/2010.

Article 74
Delegation of tasks by ESMA to competent authorities

1. Where necessary for the proper performance of a super-
visory task, ESMA may delegate specific supervisory tasks to the
competent authority of a Member State in accordance with the
guidelines issued by ESMA pursuant to Article 16 of Regulation
(EU) No 1095/2010, Such specific supervisory tasks may, in
particular, include the power to carry out requests for
information in accordance with Article 61 and to conduct
investigations and on-site inspections in accordance with
Article 62 and Article 63(6).

2. Prior to delegation of a task, ESMA shall consult the
relevant competent authority. Such consultation shall concern:

(a) the scope of the task to be delegated;

(b) the timetable for the performance of the task; and

(©) the transmission of necessary information by and to ESMA.

3, In accordance with the regulation on fees adopted by the
Commission pursuant to Article 72(3), ESMA shall reimburse a
competent authority for costs incurred as a result of carrying
out delegated tasks.

4, ESMA shall review the decision referred to in paragraph 1
at appropriate intervals. A delegation may be revoked at any
time,

5. A delegation of tasks shall not affect the responsibility of
ESMA and shall not limit ESMA’s ability to conduct and oversee
the delegated activity. Supervisory responsibilities under this
Regulation, including registration decisions, final assessments

and follow-up decisions concerning infringements, shall not
be delegated.

CHAPTER 2
Relations with third countries
Article 75
Equivalence and international agreements

1, The Commission may adopt an implementing act deter-
mining that the legal and supervisory arrangements of a third
country ensure that:

(a) trade repositories authorised in that third country comply
with legally binding requirements which are equivalent to
those laid down in this Regulation;

(b) effective supervision and enforcement of trade repositories
takes place in that third country on an ongoing basis; and

(c) guarantees of professional secrecy exist, including the
protection of business secrets shared with third parties by
the authorities, and they are at least equivalent to those set
out in this Regulation.

That implementing act shall be adopted in accordance with the
examination procedure referred to in Article 86(2).

2. Where appropriate, and in any case after adopting an
implementing act as referred to in paragraph 1, the Commission
shall submit recommendations to the Council for the
negotiation of international agreements with the relevant third
countries regarding mutual access to, and exchange of
information on, derivative contracts held in trade repositories
which are established in that third country, in a way that
ensures that Union authorities, including ESMA, have
immediate and continuous access to all the information
needed for the exercise of their duties.

3. After conclusion of the agreements referred to in
paragraph 2, and in accordance with them, ESMA shall
establish cooperation arrangements with the competent auth-
orities of the relevant third countries, Those arrangements
shall specify at least:

(a) a mechanism for the exchange of information between
ESMA and any other Union authorities that exercise respon-
sibilities in accordance with this Regulation on the one hand
and the relevant competent authorities of third countries
concerned on the other; and

(b) procedures concerning the coordination of supervisory
activities.


46

25

3§

3" DIREKTIONEN

Ledaméter av direktionen far inte

1. vara ledamot av riksdagen,

2. vara statsrad,

3. vara anstalld i Regeringskansliet,

4. vara anstalld centralt av ett politiskt parti,

5. vara ledamot eller suppleant i styrelsen fér en bank
eller annat féretag som star under Finansinspek-
tionens tillsyn, eller

6. inneha annan anstallning eller annat uppdrag som
gor dem olampliga att vara direktionsledamot.

Ledaméterna far inte heller vara underdriga, i kon-
kurs, underkastade naringsférbud eller ha forvaltare
enligt 11 kap. 7 § foraldrabalken.

Om en ledamot tar en sddan anstallning eller ett
sAdant uppdrag som kan strida mot bestammelserna
i forsta stycket skall ledamoten genast anmala det till
fullmaktige.

Under ett ar efter det att en ledamots anstallning har
upphort far ledamoten inte utan fullmaktiges medgi-
vande inneha sadan anstallning eller sadant uppdrag
som avses i férsta stycket 5 och 6.

Ledamdter av direktionen far inte sdka eller ta emot
instruktioner nar de fullgér penningpolitiska uppgif-
ter.

Vid direktionens sammantraden skall protokoll foras.

Direktionen ar beslutfér nar minst halften av leda-
miéterna ar narvarande. Arenden som kraver ett

(18)


INNEHALL

Regeringsformen
9 kap. 12, 13 och 145

Lag (1998:1404)
om valutapolitik

Lag (1988:1385)
om Sveriges riksbank

CONTENTS

The Instrument of Government.
Chapter 9, Art. 12, 13 and 14

The Currency Rate Policy
Policy Act (1998:1404)

The Sveriges Riksbank Act
(1988:1385)

SID 13

PAGE 37

PAGE 41

PAGE 45,


un@riksbank se

bank. se



L 201/28

Official Journal of the European Union

27.7.2012

3. The CCP's competent authority shall consult the members
of the college on the necessity to withdraw the authorisation of
the CCP, except where a decision is required urgently.

4. Any member of the college may, at any time, request that
the CCP's competent authority examine whether the CCP
remains in compliance with the conditions under which auth-
orisation was granted.

5. The CCP's competent authority may limit the withdrawal
to a particular service, activity, or class of financial instruments.

6. The CCP'’s competent authority shall send ESMA and the
members of the college its fully reasoned decision, which shall
take into account the reservations of the members of the
college.

7. The decision on the withdrawal of authorisation shall take
effect throughout the Union.

Article 21
Review and evaluation

1. Without prejudice to the role of the college, the
competent authorities referred to in Article 22 shall review
the arrangements, strategies, processes and mechanisms imple-
mented by CCPs to comply with this Regulation and evaluate
the risks to which CCPs are, or might be, exposed.

2. The review and evaluation referred to in paragraph 1 shall
cover all the requirements on CCPs laid down in this Regu-
lation.

3. The competent authorities shall establish the frequency
and depth of the review and evaluation referred to in
paragraph 1 having regard to the size, systemic importance,
nature, scale and complexity of the activities of the CCPs
concerned. The review and evaluation shall be updated at
least on an annual basis.

The CCPs shall be subject to on-site inspections.

4, The competent authorities shall regularly, and at least
annually, inform the college of the results of the review and
evaluation as referred to in paragraph 1, including any remedial
action taken or penalty imposed.

5. The competent authorities shall require any CCP that does
not meet the requirements laid down in this Regulation to take
the necessary action or steps at an early stage to address the
situation,

6. ESMA shall fulfil a coordination role between competent
authorities and across colleges with a view to building a
common supervisory culture and consistent supervisory prac-
tices, ensuring uniform procedures and consistent approaches,
and strengthening consistency in supervisory outcomes.

For the purposes of the first subparagraph, ESMA shall, at least
annually:

(a) conduct a peer review analysis of the supervisory activities
of all competent authorities in relation to the authorisation
and the supervision of CCPs in accordance with Article 30
of Regulation (EU) No 1095/2010; and

initiate and coordinate Union-wide assessments of the
resilience of CCPs to adverse market developments in
accordance with Article 32(2) of Regulation (EU)
No 1095/2010.

S

Where an assessment referred to in point (b) of the second
subparagraph exposes shortcomings in the resilience of one
or more CCPs, ESMA shall issue the necessary recommendations
pursuant to Article 16 of Regulation (EU) No 1095/2010.

CHAPTER 2
Supervision and oversight of CCPs
Article 22
Competent authority

1. Each Member State shall designate the competent
authority responsible for carrying out the duties resulting
from this Regulation for the authorisation and supervision of
CCPs established in its territory and shall inform the
Commission and ESMA thereof.

Where a Member State designates more than one competent
authority, it shall clearly determine the respective roles and shall
designate a single authority to be responsible for coordinating
cooperation and the exchange of information with the
Commission, ESMA, other Member States’ competent auth-
orities, EBA and the relevant members of the ESCB, in
accordance with Articles 23, 24, 83 and 84.

2. Each Member State shall ensure that the competent
authority has the supervisory and investigatory powers
necessary for the exercise of its functions.

3. Each Member State shall ensure that appropriate adminis-
trative measures, in conformity with national law, can be taken
or imposed against the natural or legal persons responsible for
non-compliance with this Regulation.

Those measures shall be effective, proportionate and dissuasive
and may include requests for remedial action within a set time
frame.

4. ESMA shall publish on its website a list of the competent
authorities designated in accordance with paragraph 1.

CHAPTER 3
Cooperation
Article 23
Cooperation between authorities

1. Competent authorities shall cooperate closely with each
other, with ESMA and, if necessary, with the ESCB.


Article 5, or regulations issued pursuant to Chapter 1,
Article 2 or Chapter 6, Article 9 are observed. In
decisions on injunctions or prohibitions the Riksbank
may set a penalty.

In cases such as those referred to in Chapter 5,
Article 5, the prohibition may be communicated to
each party that has significantly contributed to the
circulation and in so doing has been aware that the
banknotes or coins have been altered or manipula-
ted.

|. Any person failing to fulfil an obligation pursuant

to Chapter 6, Article 9, to provide information

or present documents, or who provides incorrect
information when the obligation is fulfilled, shall be
sentenced to a fine, unless the offence is subject to
punishment under the Penal Code. If a penalty has
been imposed pursuant to Chapter 11, Article 2a,
however, punishment may not be exacted for actions
covered by the penalty.

Minor infringements shall not be penalised.

The Riksbank shall, without prejudice to the stipula-
tions laid down in Chapter 8, Article 8, and Chapter
9, Article 4, of the Secrecy Act (1980:100), notify
the police or the public prosecution authority if
information emerges in its activities, as referred to in
these stipulations, that gives cause to assume that a
crime has been committed.

In special circumstances, the Riksbank may refrain
from submitting such information.

1701


ant,

Nor may a member of the Executive Board be a
minor, or a declared bankrupt, or be subject to a
prohibition against carrying on a business, or have a
trustee in accordance with Chapter 11, Article 7, of
the Code relating to Parents, Guardians and Children.

If a member takes an employment or assignment
which can come into conflict with the provisions of
the first paragraph, he shall immediately notify the
General Council.

For a period of one year after a member has ceased
to serve on the Executive Board, he may not hold
such employment or carry out such assignments as
are referred to in the first paragraph, 5 and 6, wit-
hout the consent of the General Council.

Members of the Executive Board may neither seek
nor take instructions when fulfilling their monetary
policy duties.

Minutes shall be taken at meetings of the Executive
Board.

The Executive Board has a quorum when at least half
of its members are present. However, matters that
require urgent treatment may be decided upon by
two members if they are in agreement. Each member
who takes part in the final treatment of an item shall
also take part in the decision. However, no member
is obliged to vote for more than one proposal.

i511


Cash Amounts (as defined in the General Terms for Collateral) forming cash collateral are
required to be deposited to a Bank Account. A Bank Account is an account opened in the name of Nasda
Clearing at a credit institution.

Requirements imposed on participating

Nasdaq Clearing has entered into agreements with the appointed banks which participate in the
CMS. According to these agreements the banks shall comply with the technical requirements (SWIFT,

The appointed banks are

also under the governance of the Treasury Department’s Finance Policy

LLONO1_8129630v4





ang,

hority, the Riksbank shall consult with the Authority.
In such a consultation, the Riksbank shall provide the
Financial Supervisory Authority with the necessary
information.

The Chairman and the Vice-Chairman of the General
Council and the members of the Executive Board
shall notify the Riksdag in writing

4. holdings of financial instruments as stipulated in
Chapter 1, Article 1, of the Financial Instruments
Trading Act (1991:980),

2. holdings of shares in a partnership or an economic
association except tenant-ownership associations,
and shares in similar foreign legal entities,

3. ownership, wholly or partly, of business premises
pursuant to Chapter 2, Article 14, of the Income
Tax Act (1999:1229),

4, agreements of a financial nature with previous
employers, such as agreements on wage and
pension benefits, which are paid during the period
covered by the assignment on the General Council
or the employment on the Executive Board, and

5. credits and other liabilities and the conditions for
these.

Notification of assets and agreements according to
the first paragraph 2-4 need not be made if they
together do not exceed a market value of

SEK 500,000. The same applies to credits and other
liabilities according to the first paragraph 5 if these
together are less than SEK 500,000.

Notification according to the first paragraph shall
be made when the assignment or employment is

[53]


27.7.2012

CN]

Official Journal of the European Union

L 201/1

(Legislative acts)

I

REGULATIONS

REGULATION (EU) No 648/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 4 July 2012

on OTC derivatives, central counterparties and trade repositories

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European
Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national
parliaments,

Having regard to the opinion of the European Central Bank ('),

Having regard to the opinion of the European Economic and
Social Committee (”),

Acting in accordance with the ordinary legislative procedure (°),

Whereas:

(l)

At the request of the Commission, a report was
published on 25 February 2009 by a High-Level Group
chaired by Jacques de Larosiére and concluded that the.
supervisory framework of the financial sector of the
Union needed to be strengthened to reduce the risk
and severity of future financial crises and recommended
far-reaching reforms to the structure of supervision of
that sector, including the creation of a European
System of Financial Supervisors, comprising three
European supervisory authorities, one each for the

(') O} C 57, 23.2.2011, p. 1.
@) O} C 54, 19.2.2011, p, 44,
©) Position of the European Parliament of 29 March 2012 (not yet

published in the Official Journal) and decision of the Council of
4 July 2012.

(2)

@)

banking, the insurance and occupational pensions and
the securities and markets sectors, and the creation of
a European Systemic Risk Council.

The Commission Communication of 4 March 2009,
entitled ‘Driving European Recovery’, proposed to
strengthen the Union's regulatory framework for
financial services. In its Communication of 3 July 2009
entitled ‘Ensuring efficient, safe and sound derivatives
markets’, the Commission assessed the role of derivatives
in the financial crisis, and in its Communication of
20 October 2009 entitled ‘Ensuring efficient, safe and
sound derivative markets: Future policy actions’, the
Commission outlined the actions it intends to take to
reduce the risks associated with derivatives.

On 23 September 2009, the Commission adopted
proposals for three regulations establishing _ the
European System of Financial Supervision, including the
creation of three European Supervisory Authorities
{ESAs} 10 contribute to a consistent application of
Union legislation and to the establishment of high-
quality common regulatory and supervisory standards
and practices. The ESAs comprise the European Super-
visory Authority (European Banking Authority) (EBA)
established by Regulation (EU) No 1093/2010 of the
European Parliament and of the Council (), the
European Supervisory Authority (European Insurance
and Occupational Pensions Authority) (EIOPA) estab-
lished by Regulation {EU) No 1094/2010 of the
European Parliament and of the Council), and the
European Supervisory Authority (European Securities
and Markets Authority) (ESMA) established by Regulation
(EU) No 1095/2010 of the European Parliament and of
the Council (¢), The ESAs have a crucial role to play in
safeguarding the stability of the financial sector. It is
therefore essential to ensure continuously that the devel-
opment of their work is a matter of high political priority
and that they are adequately resourced.

(@) OVL 331, 15.12.2010, p. 12.
() OF L 331, 15.12.2010, p. 48.
(© O} L 331, 15.12.2010, p. 84.


and the R&Rs. The starting point for the external analysis has been the enforceability
of the material aspects of the R&Rs (i.e. settlement finality; netting arrangements;
and collateral arrangements, including rights and interest in financial instruments,
custody activity and default management procedures).

The legal opinions obtained, as per the above description are to be updated on a
regular basis to ensure consistency with the latest legal developments.

The R&Rs states that their respective interpretation and application are subject to
Swedish law (Nasdaq Financial) and Norwegian law (Nasdaq Commodities). The
different rules are publically available on Nasdaq Clearing’s website and the website
also includes related information, and links that can be used as explanatory notes.
Nasdaq Clearing’s contact details are also available through the website so that
participants can ask any questions directly to Nasdaq Clearing.

The R&Rs clearly specify Nasdaq Clearing’s and the participants’ rights and
obligations, e.g. how and when registration, set-off, netting and settlement take
place. The R&Rs also specify when a transfer order should be regarded as irrevocable
and the measures available to Nasdaq Clearing in the event of any delay in the
delivery of securities or cash. There are clear rules on the requirements to post
collateral and the clearing house’s right to enforce such collateral.

The process of changing or amending the R&Rs also ensures that the rules,
procedures and contracts are clear and understandable and consistent with relevant
laws and regulations. Changes and amendments to the R&Rs are approved on a case
by case basis, and depending on how significantly the change would impact Nasdaq
Clearing or any of its participants, Nasdaq Clearing needs to have the change
approved by the Board, the risk management and the heads of respective business
unit. Moreover, Nasdaq Clearing’s legal department needs to approve the change or
amendment and ensures that the change or amendment is consistent with relevant
laws and regulations. When necessary, the legal department verifies that the change
or amendment is consistent with relevant laws by requesting legal opinions from
independent law firms. When making changes to the Nasdaq FIN R&Rs, Nasdaq
Clearing has an obligation, which is stipulated in Nasdaq FIN R&R, to consult with the
Swedish Securities Dealers Association before any such change would enter into
force. Any change or amendment is notified well in advance before entering into
force.

Nasdaq Clearing articulates the legal basis for its activities to the relevant authorities
as part of its authorisation process.

In the membership agreement and the applicable R&Rs, which are publicly disclosed
on Nasdaq Clearing’s website, Nasdaq Clearing states the applicable law and the
legal basis for its activities to participants and to participants’ customers. Through
signing the membership agreement and thereby consenting to the relevant R&Rs,
the participants confirm that they have received and understood the relevant rules
and legal documents.

No court in any of the relevant jurisdictions has held any of Nasdaq Clearing’s

2016, The Nasdaq Group, Inc, All Rights Reserved.

11


L 201/6

[in]

Official Journal of the European Union

27.7.2012

G1)

(32)

33)

(34)

(35)

and management of a non-financial counterparty, where
the risks relate to fluctuations in interest rates, foreign
exchange rates, inflation rates or commodity prices.

The clearing threshold is a very important figure for all
non-financial counterparties. When the clearing threshold
is set, the systemic relevance of the sum of net positions
and exposures per counterparty and per class of OTC
derivative contract should be taken into account. In
that connection, appropriate efforts should be made to
recognise the methods of risk mitigation used by non-
financial counterparties in the context of their normal
business activity.

Members of the ESCB and other Member States’ bodies
performing similar functions, other Union public bodies
charged with or intervening in the management of the
public debt, and the Bank for International Settlements
should be excluded from the scope of this Regulation in
order to avoid limiting their power to perform their tasks
of common interest.

As not all market participants that are subject to the
clearing obligation are able to become clearing
members of the CCP, they should have the possibility
to access CCPs as clients or indirect clients subject to
certain conditions.

The introduction of a clearing obligation along with a
process to establish which CCPs can be used for the
purpose of this obligation may lead to unintended
competitive distortions of the OTC derivatives market.
For example, a CCP could refuse to clear transactions
executed on certain trading venues because the CCP is
owned by a competing trading venue. In order to avoid
such discriminatory practices, CCPs should agree to clear
transactions executed in different trading venues, to the
extent that those trading venues comply with the oper-
ational and technical requirements established by the
CCP, without reference to the contractual documents
on the basis of which the parties concluded the
relevant OTC derivative transaction, provided that those
documents are consistent with market standards. Trading
venues should provide the CCPs with trade feeds on a
transparent and non-discriminatory basis. The right of
access of a CCP to a trading venue should allow for
arrangements whereby multiple CCPs use trade feeds of
the same trading venue. However, this should not lead to
interoperability for derivatives clearing or create liquidity
fragmentation.

This Regulation should not block fair and open access
between trading venues and CCPs in the internal market,
subject to the conditions laid down in this Regulation

(36)

(37)

(38)

and in the regulatory technical standards developed by
ESMA and adopted by the Commission, The Commission
should continue to monitor closely the evolution of the
OTC derivatives market and should, where necessary,
intervene in order to prevent competitive distortions
from occurring in the internal market with the aim of
ensuring a level playing field in the financial markets.

In certain areas within financial services and trading of
derivative contracts, commercial and intellectual property
rights may also exist. In instances where such property
rights relate to products or services which have become,
or impact upon, industry standards, licences should be
available on proportionate, fair, reasonable and non-
discriminatory terms.

In order to identify the relevant classes of OTC derivative
contracts that should be subject to the clearing
obligation, the thresholds and systemically relevant
non-financial counterparties, reliable data is needed.
Therefore, for regulatory purposes, it is important that
a uniform derivatives data reporting requirement is estab-
lished at Union level. Moreover, a retrospective reporting
obligation is needed, to the largest possible extent, for
both financial counterparties and non-financial counter-
parties, in order to provide comparative data, including
to ESMA and the relevant competent authorities.

An intragroup transaction is a transaction between two
undertakings which are included in the same consoli-
dation on a full basis and are subject to appropriate
centralised risk evaluation, measurement and control
procedures, They are part of the same institutional
protection scheme as referred to in Article 80(8) of
Directive 2006/48/EC or, in the case of credit institutions
affiliated to the same central body, as referred to in
Article 3(1) of that Directive, both are credit institutions
or one is a credit institution and the other is a central
body. OTC derivative contracts may be recognised within
non-financial or financial groups, as well as within
groups composed of both financial and non-financial
undertakings, and if such a contract is considered an
intragroup transaction in respect of one counterparty,
then it should also be considered an intragroup trans-
action in respect of the other counterparty to that
contract. It is recognised that intragroup transactions
may be necessary for aggregating risks within a group
structure and that intragroup risks are therefore specific.
Since the submission of those transactions to the clearing
obligation may limit the efficiency of those intragroup
risk-management processes, an exemption of intragroup
transactions from the clearing obligation may be
beneficial, provided that this exemption does not
increase systemic risk. As a result, adequate exchange


w The Instrument of
Government

(UNAUTHORIZED TRANSLATION)

(37)


The cash settlement report is provided to the members by the end of the clearing
day (21:00 CET) and expected to be paid during the settlement day's cutoff times,
ie. same day value. The payments are managed in the CMS system for automatic
handling of cash settlement. The payment instructions are transmitted by Swift and
the confirmations are received by Swift, providing real time update on the bookings
of the accounts. The payment process is continuously monitored by the Clearing
Operation personnel of Nasdaq Clearing.

For equity and debt securities, the deliveries shall be completed on the delivery day
and in accordance with the CSDs rules and routines (Nasdaq FIN R&R 2.11). The
delivery instructions are generated and sent by the CMS system and the monitoring
by the Clearing Operations personnel is performed in the CMS or directly in the
CSDs. The Nordic CSDs primarily operate in batches, and before each batch the
settlement headroom (the amount constituting the payment capacity of a delivering
party in a CSD) must be secured in order for the deliveries to be executed. If the
settlement headroom is not updated then the delivery will not be executed in that
batch. The instructions will remain the same and the personnel at Nasdaq Clearing
will have to wait for the next batch to settle the transactions.

Nasdaq Commodities operates through the Emission Registry for emission
allowances and the El-cert Registry for the electricity certificates (jointly referred to
as the “Registries”). The deliveries are considered final and binding on the members
account when the members receive confirmation that the delivery is completed.

If the settlement obligation is not fulfilled on the day specified in the contract
specifications, it constitutes a breach of the Nasdaq FIN R&R. The breach of a
participant’s obligations towards the clearing house is a ground for default. In
situations of operational failure, such as late deliveries and delays in confirming
margins, the clearing house has the right to declare a participant in default.
However, this is not enforced by default and the clearing house may make an
exception and accept a later delivery.

If a member at Financial has failed to deliver on the settlement day, Nasdaq Clearing
shall send a buy-in notification on the same day as on which the delivery should have
been made, if this follows from the relevant contract specification as set out in
Chapter 3 of the Nasdaq FIN R&R. When the failing clearing member has been
notified, it has as specified in the contract specification a limited number of bank
days to fulfill its obligation to deliver before the buy-in notification enters into force.
When the buy-in notification enters into force Nasdaq Clearing has the right, on
behalf of the failing clearing member, to buy the instrument that the clearing
member should have delivered. Once the buy-in notification comes into force and
the member has been informed, Nasdaq Clearing will no longer accept delivery from
the member. Nasdaq Clearing has facilities in place to buy in shares. As a CCP,
Nasdaq Clearing guarantees the completion of all deliveries, independent of the
original counterparty’s delivery or payment ability. Nasdaq Clearing is able to
prolong the collateral requirement during the days of the buy-in. Delay fees are
debited in connection with the delayed delivery.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

32


L 201/2 [EN Official Journal of the European Union 27.7.2012
(4) Over-the-counter derivatives (OTC derivative contracts’) the third country provides for an effective equivalent

(5)

(6)

(7)

lack transparency as they are privately negotiated
contracts and any information concerning them is
usually only available to the contracting parties. They
create a complex web of interdependence which can
make it difficult to identify the nature and level of
risks involved. The financial crisis has demonstrated
that such characteristics increase uncertainty in times of
market stress and, accordingly, pose risks to financial
stability. This Regulation lays down conditions for miti-
gating those risks and improving the transparency of
derivative contracts.

At the 26 September 2009 summit in Pittsburgh, G20
leaders agreed that all standardised OTC derivative
contracts should be cleared through a central
counterparty (CCP) by the end of 2012 and that OTC
derivative contracts should be reported to trade reposi-
tories. In June 2010, G20 leaders in Toronto reaffirmed
their commitment and also committed to accelerate the
implementation of strong measures to improve trans-
parency and regulatory oversight of OTC derivative
contracts in an internationally consistent and non-
discriminatory way.

The Commission will monitor and endeavour to ensure
that those commitments are implemented in a similar
way by the Union's international partners. The
Commission should cooperate with third-country auth-
orities in order to explore mutually supportive solutions
to ensure consistency between this Regulation and the
requirements established by third countries and thus
avoid any possible overlapping in this respect. With the
assistance of ESMA, the Commission should monitor and
prepare reports to the European Parliament and the
Council on the international application of principles
laid down in this Regulation. In order to avoid
potential duplicate or conflicting requirements, the
Commission might adopt decisions on equivalence of
the legal, supervisory and enforcement framework in
third countries, if a number of conditions are met, The
assessment which forms the basis of such decisions
should not prejudice the right of a CCP established in
a third country and recognised by ESMA to provide
clearing services to clearing members or trading venues
established in the Union, as the recognition decision
should be independent of this assessment, Similarly,
neither an equivalence decision nor the assessment
should prejudice the right of a trade repository estab-
lished in a third country and recognised by ESMA to
provide services to entities established in the Union.

With regard to the recognition of third-country CCPs,
and in accordance with the Union's international
obligations under the agreement establishing the World
Trade Organisation, including the General Agreement on
Trade in Services, decisions determining third-country
legal regimes as equivalent to the legal regime of the
Union should be adopted only if the legal regime of

(8)

(9)

(10)

(1)

system for the recognition of CCPs authorised under
foreign legal regimes in accordance with the general
regulatory goals and standards set out by the G20 in
September 2009 of improving transparency in the
derivatives markets, mitigating systemic risk, and
protecting against market abuse. Such a system should
be considered equivalent if it ensures that the substantial
result of the applicable regulatory regime is similar to
Union requirements and should be considered effective
if those rules are being applied in a consistent manner.

It is appropriate and necessary in this context, taking
account of the characteristics of derivative markets and
the functioning of CCPs, to verify the effective equiv-
alence of foreign regulatory systems in meeting G20
goals and standards in order to improve transparency
in derivatives markets, mitigate systemic risk and
protect against market abuse. The very special situation
of CCPs requires that the provisions relating to third
countries are organised and function in accordance
with arrangements that are specific to these market
structure entities. Therefore this approach does not
constitute a precedent for other legislation.

The European Council, in its Conclusions of 2 December
2009, agreed that there was a need to substantially
improve the mitigation of counterparty credit risk and
that it was important to improve transparency, efficiency
and integrity for derivative transactions. The European
Parliament resolution of 15 June 2010 on ‘Derivatives
markets: future policy actions’ called for mandatory
clearing and reporting of OTC derivative contracts.

ESMA should act within the scope of this Regulation by
safeguarding the stability of financial markets in
emergency situations, ensuring the consistent application
of Union rules by national supervisory authorities and
settling disagreements between them. It is also
entrusted with developing draft regulatory and imple-
menting technical standards and has a central role in
the authorisation and monitoring of CCPs and trade
repositories.

One of the basic tasks to be carried out through the
European System of Central Banks (ESCB) is to
promote the smooth operation of payment systems. In
this respect, the members of the ESCB execute oversight
by ensuring efficient and sound clearing and payment
systems, including CCPs. The members of the ESCB are
thus closely involved in the authorisation and monitoring
of CCPs, recognition of third-country CCPs and the
approval of interoperability arrangements. In addition,
they are closely involved in respect of the setting of
regulatory technical standards as well as guidelines and
recommendations. This Regulation is without prejudice


“74, Pursuant to Chapter 9, Article 13 of the Instrument

ARTS,

ART,

of Government, the activities of the Riksbank are
managed by an Executive Board, consisting of six
members, who are appointed by the General Council
for a period of five or six years. The General Council
appoints the Chairman of the Executive Board,

who at the same time shall be the Governor of the
Riksbank, and at least one Vice-Chairman, who at
the same time shall serve as Deputy Governor of the
Riksbank.

When required, in the absence or incapacity of the
Governor, the General Council shall determine in
which order the Deputy Governors shall serve in his
place.

.. Matters which are not to be decided by the General

Council are determined by the Executive Board. The
Executive Board may decide that matters may be
determined by the Governor of the Riksbank or by
another official at the Riksbank,

‘CHAPTER 2 THE GENERAL COUNCIL

A member of the General Council may not

41. be a Cabinet minister,

2. be a member of the Riksbank's Executive Board,

3. be a member or deputy of a board of directors of a
bank or any other company subject to supervision
by the Financial Supervisory Authority, or

4. hold any other employment or assignment which
makes him unsuitable as a member of the General
Council.




ant,

Nor may a member of the General Council be a
minor, or a declared bankrupt, or be subject to a
prohibition against carrying on a business, or have a
trustee in accordance with Chapter 11, Article 7, of
the Code relating to Parents, Guardians and Children.

Ifa member takes an employment or assignment that
may come into conflict with the provisions of the first
paragraph, the Riksdag shall, on a proposal by the
Riksdag Committee on Finance sever the member
from the assignment as member of the General
Council. Any employment or assignment taken up by
a member shall be reported to the Riksdag.

This provision is included in the supplementary rule
8.7.1 of the Riksdag Act.

The right of the General Council to sever a member
of the Executive Board from his employment follows
from Chapter 9, Article 13, of the Instrument of
Government.

An appeal against a decision on severance from the
employment shall be made within two months of the
decision being served. The Governor of the Riks-
bank may bring a case before the European Court of
Justice. Other members of the Executive Board may
appeal at the Supreme Court.

The Supreme Court may annul a decision on seve-
rance from employment.

If an appeal is not made within the time prescribed in
the second paragraph, the party has lost the right to
appeal.

(49)


GN]

27.7.2012

Official Journal of the European Union

L 201/31

2. A CCP shall have a board. At least one third, but no less
than two, of the members of that board shall be independent.
Representatives of the clients of clearing members shall be
invited to board meetings for matters relevant to Articles 38
and 39. The compensation of the independent and other non-
executive members of the board shall not be linked to the
business performance of the CCP.

The members of a CCP's board, including its independent
members, shall be of sufficiently good repute and shall have
adequate expertise in financial services, risk management and
clearing services.

3. A CCP shall clearly determine the roles and responsibilities
of the board and shall make the minutes of the board meetings
available to the competent authority and auditors.

Article 28
Risk committee

1. A CCP shall establish a risk committee, which shall be
composed of representatives of its clearing members, inde-
pendent members of the board and representatives of its
clients. The risk committee may invite employees of the CCP
and external independent experts to attend risk-committee
meetings in a non-voting capacity. Competent authorities may
request to attend risk-committee meetings in a non-voting
capacity and to be duly informed of the activities and
decisions of the risk committee, The advice of the risk
committee shall be independent of any direct influence by the
management of the CCP. None of the groups of representatives
shall have a majority in the risk committee.

2. A CCP shall clearly determine the mandate, the
governance arrangements to ensure its independence, the oper-
ational procedures, the admission criteria and the election
mechanism for risk-committee members. The governance
arrangements shall be publicly available and shall, at least,
determine that the risk committee is chaired by an independent
member of the board, reports directly to the board and holds
regular meetings.

3. The risk committee shall advise the board on any
arrangements that may impact the risk management of the
CCP, such as a significant change in its risk model, the
default procedures, the criteria for accepting clearing
members, the clearing of new classes of instruments, or the
outsourcing of functions. The advice of the risk committee is
not required for the daily operations of the CCP. Reasonable
efforts shall be made to consult the risk committee on devel-
opments impacting the risk management of the CCP in
emergency situations.

4, Without prejudice to the right of competent authorities to
be duly informed, the members of the risk committee shall be
bound by confidentiality. Where the chairman of the risk
committee determines that a member has an actual or
potential conflict of interest on a particular matter, that
member shall not be allowed to vote on that matter.

5. A CCP shall promptly inform the competent authority of
any decision in which the board decides not to follow the
advice of the risk committee.

Article 29
Record keeping

1. A CCP shall maintain, for a period of at least 10 years, all
the records on the services and activity provided so as to enable
the competent authority to monitor the CCP’s compliance with
this Regulation.

2. A CCP shall maintain, for a period of at least 10 years
following the termination of a contract, all information on all
contracts it has processed. That information shall at least enable
the identification of the original terms of a transaction before
clearing by that CCP.

3. A CCP shall make the records and information referred to
in paragraphs 1 and 2 and all information on the positions of
cleared contracts, irrespective of the vente where the trans-
actions were executed, available upon request to the
competent authority, to ESMA and to the relevant members
of the ESCB.

4. In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the details of the records and information to be retained
as referred to in paragraphs 1 to 3.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

5. In order to ensure uniform conditions of application of
paragraphs 1 and 2, ESMA shall develop draft implementing
technical standards specifying the format of the records and
information to be retained,

ESMA shall submit those draft implementing technical standards
to the Commission by 30 September 2012.

Power is conferred on the Commission to adopt the imple-
menting technical standards referred to in the first subparagraph
in accordance with Article 15 of Regulation (EU)
No 1095/2010.

Article 30
Shareholders and members with qualifying holdings

1. The competent authority shall not authorise a CCP unless
it has been informed of the identities of the shareholders or
members, whether direct or indirect, natural or legal persons,
that have qualifying holdings and of the amounts of those
holdings.


27.7.2012 EN

Official journal of the European Union

L 201/41

2. A CCP shall clearly state its obligations with respect to
deliveries of financial instraments, including whether it has an
obligation to make or receive delivery of a financial instrument
or whether it indemnifies participants for losses incurred in the
delivery process.

3. Where a CCP has an obligation to make or receive
deliveries of financial instruments, it shall eliminate principal
risk through the use of delivery-versus-payment mechanisms
to the extent possible.

TITLE V
INTEROPERABILITY ARRANGEMENTS
Article 51
Interoperability arrangements

1. A CCP may enter into an interoperability arrangement
with another CCP where the requirements laid down in
Articles 52, 53 and 54 are fulfilled.

2. When establishing an interoperability arrangement with
another CCP for the purpose of providing services to a
particular trading venue, the CCP shall have non-discriminatory
access, both to the data that it needs for the performance of its
functions from that particular trading venue, to the extent that
the CCP complies with the operational and technical
requirements established by the trading venue, and to the
relevant settlement system.

3. Entering into an interoperability arrangement or accessing
a data feed or a settlement system referred to in paragraphs 1
and 2 shall be rejected or restricted, directly or indirectly, only
in order to control any risk arising from that arrangement or
access.

Article 52
Risk management

1. CCPs that enter into an interoperability arrangement shall:

(a) put in place adequate policies, procedures and systems to
effectively identify, monitor and manage the risks arising
from the arrangement so that they can meet their
obligations in a timely manner;

0

agree on their respective rights and obligations, including
the applicable law governing their relationships;

(©) identify, monitor and effectively manage credit and liquidity
risks so that a default of a clearing member of one CCP
does not affect an interoperable CCP;

(d) identify, monitor and address potential interdependences
and correlations that arise from an_ interoperability

arrangement that may affect credit and liquidity risks
relating to clearing member concentrations, and pooled
financial resources.

For the purposes of point (b) of the first subparagraph, CCPs
shall use the same rules concerning the moment of entry of
transfer orders into their respective systems and the moment of
irrevocability as set out in Directive 98/26/EC, where relevant.

For the purposes of point (c) of the first subparagraph, the
terms of the arrangement shall outline the process for
managing the consequences of the default where one of the
CCPs with which an interoperability arrangement has been
concluded is in default.

For the purposes of point (d) of the first subparagraph, CCPs
shall have robust controls over the re-use of clearing members’
collateral under the arrangement, if permitred by their
competent authorities. The arrangement shall outline how
those risks have been addressed taking into account sufficient
coverage and need to limit contagion.

2. Where the risk-management models used by the CCPs to
cover their exposure to their clearing members or their
reciprocal exposures are different, the CCPs shall identify
those differences, assess risks that may arise therefrom and
take measures, including securing additional financial resources,
that limit their impact on the interoperability arrangement as
well as their potential consequences in terms of contagion risks
and ensure that these differences do not affect each CCP's ability
to manage the consequences of the default of a clearing
member.

3. Any associated costs that arise from paragraphs 1 and 2
shall be borne by the CCP requesting interoperability or access,
unless otherwise agreed between the parties.

Article 53
Provision of margins among CCPs

1. A CCP shall distinguish in accounts the assets and
positions held for the account of CCPs with whom it has
entered into an interoperability arrangement.

2. If a CCP that enters into an interoperability arrangement
with another CCP only provides initial margins to that CCP
under a security financial collateral arrangement, the receiving
CCP shall have no right of use over the margins provided by the
other CCP.

3. Collateral received in the form of financial instruments
shall be deposited with operators of securities settlement
systems notified under Directive 98/26/EC.


Exhibit F-4 to Supplement S-1 to Form FBOT

A demonstration that the clearing organization is authorized by rule or contractual agreement to
obtain, from members and other participants, any information and cooperation necessary to conduct
investigations, to effectively enforce its rules, and to ensure compliance with the conditions of
registration.

Members and their board of directors and employees are, upon written request by the
Clearinghouse, under an obligation to as soon as possible provide the Clearinghouse with all information
the Clearinghouse considers relevant in respect of the Clearinghouse’s role in surveillance of the Market
Conduct Rules and other applicable laws and regulations. The duty to provide such information applies
regardless of any confidentiality undertakings and other duties of silence the Exchange Members may be
placed under. For further details, please see Section 7 of the Market Conduct Rules.

LONO1_8129632v5


to ensure that the net liquidation value of the assets is equal to or exceeds the
margin required between the last valuation and liquidation. The individual haircut
parameter for each security is based on an analysis of the volatility of historical
prices for a specified look back period. The haircuts are validated regularly under
assumptions of severe (extreme but plausible) market stress. Nasdaq Clearing uses a
sufficiently long look-back period to ensure that periods of stress are included in the
data sample, at a high confidence level. This approach reduces the need for pro-
cyclical adjustments of the haircuts. Nasdaq Clearing runs daily price checks of
collateral securities to verify that market movements does not exceed certain
predefined thresholds (in line with the applicable haircuts).

Nasdaq Clearing handles concentration risk by applying limits based on the observed
risk of the posted collateral. The concentration limits used by Nasdaq Clearing are
based on an analysis of the accepted collateral. The asset types perceived to have
the highest total risk in terms of credit- liquidity- and market risk get a lower
concentration limit compared to asset types with a lower total risk. Concentration
limits are reviewed at least annually. Concentration limits and haircuts are approved
by the Clearing Risk Committee and are included in the collateral list (Appendix 14 of
Nasdaq FIN R&R and Appendix 10 of Nasdaq COM R&R). On a clearing house level,
Nasdaq Clearing only allows a certain percentage of its total collateral to be
guaranteed by a single credit institution. The percentage allowed is in accordance
with EMIR.

Nasdaq Clearing has various means and processes in place to mitigate the risks
associated with the use of cross border collateral, particularly the risk of conflicts of
law issues arising in relation to the realization of cross-border collateral. Nasdaq
Clearing’s legal opinion program has been established to ensure that the R&Rs are
enforceable and sound, to identify and analyze potential conflicts of law issues and
to mitigate legal risk resulting from such issues.

The collateral is also held directly in Nasdaq Clearing’s accounts with applicable CSD
(or if not possible in a custodian institution which fulfills certain predefined
requirements). Collateral processing takes place in streamlined processes through
standardized and automated interfaces which ensure operational promptness and
access in a timely manner.

The overall CMS at Nasdaq Clearing is designed to allow for operational flexibility
and effectiveness, including cash optimization and direct debit/credit functionality.
The dedicated Clearing Operations team is sufficiently staffed, and has robust BCP
plans in place to ensure smooth operations even during times of market stress.
Information regarding the collateral management service can be found on Nasdaq
Clearing’s homepage.

2016, The Nasdaq Group, Inc. All Rights Reserved.

23


counterparts not being able to fulfill their obligations to the clearing house. Nasdaq
Clearing is protected from this risk by a number of means, including the collateral it
collects, the default fund and its own capital resources. Nasdaq Clearing also has pre-
defined default management procedures, which are tested and proven via real
defaults and default fire drills.

Please see below statistics showing the average aggregate intraday exposure that
Nasdaq Clearing has towards its participants:

The intraday exposure of Nasdaq Clearing to its participants can be measured
by the total average daily margin requirement, i.e. the total amount of
collateral that it demands from its participants. For 2015, the average total daily
margin requirement was SEK 36 billion or EUR 3.9 billion.

One of the cornerstones of a clearing house is its operations. The clearing house
should have stable and reliable systems, adequate capacity and the ability to quickly
handle major disruptions by the use of backup facilities and well-tested routines to
mitigate the effects of operational risk. The operational reliability of Nasdaq Clearing
is high: availability of the Genium INET clearing system during 2015 was 99.99%, and
for the CMS WIZER system during 2015 was 99.87%. As well as resilience of systems,
which is tested at least annually with failover from primary to secondary sites, the
clearing house also has controls and checks in place to cover resilience of daily
operations. These Business Continuity Plan (“BCP”) arrangements cover all aspects
of the business including relocation of staff from the primary office as well as back-
up processes in case a critical function is not functioning.

Since the end of 2009 Nasdaq Clearing is in full compliance with the Sarbanes-Oxley
Act. Each process that significantly contributes to the financial result of Nasdaq
Clearing is described in detail and the existing controls are documented.
Subsequently, each process is analyzed from a risk perspective, utilizing the COSO
framework, and any potential risk issues or control weaknesses are addressed and
remedied.

General organisation of the FMI

Nasdaq Clearing has in place a Board of Directors (the “Board”), represented by
executive members of the Nasdaq Group as well as independent non-executives.
The Board takes overall responsibility for the functioning of the CCP. The Board
committees meet on a quarterly basis and include the Audit and Remuneration
Committee as well as the Member Risk Committee which consists of four members,
three clients and two independent directors. Both the Default Committee and the
Recovery Committee have delegated authority from the Board, and meetings would
be called if necessary. Internal Audit, the Chief Risk Officer and the Chief Compliance
Officer report directly to the Board. Other functions report to the CEO. Key policies,
including the Clearing Risk Policy, Risk Mandate, Regulatory Capital Policy,
Investment Policy, Compliance Policy and Conflicts of Interest Policy (amongst
others) are adopted by the Board on an annual basis, or more frequently if
significant changes are required.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


cause volatility and/or liquidity risk in a default scenario;

c. Wrong way risk: the risk that a member’s portfolio is highly correlated
to the country of domicile, or that the derivatives portfolio and the
collateral assets are highly correlated with the impact that both
assets and liabilities may potentially lose value at the same time.

3. Liquidity risk: arising when a participant fails to fulfil its payment obligations
creating a temporary exposure for Nasdaq Clearing.

4. Operational risk: encompassing loss arising from break-downs, deficiencies
and weak points in respect of IT systems or internal control procedures or due
to human error or management failure.

5. Legal risk: in respect of the validity and enforceability of contracts.

6. Business risk: the risk that exogenous factors have adverse effects on the
viability of Nasdaq Clearing’s business model and long run profitability.

7. Investment risk: the financial risk that arises due to the investment activities
undertaken by the clearing house.

8. Default risk: The risks that Nasdaq Clearing itself is not able to fulfil its
obligations towards its counterparties, i.e. is in default in accordance with its
own rules and regulations.

Nasdaq Clearing provides its members and members’ clients with a range of tools to
stay well informed about the clearing process and the risk they have towards the
clearing house. There is comprehensive information on the website, including
description of the clearing process, margin methodology guides, default fund policy
and stress test methodology descriptions etc. Participants have access to more
specific information via the clearing system, such as account positions, margin
requirements, exposure reports, margin simulation etc. The clearing system is
available through a variety of interfaces, which enables the participant to establish
its exposure and risk towards the clearing house, simulate anticipated changes in the
exposure, as well as administrate its transactions with the clearing house in an
efficient way.

In addition to the public information and the system tools available to its members,
the Clearing Operations and Clearing Risk Management departments are in regular
contact with market participants regarding exposures, margining requirements,
collateral arrangements and liquidity issues.

Abreach of a participant's obligations towards Nasdaq Clearing is ground for default.
Certain operational failures are also grounds for default, but more often, penalties
are issued for late deliveries, late margin confirmation and late settlement
payments. Communication, penalties and the possibility of a defaulting member all
contribute to incentives for members to handle and limit the risks they pose to the
clearing house.

The mutualization of risk through the default fund also ensures that clearing
participants are incentivized to manage the risk they, and other participants, are

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

16


ant

MT,

ag

ag,

The Government is responsible for general currency
policy issues pursuant to Chapter 9, Article 12, of the
Instrument of Government.

The Government shall decide on the system that is to
apply for establishing the value of the krona in rela-
tion to foreign currencies (the exchange rate system).

The Riksbank may request the Government to make
a decision on the exchange rate system. Such a re-
quest shall be swiftly dealt with by the Government.

The Government shall consult the Riksbank before
making decisions on the exchange rate system.

1431


Nasdaq Clearing has established explicit rules and procedures that address fully any
credit losses it may face as a result of any individual or combined default among its
participants with respect to any of their obligations to the FMI. In more detail,
Nasdaq Clearing has established rules and procedures to allocate uncovered credit
losses (see Nasdaq FIN R&R “Appendix 16 Default Fund Rules” and Nasdaq COM R&R
“Clearing Appendix 9 Default Fund Rules”).

The rules and procedures addresses how potentially uncovered credit losses would
be allocated, including the repayment of any funds Nasdaq Clearing may borrow
from liquidity providers. In more detail, Nasdaq Clearing has bilaterally negotiated
credit facilities provided by liquidity providers, i.e. not liquidity providers formalized
within its R&Rs. If Nasdaq Clearing has utilized any of its credit facilities from its
liquidity providers, such facilities should be fully repaid as soon as collateral and any
financial resources from the waterfall have been realized in order to cover for the
losses incurred as a result of the defaulting member.

The rules and procedures indicate Nasdaq Clearing’s process to replenish any
financial resources that Nasdaq Clearing may employ during a stress event, so that
Nasdaq Clearing can continue to operate in a safe and sound manner. In more detail,
the respective default fund rules fully address how utilized default fund
contributions shall be replenished, both in regards of members that are obliged to
contribute to the default fund and Nasdaq Clearing’s own capital (see Nasdaq FIN
R&R “Appendix 16 Default Fund Rules” and Nasdaq COM R&R “Clearing Appendix 9
Default Fund Rules”). Replenished funds will not be placed in their original position
in the Waterfall until a 90-day period has elapsed (the “Interim Period”). During the
Interim Period, the replenished funds will be placed above the Assessment Power in
the Waterfall and the same priority order within the replenished funds will be
applied as with the Waterfall (i.e. replenished Nasdaq Junior Capital below
replenished default fund contributions etc.). When the Interim Period has elapsed,
the funds will be moved down to their original, junior level.

Principle 5: Collateral

An FMI that requires collateral to manage its or its participants’ credit exposure
should accept collateral with low credit, liquidity, and market risks. An FMI should
also set and enforce appropriately conservative haircuts and concentration limits.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

21


The same applies to changes in such holdings. The
reporting obligation according to this Article does
not, however, apply to the Chairman and Vice-Chair-
man of the General Council and the members of the
Executive Board.

“7, The Riksbank shall have a Staff Disciplinary Board,
chaired by the Governor of the Riksbank. in addition
to personnel representatives, the other members
of the Disciplinary Board shall be appointed by the
Riksbank. The following matters, which concern
others than members of the Executive Board, shall be
decided upon by the Disciplinary Board:

1. dismissal from employment on account of personal
circumstances, though not concerning probatio-
nary appointments,

2. disciplinary measures,

3. notification of prosecution,

4. suspension.

The Staff Disciplinary Board has a quorum when the
chairman and at least half of the other members are
present.

In the planning and implementation of its peacetime
activities, the Riksbank must adhere to the demands
made by the national defence requirements.

In defence planning, the Riksbank shall consult
with the Financial Supervisory Authority on matters
concerning financial services and with the National
Board of Trade on matters relating to foreign trade.

{66}


ART,

Salaries and other employment benefits for members
of the Executive Board are established by the General
Council.

The General Council and the Executive Board may
not convene in a region occupied by a foreign power.

‘CHAPTER | NOTES AND COINS:

Pursuant to Chapter 9, Article 14, of the Instrument
of Government, the Riksbank has the exclusive right
to issue banknotes and coins. The General Council
shall determine the design of the banknotes and
coins which the Riksbank issues.

Banknotes and coins issued by the Riksbank are legal
tender.

Sweden's monetary unit is the krona. The krona is
divided into one hundred dre.

Rt:2, Banknotes may be issued in denominations of twenty,

ART,

fifty, one hundred, five hundred and one thousand
kronor.

Coins may be issued in denominations of fifty dre,
one krona, five kronor and ten kronor.

Furthermore, commemorative and jubilee coins may
be issued in other denominations.

}. The Riksbank shall be responsible for the provision of

Sweden's banknotes and coins.

155]


regulatory tangible equity equal to 33% of regulatory capital. In the event that the
buffer (or any additional tangible equity) is not sufficient to meet additional equity
requirements, the plan entails requesting further capital from Nasdaq Clearing’s
parent company. As Nasdaq Clearing is owned by a single entity, this process can be
achieved within a very short timeframe, if needed.

The plan for increasing the regulatory capital is set out in the Regulatory Capital
Policy and reviewed and updated if deemed necessary by the Board on an annual
basis.

Principle 16: Custody and investment risks

An FMI should safeguard its own and its participants’ assets and minimise the risk of
loss on and delay in access to these assets. An FMI’s investments should be in
instruments with minimal credit, market, and liquidity risks.

The majority of assets that are used by Nasdaq Clearing to support its regulatory
capital or that have been provided by members to secure their obligations to Nasdaq
Clearing are all held with CSDs in Nasdaq Clearing’s own name (own account or
nominee account). This ensures a limited exposure towards a single custodian and
also a quick access to the securities if needed.

To mitigate the custody risk in relation to member’s contributions to the default
fund, or posted collateral, all securities held with CSD’s are held on segregated
nominee accounts and can never be co-mingled with the CSD’s own assets.

In those cases where it is not possible for Nasdaq Clearing to hold assets directly
with a CSD, e g Nasdaq Clearing does not have direct access to the CSD or the local
security settlement system, Nasdaq Clearing will hold the assets with a custodian
institution.

A custodian institution must fulfill Nasdaq Clearing’s requirements of minimum
restricted equity capital and minimum rating in order to be eligible as a custodian
institution. To become a custodian institution the institution must be approved by
the Clearing Risk Committee. The Clearing Risk Committee is presented with an
analysis where the custodian institution is assessed. The assessment is based on a
due diligence questionnaire, due diligence into its financial requirements, credit
rating, supervisory authority, organization, ownership structure and legal analysis.

Custodian institutions are monitored by Nasdaq Clearing, with specific regards to the
custodian institution’s rating and financial requirements.

Nasdaq Clearing measures continuously the exposure towards custodian institutions.
Moreover, the entities which have multiple roles with Nasdaq Clearing are
monitored and the risks in terms of custody service and liquidity provider, is
measured on a daily basis The total risk towards entities with multiple roles is

reported quarterly to the Board of Directors.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

45


performed where also the maximum capacity is tested. In case of a major system
update or platform change, these capacity tests are also performed with simulated
loads to secure that the requirements can be met.

As a baseline, the clearing systems have undergone thorough performance and
capacity tests as part of the pre-production integration tests. The tests have been
done on the actual hardware and software configuration that was later launched as
production systems. Load tests are also executed due to architectural changes in the
systems. To ensure that new hardware and network solutions comply with the
requirements, benchmark tests are performed. These are typically done every 18-24
months.

Operational service level adherence, performance and capacity and other
operational aspects are reported on a monthly basis and again followed up on in
operational meetings and in the quarterly Service Level Review meetings. Capacity
and performance is monitored closely on a daily basis. If a service level parameter is
near or exceeds its stated limit, the situation is analyzed.

The clearing house has adopted Information Security Policies and Standards which
are designed to maintain the confidentiality, integrity and availability of information
and which applies to development, maintenance and production of systems within
the clearing house as well as to outsourcing partners and third party vendors.

Detailed standards and procedures have also been established in many IT security
related areas such as firewall management, Internet access, intrusion detection,
password management and remote access.

The clearing house follows industry best practices with regards to policies,
processes, controls and security auditing. The clearing house’s datacenters are
SSAE16-certified and the clearing house’s Information Security professionals hold
the industry relevant certifications such as CISSP, CISA, ISSAP, CISM, and GIAC.

Deviations from the Information Security Policies are handled through time-limited
deviation requests. Deviation requests are divided into a tiered model of rigor of
levels high, medium and low risk requiring different levels of management approval.
Ultimately the deviation process is managed by the Nasdaq Information Security Risk
Committee. The NISRC is co-headed by the Nasdaq CIO and the Chief Information
Security Officer (CISO).

Nasdaq Clearing has established BCPs, describing the management objectives and
procedures for how to achieve continuity of the business, its key operations and
processes in the event of a disruption. The plan includes a strategic and operational
framework to secure the clearing house’s resilience to disruption, interruption or
loss, in supplying its products and services. It also describes the process for how to
prioritize, organize and manage the business operations to secure our service
offering in case of a disruptive event or other serious situation, in order to fulfill our
obligations towards customers, regulators and other stakeholders and minimize any
negative consequences. This involves both a proactive planning element and
reactive measures to be taken when an incident occurs.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

49


Mailing Address: Tullvaktsvagen 15

Stockholm
SWE

Phone Number: 0046 8 405 6830

Fax Number:

3b. If different than above, primary contact at the clearing organization that is authorized to

receive all forms of Commission correspondence:

‘Name:

Title:

Email Address:

Mailing Address:

Phone Number:

Fax Number:

BUSINESS ORGANIZATION
Describe organization history, including date and, if applicable, location of filing of original
organizational documentation, and describe all substantial amendments or changes thereto.

For example:

Nasdaq Clearing AB is a private limited liability company incorporated and having its principal place
of business in Stockholm, Sweden. It is authorized as a central counterparty and licensed to conduct
clearing operations by the Swedish FSA pursuant to the European Market Infrastructure Regulation.
The Swedish FSA has also approved and designated Nasdaq Clearing as a system for settlement and

notified this to the European Securities and Markets Authority.


respective customer has chosen.

With respect to the legal framework, EMIR provides for requirements and support as
to, inter alia, the segregation and portability of client positions and assets (collateral)
in the event of a clearing member's default. EMIR has direct effect in the member
states of the European Union, including Sweden. In DS 2012:39 the Swedish Ministry
of Finance has concluded that EMIR and the structures prescribed therein, including
segregation and portability, will be enforceable in Sweden without the need for
legislative changes.

Nasdaq Clearing’s arrangements to protect and transfer the positions and collateral
of a participant’s customers have been developed to provide legal protection for the
customers of participants in accordance and compliance with the requirements set
out in the PFMIs as well as EMIR.

In addition, in developing the mechanics for portability Nasdaq Clearing obtained
external legal advice to ensure that the regulatory requirements are met as well as
ensure enforceability in the relevant jurisdictions. The relevant jurisdictions are the
jurisdictions where the collateral and positions are held as well as the jurisdiction
which law will apply in connection with the default of a participant.

The arrangements have been calibrated with the ISDA/FOA European Client Clearing
Addendum aimed at providing a standardized solution consistent with international
best practice.

If the arrangements are provided to members outside of the EEA or a different
jurisdiction’s legislation is determined to apply in the event of insolvency of a
participant, Nasdaq Clearing has a process for verifying the enforceability of the
arrangement in relation to such foreign legislation (as described further under
Principle 1).

Nasdaq Clearing has an account structure with a range of account types. Please see
below for short descriptions of the different account types. Some account types are
common for Nasdaq Financial and Nasdaq Commodities, and others are only used
within one of the markets. These differences are noted below. Following the list is a
description of the level of segregation.

1. House Account (Nasdaq Financial and Nasdaq Commodities): House
accounts for clearing members’ own positions. Netting of positions
within the House Account is possible.

2. Omnibus Account (Nasdaq Financial and Nasdaq Commodities): Several
customers per account, netting of customer positions within the
Omnibus Account is possible (however subject to the prohibition of
netting between the Omnibus Account and any connected Single-client
Account, please see below). There is no legal relationship between
customers and Nasdaq Clearing.

3. Single-client Account (Nasdaq Financial): The Single-client Account is
regarded as a sub-account of an Omnibus Account. One customer per

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

39


27.7.2012 Gx] Official Journal of the European Union L 201/59

ANNEX II

List of the coefficients linked to aggravating and mitigating factors for the application of Article 65(3)
The following coefficients shall be applicable, cumulatively, to the basic amounts referred to in Article 65(2):
1. Adjustment coefficients linked to aggravating factors:

(a) if the infringement has been committed repeatedly, for every time it has been repeated, an additional coefficient of
1,1 shall apply;

(b) if the infringement has been committed for more than six months, a coefficient of 1,5 shall apply;

(c) if the infringement has revealed systemic weaknesses in the organisation of the trade repository, in particular in its
procedures, management systems or internal controls, a coefficient of 2,2 shall apply;

(d) if the infringement has a negative impact on the quality of the data it maintains, a coefficient of 1,5 shall apply;
(¢) if the infringement has been committed intentionally, a coefficient of 2 shall apply:
(9 if no remedial action has been taken since the breach has been identified, a coefficient of 1,7 shall apply:

(g) if the trade repository’s senior management has not cooperated with ESMA in carrying out its investigations, a
coefficient of 1,5 shall apply.

|. Adjustment coefficients linked to mitigating factors:
(@) if the infringement has been committed for less than 10 working days, a coefficient of 0,9 shall apply:

(b) if the trade repository’s senior management can demonstrate to have taken all the necessary measures to prevent
the infringement, a coefficient of 0,7 shall apply;

(0) if the trade repository has brought quickly, effectively and completely the infringement to ESMA’s attention, a
coefficient of 0,4 shall apply;

(@) if the trade repository has voluntarily taken measures to ensure that a similar infringement cannot be committed in
the future, a coefficient of 0,6 shall apply.


Tx)

27.7.2012

Official Journal of the European Union

L 201/19

Power is delegated to the Commission to adopt regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

3. ESMA shall, on its own initiative, after conducting a
public consultation and after consulting the ESRB and, where
appropriate, the competent authorities of third countries,
identify, in accordance with the criteria set out in points (a),
(b) and (c) of paragraph 4 and notify to the Commission the
classes of derivatives that should be subject to the clearing
obligation provided in Article 4, but for which no CCP has
yet received authorisation.

Following the notification, ESMA shall publish a call for a devel-
opment of proposals for the clearing of those classes of deriva-
tives,

4, With the overarching aim of reducing systemic risk, the
draft regulatory technical standards for the part referred to in
paragraph 2(a) shall take into consideration the following
criteria:

(a) the degree of standardisation of the contractual terms and
operational processes of the relevant class of OTC deriva-
tives;

(b) the volume and liquidity of the relevant class of OTC deriva-
tives;

(Othe availability of fair, reliable and generally accepted pricing
information in the relevant class of OTC derivatives.

In preparing those draft regulatory technical standards, ESMA
may take into consideration the interconnectedness between
counterparties using the relevant classes of OTC derivatives,
the anticipated impact on the levels of counterparty credit
risk between counterparties as well as the impact on
competition across the Union.

In order to ensure consistent application of this Article, ESMA
shall develop draft regulatory technical standards further spec-
ifying the criteria referred to in points (a), (b) and (c) of the first
subparagraph.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt regulatory
technical standards referred to in the third subparagraph of
this paragraph in accordance with Articles 10 to 14 of Regu-
lation (EU) No 1095/2010.

5. The draft regulatory technical standards for the part
referred to in paragraph 2(b) shall take into consideration the
following criteria:

(a) the expected volume of the relevant class of OTC deriva-
tives;

(b) whether more than one CCP already clear the same class of
OTC derivatives;

the ability of the relevant CCPs to handle the expected
volume and to manage the risk arising from the clearing
of the relevant class of OTC derivatives;

©)

Ss

the type and number of counterparties active, and expected
to be active within the market for the relevant class of OTC
derivatives,

the period of time a counterparty subject to the clearing
obligation needs in order to put in place arrangements to
clear its OTC derivative contracts through a CCP;

@

(f) the risk management and the legal and operational capacity
of the range of counterparties that are active in the market
for the relevant class of OTC derivatives and that would be
captured by the clearing obligation pursuant to Article 4(1).

6. If a class of OTC derivative contracts no longer has a CCP
which is authorised or recognised to clear those contracts under
this Regulation, it shall cease to be subject to the clearing
obligation referred to in Article 4, and paragraph 3 of this
Article shall apply.

Article 6
Public register

1. ESMA shall establish, maintain and keep up to date a
public register in order to identify the classes of OTC derivatives
subject to the clearing obligation correctly and unequivocally.
‘The public register shall be available on ESMA’s website.

2. The register shall include:

(a) the classes of OTC derivatives that are subject to the
clearing obligation pursuant to Article 4;

(b) the CCPs that are authorised or recognised for the purpose
of the clearing obligation;

(c) the dates from which the clearing obligation takes effect,
including any phased-in implementation;


27.7.2012

a

Official Journal of the European Union

L 201/5

27)

(28)

as variation margins is developed by CCPs to address this
problem. Such a technical solution should take into
account the special role of pension scheme arrangements
and avoid materially adverse effects on pensioners.
During a transitional period, OTC derivative contracts
entered into with a view to decreasing investment risks
directly relating to the financial solvency of pension
scheme arrangements should be subject not only to the
reporting obligation, but also to bilateral collateralisation
requirements. The ultimate aim, however, is central
clearing as soon as this is tenable.

It is important to ensure that only appropriate entities
and arrangements receive special treatment as well as to
take into account the diversity of pension systems across
the Union, while also to provide for a level playing field
for all pension scheme arrangements. Therefore, the
temporary derogation should apply to institutions for
occupational retirement provision registered in
accordance with Directive 2003/41/EC, including any
authorised entity responsible for managing such an insti-
tution and acting on its behalf as referred to in
Article 2(1) of that Directive as well as any legal entity
set up for the purpose of investment by such institutions,
acting solely and exclusively in their interest, and to
occupational retirement provision businesses of insti-
tutions referred to in Article 3 of Directive 2003/41/EC.

The temporary derogation should also apply to occupa-
tional retirement provision businesses of life insurance
undertakings provided that all corresponding assets and
liabilities are ring-fenced, managed and organised separ-
ately, without any possibility of transfer. It should also
apply to any other authorised and supervised entities
operating on a national basis only or arrangements
that are provided mainly in the territory of one
Member State, only if both of them are recognised by
national law and their primary purpose is to provide
benefits upon retirement. The entities and arrangements
referred to in this recital should be subject to the decision
of the relevant competent authority and in order to
ensure consistency, remove possible misalignments and
avoid any abuse, the opinion of ESMA, after consulting
EIOPA. This could include entities and arrangements that
are not necessarily linked to an employer pension
programme but still have the primary purpose of
providing income at retirement, either on a compulsory
or on a voluntary basis. Examples could include legal
entities operating pension schemes on a funded basis
under national law, provided that they invest in
accordance with the ‘prudent person’ principle, and
pension arrangements taken up by individuals directly,
which may also be provided by life insurers. The
exemption in the case of pension arrangements taken
up by individuals directly should not cover OTC
derivative contracts relating to other life insurance

(29)

(0)

products of the insurer which do not have the primary
purpose of providing an income at retirement.

Further examples might be retirement provision busi-
nesses of insurance undertakings covered by Directive
2002/83/EC, provided that all assets corresponding to
the businesses are included in a special register in
accordance with the Annex to Directive 2001/17/EC of
the European Parliament and of the Council of 19 March
2001 on the reorganisation and winding-up of insurance
undertakings (') as well as occupational retirement
provision arrangements of insurance undertakings based
on collective bargaining agreements. Institutions estab-
lished for the purpose of providing compensation to
members of pension scheme arrangements in the case
of a default should also be treated as a pension scheme
for the purpose of this Regulation.

Where appropriate, rules applicable to financial counter-
parties, should also apply to non-financial counterparties.
It is recognised that non-financial counterparties use OTC
derivative contracts in order to cover themselves against
commercial risks directly linked to their commercial or
treasury financing activities. Consequently, in determining
whether a non-financial counterparty should be subject
to the clearing obligation, consideration should be given
to the purpose for which that non-financial counterparty
uses OTC derivative contracts and to the size of the
exposures that it has in those instruments. In order to
ensure that non-financial institutions have the oppor-
tunity to state their views on the clearing thresholds,
ESMA should, when preparing the relevant regulatory
technical standards, conduct an open public consultation
ensuring the participation of non-financial institutions.
ESMA should also consult all relevant authorities, for
example the Agency for the Cooperation of Energy Regu-
lators, in order to ensure that the particularities of those
sectors are fully taken into account. Moreover, by
17 August 2015, the Commission should assess the
systemic importance of the transactions of non-
financial firms in OTC derivative contracts in different
sectors, including in the energy sector.

In determining whether an OTC derivative contract
reduces risks directly relating to the commercial activities
and treasury activities of a non-financial counterparty,
due account should be taken of that non-financial
counterparty’s overall hedging and risk-mitigation strat-
egies. In particular, consideration should be given to
whether an OTC derivative contract is economically
appropriate for the reduction of risks in the conduct

(') OJ L 110, 20.4.2001, p. 28.




Gy]

L 201/54

Official Journal of the European Union

27.7.2012

() on the access of CCPs to trading venues, the effects on
competitiveness of certain practices, and the impact on
liquidity fragmentation;

() on ESMA’s staffing and resources needs arising from the
assumption of its powers and duties in accordance with
this Regulation;

(g) on the impact of the application of additional requirements
by Member States pursuant to Article 14(5).

Those reports shall be communicated to the Commission by
30 September 2014 for the purposes of paragraph 1. They shall
also be submitted to the European Parliament and the Council.

4. The Commission shall, in cooperation with the Member
States and ESMA, and after requesting the assessment of the
ESRB, draw up an annual report assessing any possible systemic
risk and cost implications of interoperability arrangements.

The report shail focus at least on the number and complexity of
such arrangements, and the adequacy of risk-management
systems and models, The Commission shall submit the report
to the European Parliament and the Council, together with any
appropriate proposals.

The ESRB shall provide the Commission with its assessment of
any possible systemic risk implications of interoperability
arrangements.

5, ESMA shall present an annual report to the European
Parliament, the Council and the Commission on the penalties
imposed by competent authorities, including supervisory
measures, fines and periodic penalty payments.

Article 86
Committee procedure

1. The Commission shall be assisted by the European
Securities Committee established by Commission Decision
2001/528/EC ('). That committee shall be a committee within
the meaning of Regulation (EU) No 182/201.

2. Where reference is made to this paragraph, Article 5 of
Regulation (EU) No 182/2011 shall apply.

Article 87
Amendment to Directive 98/26/EC
1. In Article 9(1) of Directive 98/26/EC, the following
subparagraph is added:

( Of L 191, 13.7.2001, p. 45.

‘Where a system operator has provided collateral security to
another system operator in connection with an interoperable
system, the rights of the providing system operator to that
collateral security shall not be affected by insolvency
proceedings against the receiving system operator.’

2. Member States shall adopt and publish the laws, regu-
lations and administrative provisions necessary to comply
with point (1) by 17 August 2014. They shall forthwith
inform the Commission thereof.

When Member States adopt those measures, they shall contain a
reference to Directive 98/26/EC or shall be accompanied by
such reference on the occasion of their official publication.
The methods of making such reference shall be laid down by
Member States.

Article 88
Websites

1. ESMA shall maintain a website which provides details of
the following:

(a) contracts eligible for the clearing obligation under Article 5;

(0) penalties imposed for breaches of Articles 4, 5 and 7 to 11:

CCPs authorised to offer services or activities in the Union
that are established in the Union, and the services or
activities which they are authorised to provide or perform,
including the classes of financial instruments covered by
their authorisation;

S

(d)

penalties imposed for breaches of Titles IV and V;

CCPs authorised to offer services or activities in the Union
established in a third country, and the services or activities
which they are authorised to provide or perform, including
the classes of financial instruments covered by their auth-
orisation;

=

(f) trade repositories authorised to offer services or activities in
the Union;

(g) fines and periodic penalty payments imposed in accordance
with Articles 65 and 66;

(h) the public register referred to in Article 6.


Exhibit E to Supplement S-1 to Form FBOT

With respect to each relevant regulatory regime or authority governing the clearing organization,
attach:

(1) A description of the regulatory regime/authority’s structure, resources, staff and scope of authority.
1. Finansinspektionen'

As mentioned in Exhibit A-1 to Supplement S-1 Form FBOT, the commodity clearing operations
are supervised by FI and Finanstilsynet jointly, with FI being appointed as the principal supervisor in
accordance with the requirements under the European Market Infrastructure Regulation (“EMIR”) and
pursuant to a memorandum of understanding between the two supervisors. For a thoroughly description
of Finanstilsynet’s structure, resources, staff and scope of authority, please see Exhibit F to Form FBOT.

FI is a central administrative authority with more than 400 employees. These include lawyers,
economists, statisticians, analysts and actuaries. FI’s board of directors, which has nine members
including the Director General, is appointed by the Swedish Government.

FI implements and expands upon laws and decisions emanating from the Swedish parliament (Sw.
Riksdagen), the government and the Swedish ministry of finance and is also guided by EU regulation and
international standards for financial supervision and regulation.

FI is headed by a board of directors which is responsible for the operations of the authority. The
board decides on questions of principal and those of greater importance, such as new regulations,
sanctions and the planning of FI’s operations. The Director General is responsible for and heads the
operating activities in accordance with the board’s directives and guidelines.

The board members are appointed by the Government for a three-year period. They should have
experience from the industry or financial_market, but_are_not_allowed_to_work simultaneously for a
company under FI’s supervision.

1 All information provided in this Section is based on information provided by FI. For further information about FI
please see www. fi.se.

LONO1_8129630v4


m5,

ATG,

for International Settlements and grant credit for the
European Union's Medium-Term Financial Assistance
for Member States' Balances of Payments.

In pursuance of its foreign exchange policy, the Riks-
bank may, subject to authorization from the Riksdag,
grant credit to other international financial bodies of
which Sweden is a member and reach agreements
with non-central-bank parties concerning long-term
international borrowing arrangements.

Subject to authorization from the Riksdag, the Riks-
bank may make capital contributions from its own
funds to the International Monetary Fund.

Subject to authorization from the Riksdag, the
Riksbank may also participate, in other ways than
those stated in Articles 2 and 3, in funding within
the framework of the International Monetary Fund's
activities. However, no authorization is necessary if
the funding is for foreign exchange policy purposes
or if there are special circumstances.

The Riksbank may acquire the Special Drawing
Rights resulting from Sweden's participation in the
International Monetary Fund. In addition, it is the
responsibility of the Riksbank to fulfil obligations
resulting from Sweden's participation in this system.

}. The Riksbank may serve as a liaison body in relation

to international financial institutions of which Swe-
den is a member.

(61)


m5,

Aang,

The Riksdag determines whether the General Council
shall be discharged from liability for its activities

and the Executive Board for its management of the
Riksbank, Discharge from liability may only be de-
nied if there are reasons to make claims of financial
liability against a member of the General Council

or the Executive Board, or if the member should be
prosecuted for criminal actions in connection with his
assignment or employment.

The Riksbank shall annually report to the Riksdag

what measures the Bank has taken in view of the
Swedish National Audit Office's observations,

cHAPTER 44 FEES, PENALTIES, ETC.

. A financial institution that does not fulfil its estab-

lished minimum reserve requirement shall pay a
special fee to the State.

The Riksbank rules in matters concerning such special
fees.

. The special fee pursuant to Article 1 shall correspond

to the daily interest on the deficit, amounting to twice
the lending rate that the Riksbank is implementing on
credit granted to banking institutions in accordance
with Chapter 6, Article 5. In special circumstances,
the fee may be reduced totally or partly.

®7-2a.The Riksbank may issue injunctions or prohibitions as

necessary to ensure that the provision in Chapter 5,

[63]


(4) A description of the clearing organization’s rules with respect to the disclosure of material non-
public information obtained as a result of a member’s performance on the governing board or ona
significant committee,

Employees of Nasdaq Clearing are by law prohibited to disclose information that they have obtained
during their employment. According to Chapter 1, Section 11 of the Securities Market Act, employees of a
clearing organization may not disclose or utilize any information or otherwise utilize what he or she has
learned during the employment. In addition, each employee of Nasdaq Clearing is prohibited through its
employment agreement to disclose any information obtained as a result of its employmen{

LONO1_8129620v5


L 201/58 xm Official Journal of the European Union

27.7.2012

Jl, Infringements relating to transparency and the availability of information:

(a) a trade repository infringes Article 81(1) by not regularly publishing, in an easily accessible way, aggregate
positions by class of derivatives on the contracts reported to it;

(b) a trade repository infringes Article 81(2) by not allowing the entities referred to in Article 81(3) direct and
immediate access to the details of derivatives contracts they need to fulfil their respective responsibilities and
mandates.

IV. Infringements relating to obstacles to the supervisory activities:

(a) a trade repository infringes Article 61(1) by providing incorrect or misleading information in response to a simple
request for information by ESMA in accordance with Article 61(2) or in response to a decision by ESMA
requiring information in accordance with Article 61(3);

(b) a trade repository provides incorrect or misleading answers to questions asked pursuant to Article 62(1)(c);

(0) a trade repository does not comply in due time with a supervisory measure adopted by ESMA pursuant to
Article 73.


Securities Dealers Associations in key countries, the establishment of Clearing
Councils in key locations and in some cases for specific asset classes, wider Clearing
Forums and IT forums, in addition to numerous bilateral meetings with both
members and customers. The organization has dedicated resources that follow
market and regulatory developments.

There are goals with regard to operational effectiveness and the goals are regularly
measured and analyzed. These goals include operational effectiveness and customer
focus.

Nasdaq Clearing regularly reviews its efficiency and effectiveness. Metrics are
gathered daily and monthly reports are analyzed by management. Annual customer
surveys are also performed. In addition, input on efficiency and effectiveness is also
received from i.a. Internal Audit reviews and Risk Self-Assessments which are both
conducted at regular intervals.

Principle 22: Communication procedures and standards

An FMI should use, or at a minimum accommodate, relevant internationally
accepted communication procedures and standards in order to facilitate efficient
payment, clearing, settlement, and recording.

The clearing information is visible to members via graphical user interfaces (GUIs)
and via communication protocols, the later enabling members to access the clearing
information via third party applications.

The GUls available for members are the following: Genium INET Clearing
Workstation 1, Genium INET Clearing Workstation 2 and CMS Web. The
communication protocols available are: FIX, FPML, OMnet API and Swift.

Clearing information is also available for members via reports, available via SFTP and
through the GUIs, in CSV, Excel and PDF format.

Nasdaq Clearing is continuously working on improving the clearing functionality of
the FIX protocol as the FIX standards becomes defined and implemented. Settlement
instructions follows internationally accepted standards such as ISO and Swift
messaging.

2016, The Nasdaq Group, Inc. All Rights Reserved.

56


Vv. List of publicly available resources

Public information related to Nasdaq Clearing can be found on the company website
www.nasdagomx.com/transactions/posttrade/clearing/europeanclearing

From this page interested parties can navigate to detailed information about
© Governance and strategy

© Products cleared

@ = R&Rs

e® Systems

e Risk Management, including risk models, stress tests and default management
¢ Collateral management, settlement and TR reporting

This is not an exhaustive list.

An overview of the CCP can be found in the document titled “Nasdaq Clearing as a Counterparty”
which can also be accessed from the Nasdaq Clearing front page (link above).

Rules and Regulations of Nasdaq Financial
http://business.nasdaq.com/list/Rules-and-Regulations/European-rules/common/derivatives-
rules/index.html

Rules and Regulations of Nasdaq Commodities

http://business.nasdaq.com/list/Rules-and-Regulations/European-rules/Nasdaq-
Commodities/index.html

© 2016, The Nasdaq Group, Inc. All Rights Reserved. 59


BESTALLNING av denna publikation kan

6ras direkt fran Sveriges riksbank,

Férrddet, 103 37 Stockholm, fax 08-21 05 31,
epost: forradet@riksbank.se eller
wowwriksbank.se

ISBN 978-91-89612-37-2

Tryck: Jernstrém Offset

Stockholm 2008


times with the capital requirements, to cover credit risks, counterparty risks, market risks, operational
risks and legal and business risks. The capital required to cover each of these risks must be calculated in
accordance with the Commission Delegated Regulation (EU) No 152/2013 supplementing EMIR. If the
“P’s capital falls below 110% of these capital requirements or EUR 7.5 million, the CCP must notify
Finansinspektionen.

(iii) The regulatory regime/authority’s program for the ongoing supervision and oversight of
the clearing organization and the enforcement of its clearing rules.

(iv) The extent to which the current RCCPs are used or applied by the regulatory
regime/authority in its supervision and oversight of the clearing organization or are
incorporated into its rules and regulations and the extent to which the regulatory
regime/authority reviews the clearing systems for compliance therewith.

Primarily the Clearinghouse is authorized in accordance with EMIR with the oversight the
Swedish FSA and the EMIR College. In addition, the Clearinghouse observes the CPMI IOSCO
principles with the oversight of Riksbanken. All public disclosures performed by the
Clearinghouse in regards to CPMI JIOSCO are published on the website;
http://business.nasdag.com/trade/clearing/nasdag-clearing/about-nasdaq-clearing/#tcem:5044-

|

(v) The extent to which the regulatory regime/authority reviews and/or approves the rules of
the clearing organization prior to their implementation.

The review of the supervisory authorities safeguards that the
amendments do not violate applicable law, including that the amendments comply with the requirements
for neutrality between the members.

LONO1_8129630v4




ARTS,

og,

ant.

To protect a claim, the Riksbank may acquire all
types of property. Such property shall be sold as
soon as is appropriate and not later than when it can
be done without incurring a loss.

The Riksbank may conduct services, against pay-
ment, linked to its activities as a central bank.

. The Riksbank may, following individual reviews,

agree to a composition and make decisions concer-
ning the write-off, write-down or remission of its
claim.

CHAPTER 9 ADMINISTRATIVE PROVISIONS

The Riksbank conducts its activities at a head office
in Stockholm, where the General Council and the
Executive Board also have their seat.

The Riksbank may also conduct activities at branch
offices, in that number and at those locations which
are determined by the Riksbank.

The Head Office shall have an Audit Unit and other
units decided by the Riksbank.

Operations of the Audit Unit are governed by the
General Council.

The distribution of business between different units
shall be made clear in the rules of procedure as re-
ferred to in Article 4,

[64


by Swedish law (for Nasdaq Financial) and Norwegian law (for Nasdaq
Commodities).

System design and operations

The Genium INET Clearing system supports the clearing of equities, fixed-income,
commodities and over-the-counter instruments including functionality for margining,
risk management, collateral management and settlement activities for all asset
classes. CMS WIZER, which is linked to Genium INET is used as a cash settlement,
custody and delivery system.

Systems and controls are in place to manage these processes on a day to day basis,

and business continuity and crisis management plans and procedures are in place
for situations out of the normal routines.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


5§

7§

Riksbanken far efter medgivande av riksdagen av
egna medel tillskjuta insatskapital i Internationella
valutafonden.

Riksbanken far efter medgivande av riksdagen ocks&
pa annat satt an som anges i andra och tredje styck-
ena delta i finansiering inom ramen fér Internatio-
nella valutafondens verksamhet. Nagot medgivande
behovs dock inte om finansieringen har ett valutapo-
litiskt syfte eller om det finns sarskilda skal.

Riksbanken far forvarva de sarskilda dragningsratter
som tillkommer Sverige genom deltagandet i Interna-
tionella valutafonden. Det dligger vidare Riksbanken
att fullgdra de skyldigheter som fdljer av Sveriges
deltagande i detta system.

Riksbanken far verka som férbindelseorgan i férhal-
lande till internationella finansorgan som Sverige ar
medlem i.

Riksbanken far med eller utan rantegottgorelse ta
emot insattningar i valuta eller guld fran, och géra
sadana insattningar hos, banker, utlandska bankfére-
tag, centralbanker, kreditmarknadsféretag, utlandska
kreditféretag, Banken fér internationell betalningsut-
jamning (BIS) och Internationella ateruppbyggnads-
‘och utvecklingsbanken (IBRD). Riksbanken far aven
ta emot sadana insattningar fran andra stater och
mellanstatliga organ.

Riksbanken far aven inga avtal om skyldigheter och
rattigheter som anknyter till de insattningar som
anges i férsta stycket.

(271


1. grant credit against adequate collateral and receive
deposits,

2. purchase, sell and mediate securities, foreign ex-
change and rights and obligations linked to such
assets,

3. issue its own instruments of debt.

Generally applicable interest terms for such lending
and borrowing according to the first paragraph 1,
shall be made public.

In pursuance of its monetary policy, the Riksbank
may decide to impose minimum reserve requirements
on financial institutions.

Minimum reserve requirement means that a certain
share, not exceeding fifteen per cent of the financial
institution's investments or liabilities, calculated in a
manner stipulated by the Riksbank, shall for a speci-
fic period be covered by funds of a corresponding va-
lue that, with or without interest compensation, shall
be deposited in a Riksbank account on behalf of the
institution concerned. To an extent determined by
the Riksbank the financial institution's cash holdings,
shall be equal to such funds.

For foreign financial institutions that are entitled to
conduct business activities from a branch registered
in Sweden, the minimum reserve requirement is cal-
culated on the basis of the investments or liabilities
of the particular branch.

(58)


services, however, intra-day liquidity is not obtained.

Most of the liquidity recourses are replenished automatically. For instance, collateral
held but not yet realized would, when realized replenish the utilized liquidity
resources.

If liquidity is utilized and it corresponds to capital losses such funds will not be
automatically replenished. In such circumstances, the default fund rules stipulate
that members must replenish the default fund within 10 days. Moreover, Nasdaq
Clearing holds substantial buffer in non-regulatory tangible equity according to its
Regulatory Capital Policy, which means that those financial resources backing this
buffer in equity could within a short period of time replenish any used QLR or ALR.
The replenishment rules are explicitly specified in the default fund rules.

Principle 8: Settlement finality

An FMI should provide clear and certain final settlement, at a minimum by the end
of the value date. Where necessary or preferable, an FMI should provide final
settlement intraday or in real time.

By registration of a contract a participant is obliged to perform liabilities consistent
with the contract specifications as specified in the R&Rs and the participant shall
accordingly complete settlement on the date specified by Nasdaq Clearing. Other
than as set forth in the R&Rs regarding protest, the obligations in the contracts are
binding and the settlement instructions shall prevail. Any late payments or deliveries
are considered a breach of R&Rs.

Nasdaq Financial

A transfer order under the Nasdaq FIN R&R has the same definition as under Article
2 (i) of the Settlement Finality Directive and shall therefore be deemed to include
every express or automated instruction that results in the registration of a contract
and every express or automated instruction intended for settlement of a contract.
Section 2.9.30 of the Nasdaq FIN R&R stipulates that a transfer order with respect to
cash settlement or delivery shall be deemed to have been placed in the clearing
system upon receipt of a request by Nasdaq Financial or when the clearing system,
without such a request, generates a final settlement report in accordance with
section 2.11.8 of the Nasdaq FIN R&R. Other than as set out in section 2.10 of the
Nasdaq FIN R&R regarding protests, transfer orders may not be revoked after receipt
of such settlement basis by Nasdaq Financial. As per section 2.10 of the Nasdaq FIN
R&R, clearing members shall continuously assist in reconciliation of transactions
registered during the day and shall submit to the clearing house any protests
attributable to registrations or failures to register or in the event that discrepancies
exist compared with the members’ own records. Members shall also, within the
times stated in the Nasdaq FIN R&R, submit protests against transactions that are
erroneously executed or have failed to be executed, exercised or cash settled.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

30




27.7.2012

G4

Official Journal of the European Union

L 201/11

(70)

(71)

(72)

(73)

(74)

in general. Such pricing sources should include those
relating to indices that are used as references to
derivatives or other financial instruments.

Margins are the primary line of defence for a CCP.
Although CCPs should invest the margins received in a
safe and prudent manner, they should make particular
efforts to ensure adequate protection of margins to
guarantee that they are returned in a timely manner to
the non-defaulting clearing members or to an inter-
operable CCP where the CCP collecting these margins
defaults.

Access to adequate liquidity resources is essential for a
CCP. It is possible for such liquidity to derive from access
to central bank liquidity, creditworthy and reliable
commercial bank liquidity, or a combination of both.
Access to liquidity could result from an authorisation
granted in accordance with Article 6 of Directive
2006/48/EC or other appropriate arrangements. In
assessing the adequacy of liquidity resources, especially
in stress situations, a CCP should take into consideration
the risks of obtaining the liquidity by only relying on
commercial banks credit lines.

The ‘European Code of Conduct for Clearing and
Settlement’ of 7 November 2006 established a
voluntary framework for establishing links between
CCPs. However, the post-trade sector remains fragmented
along national lines, making cross-border trades more
costly and hindering harmonisation. It is therefore
necessary to lay down the conditions for the estab-
lishment of interoperability arrangements between CCPs
to the extent these do not expose the relevant CCPs to
risks that are not appropriately managed.

Interoperability arrangements are important for greater
integration of the post-trading market within the Union
and regulation should be provided for. However, as inter-
operability arrangements may expose CCPs to additional
risks, CCPs should have been, for three years, authorised
to clear or recognised in accordance with this Regulation,
or authorised under a pre-existing national authorisation
regime, before competent authorities grant approval of
such interoperability arrangements. In addition, given the
additional complexities involved in an interoperability
arrangement between CCPs clearing OTC derivative
contracts, it is appropriate at this stage to restrict the
scope of interoperability arrangements to transferable
securities and money-market instruments. However, by
30 September 2014, ESMA should submit a report to
the Commission on whether an extension of that scope
to other financial instruments would be appropriate.

Trade repositories collect data for regulatory purposes
that are relevant to authorities in all Member States.

(75)

(76)

(77)

(78)

(79)

(80)

ESMA should assume responsibility for the registration,
withdrawal of registration and supervision of trade
repositories.

Given that regulators, CCPs and other market participants
rely on the data maintained by trade repositories, it is
necessary to ensure that those trade repositories are
subject to strict operational, record-keeping and data-
management requirements.

Transparency of prices, fees and risk-management models
associated with the services provided by CCPs, their
members and trade repositories is necessary to enable
market participants to make an informed choice.

In order to carry out its duties effectively, ESMA should
be able to require, by simple request or by decision, all
necessary information from trade repositories, related
third parties and third parties to which the trade reposi-
tories have outsourced operational functions or activities.
If ESMA requires such information by simple request, the
addressee is not obliged to provide the information but,
in the event that it does so voluntarily, the information
provided should not be incorrect or misleading. Such
information should be made available without delay.

Without prejudice to cases covered by criminal or tax
law, the competent authorities, ESMA, bodies or natural
or legal persons other than the competent authorities,
which receive confidential information should use it
only in the performance of their duties and for the
exercise of their functions. However, this should not
prevent the exercise, in accordance with national law,
of the functions of national bodies responsible for the
prevention, investigation or correction of cases of
maladministration.

In order to exercise its supervisory powers effectively,
ESMA should be able to conduct investigations and on-
site inspections.

ESMA should be able to delegate specific supervisory
tasks to the competent authority of a Member State,
for instance where a supervisory task requires
knowledge and experience with respect to local
conditions, which are more easily available at national
level. ESMA should be able to delegate the carrying out
of specific investigatory tasks and on-site inspections.
Prior to the delegation of tasks, ESMA should consult
the relevant competent authority about the detailed
conditions relating to such delegation of tasks,
including the scope of the task to be delegated, the
timetable for the performance of the task, and the trans-
mission of necessary information by and to ESMA. ESMA


As a central counterparty, Nasdaq Clearing guarantees all deliveries, independent of
the original counterparty’s delivery or payment ability. However, Nasdaq Clearing
does not undertake the responsibility to fulfill the transaction on the original
settlement day if the original counterparty cannot fulfill its obligation. In that case,
Nasdaq Clearing has the right to buy securities and charge a delay fee for failed
delivery or take other steps to complete the delivery.

Delivery of shares is made through Nasdaq Clearing’s accounts in certain central
securities depositories (“CSDs”). The principle Delivery-versus-Payment (“DvP”)
applies for all financial deliveries of underlying securities due to expiration or
exercise. Delivery of Swedish fixed income instruments takes place in Euroclear
Sweden and delivery of Danish fixed income instruments takes place in VP Securities
Denmark. Delivery of the emission allowances and the electricity certificates takes
place in Nasdaq Clearing registry accounts with the relevant registry.

The credit enhancing effects of a centralized clearing house boost market efficiency,
reduce risk and allow broader client participation. Each of these features contributes
to increasing liquidity in the marketplace. As a central counterparty, Nasdaq Clearing
also plays an important role in terms of stability in the financial system.

General description of Nasdaq Clearing’s operations and services

Nasdaq Clearing clears all trades executed on the derivatives markets operated by
Nasdaq Financial and Nasdaq Commodities as well as OTC trades done outside the
regulated markets and reported to the clearing house for clearing. Nasdaq Clearing
offers clearing of equity and index derivatives on Swedish, Norwegian, Finnish and
Danish instruments; fixed income derivatives on Swedish, Norwegian and Danish
underlying; commodity derivatives on power, natural gas, emission rights, electricity
certificates, freight, fuel-oil, seafood and renewable energy.

As a clearing house, Nasdaq Clearing becomes the legal counterpart to the original
buyer and seller in a trade, through so called novation. This means that the original
counterparts no longer have risk towards each other. Instead, the clearing house
takes on this counterparty risk.

The ability to manage the counterparty risk is dependent on pro-active risk
management, a sound legal foundation and the financial strength of the clearing
house. Furthermore, rigid financial and operational requirements are applied to its
members. Nasdaq Clearing also relies on an advanced portfolio-based margining
system to determine the amount of collateral appropriate for the counterparty risks
it assumes. In the event of a loss resulting from a counterparty default, Nasdaq
Clearing has a member sponsored default fund as well as its own funded risk-bearing
capital, which serves as a buffer between any defaulting counterparty and all other
counterparties.

By taking on the responsibility of the original counterparts to the trade, as described
above, Nasdaq Clearing becomes the counterpart to both the buyer and seller of the
original trade. The clearing house thus becomes exposed to the risk of the original

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


Gx

27.7.2012

Official Journal of the European Union

L 201/29

2. Competent authorities shall, in the exercise of their
general duties, duly consider the potential impact of their
decisions on the stability of the financial system in all other
Member States concerned, in particular the emergency situations
referred to in Article 24, based on the available information at
the time.

Article 24
Emergency situations

The CCP’s competent authority or any other authority shall
inform ESMA, the college, the relevant members of the ESCB
and other relevant authorities without undue delay of any
emergency situation relating to a CCP, including developments
in financial markets, which may have an adverse effect on
market liquidity and the stability of the financial system in
any of the Member States where the CCP or one of its
clearing members are established.

CHAPTER 4
Relations with third countries
Article 25
Recognition of a third-country CCP

1. A CCP established in a third country may provide clearing
services to clearing members or trading venues established in
the Union only where that CCP is recognised by ESMA.

2. ESMA, after consulting the authorities referred to in
paragraph 3, may recognise a CCP established in a third
country that has applied for recognition to provide certain
clearing services or activities where:

(a) the Commission has adopted an implementing act in
accordance with paragraph 6;

(b) the CCP is authorised in the relevant third country, and is
subject to effective supervision and enforcement ensuring
full compliance with the prudential requirements applicable
in that third country;

(0) cooperation arrangements have been established pursuant to
paragraph 7;

(d) the CCP is established or authorised in a third country that
is considered as having equivalent systems for anti-money-
laundering and combating the financing of terrorism to
those of the Union in accordance with the criteria set out
in the common understanding between Member States on
third-country equivalence under Directive 2005/60/EC of
the European Parliament and of the Council of 26 October
2005 on the prevention of the use of the financial system
for the purpose of money laundering and terrorist financ-

ing (").

3. When assessing whether the conditions referred to in
paragraph 2 are met, ESMA shall consult:

(a) the competent authority of a Member State in which the
CCP provides or intends to provide clearing services and
which has been selected by the CCP;

(!) Of L 309, 25.11.2005, p. 15.

(b) the competent authorities responsible for the supervision of
the clearing members of the CCP that are established in the
three Member States which make or are anticipated by the
CCP to make the largest contributions to the default fund of
the CCP referred to in Article 42 on an aggregate basis over
a one-year period;

(o

the competent authorities responsible for the supervision of
trading venues located in the Union, served or to be served
by the CCP;

(d) the competent authorities supervising CCPs established in
the Union with which interoperability arrangements have
been established;

the relevant members of the ESCB of the Member States in
which the CCP provides or intends to provide clearing
services and the relevant members of the ESCB responsible
for the oversight of the CCPs with which interoperability
arrangements have been established;

=

(f) the central banks of issue of the most relevant Union
currencies of the financial instruments cleared or to be
cleared.

4. The CCP referred to in paragraph 1 shall submit its appli-
cation to ESMA.

The applicant CCP shall provide ESMA with all information
necessary for its recognition. Within 30 working days of
receipt, ESMA shall assess whether the application is
complete. If the application is not complete, ESMA shall set a
deadline by which the applicant CCP has to provide additional
information.

The recognition decision shall be based on the conditions set
out in paragraph 2 and shall be independent of any assessment
as the basis for the equivalence decision as referred to in
Article 13(3).

ESMA shall consult the authorities and entities referred to in
paragraph 3 prior to taking its decision.

Within 180 working days of the submission of a complete
application, ESMA shall inform the applicant CCP in writing,
with a fully reasoned explanation, whether the recognition has
been granted or refused.

ESMA shall publish on its website a list of the CCPs recognised
in accordance with this Regulation.

5.  ESMA shall, after consulting the authorities and entities
referred to in paragraph 3, review the recognition of the CCP
established in a third country where that CCP has extended the
range of its activities and services in the Union. That review
shail be conducted in accordance with paragraphs 2, 3 and 4.
ESMA may withdraw the recognition of that CCP where the
conditions set out in paragraph 2 are no longer met and in
the same circumstances as those described in Article 20.


The principles also include requirements aimed at central banks and other authorities overseeing
or supervising the financial infrastructure. Riksbanken therefore also applies the international principles to
its own oversight work.

Riksbanken has chosen to apply six criteria for identifying the systems that are to come under its
oversight. The assessment is based on: (i) the number and value of the transactions handled by the system;
(ii) the system's market shares; (iii) the markets on which the system is active; (iv) the available
alternatives that could be used at short notice; (v) the presence of links with other systems and other
financial institutions; and (vi) the system's significance for the implementation of monetary policy.

As mentioned above,

when overseeing the different systems in the financial infrastructure, including the Clearinghouse,
Riksbanken applies the international principles for stability and efficiency drawn-up by CPSS and.
However, these principles are minimum requirements, and specific features of the Swedish market may
mean that Riksbanken has to set more stringent requirements. This could be because, for instance, activity
on the Swedish market is concentrated to a small number of participants. When Riksbanken adapts the
requirements to Swedish conditions, this is justified in the analysis and assessment of each individual
system. If the system complies with the international principles but not Riksbanken’s more stringent
requirements, Riksbanken provides notification of this in its assessment of the system. Riksbanken also
takes into account, in addition to the international principles, current laws and sometimes also market
practices. In these cases, too, Riksbanken’s assessment contains information on which laws or other
factors are entailed and why they are used in the analysis.

In addition to the assessment performed by Riksbanken, the systems assess themselves when
Riksbanken considers this to be necessary, but at least once every three years. Riksbanken uses these self-
assessments as a base for its own assessment of the systems. As a complement to the systems’ self-
assessments, Riksbanken makes an in-depth analysis of specific risks in the systems. The in-depth
analysis results in Riksbanken making an assessment of whether there are any potential sources of
systemic risks or efficiency losses.

Riksbanken’s regular oversight can be divided into three stages:

a) Collecting both qualitative and quantitative information on the systems covered by the
oversight. Riksbanken has a statutory right to acquire information from the systems that
Riksbanken considers necessary to oversee the stability of the payment systems.’ The
systems are expected to inform Riksbanken of planned changes in the systems and of
other important matters that affect the systems in some way. Such information could
consist of existing documentation, which can be handed over in connection with meetings
with the systems. Consequently, Riksbanken meets the system operators on a quarterly
basis and monitors statistics and information circulated between meetings and can also
acquire information on the systems by collecting the views of their participants.

b) Analyzing the information collected and identifying potential sources of systemic risks
and efficiency losses. The analysis in the oversight work can be divided into analysis and
assessment of the systems’ self-assessments and in-depth analysis of specific risks in the
system. The latter is based on the risks that are given priority in and between the Swedish
systems on the basis of Riksbanken’s risk-based working method. The analysis is based
on the international principles drawn-up by the CPSS and IOSCO.

4 Sveriges Riksbank Act, Chapter 6, Article 9.

LONO1_8129630v4-


27.7.2012 LEN]

Official Journal of the European Union

L 201/47

4. Notwithstanding paragraphs 2 and 3, the amount of the
fine shall not exceed 20 % of the annual turnover of the trade
repository concerned in the preceding business year but, where
the trade repository has directly or indirectly benefited finan-
cially from the infringement, the amount of the fine shall be at
least equal to that benefit.

Where an act or omission of a trade repository constitutes more
than one infringement listed in Annex 1, only the higher fine
calculated in accordance with paragraphs 2 and 3 and relating
to one of those infringements shall apply.

Article 66
Periodic penalty payments

1. ESMA shall, by decision, impose periodic penalty
payments in order to compel:

(a) a trade repository to put an end to an infringement in
accordance with a decision taken pursuant to
Article 73(1)(a); or

(0) a person referred to in Article 61(1):

(i) to supply complete information which has been
requested by a decision pursuant to Article 61;

(i) to submit to an investigation and in particular to
produce complete records, data, procedures or any
other material required and to complete and correct
other information provided in an investigation
launched by a decision pursuant to Article 62; or

(ii) to submit to an on-site inspection ordered by a decision
taken pursuant to Article 63.

2. A periodic penalty payment shall be effective and propor-
tionate. The periodic penalty payment shall be imposed for each
day of delay.

3. Notwithstanding paragraph 2, the amount of the periodic
penalty payments shall be 3% of the average daily turnover in
the preceding business year, or, in the case of natural persons,
2% of the average daily income in the preceding calendar year,
Tt shall be calculated from the date stipulated in the decision
imposing the periodic penalty payment.

4. A periodic penalty payment shall be imposed for a
maximum period of six months following the notification of
ESMA’s decision. Following the end of the period, ESMA shall
review the measure.

Article 67
Hearing of the persons concerned

1. Before taking any decision on a fine or periodic penalty
payment under Articles 65 and 66, ESMA shall give the persons
subject to the proceedings the opportunity to be heard on its
findings. ESMA shall base its decisions only on findings on
which the persons subject to the proceedings have had an
opportunity to comment.

2. The rights of the defence of the persons subject to the
proceedings shall be fully respected in the proceedings. They
shall be entitled to have access to ESMA’s file, subject to the
legitimate interest of other persons in the protection of their
business secrets, The right of access to the file shall not extend
to confidential information or ESMA's internal preparatory
documents.

Article 68

Disclosure, nature, enforcement and allocation of fines and
periodic penalty payments

1. ESMA shall disclose to the public every fine and periodic
penalty payment that has been imposed pursuant to Articles 65
and 66 unless such disclosure to the public would seriously
jeopardise the financial markets or cause disproportionate
damage to the parties involved. Such disclosure shall not
contain personal data within the meaning of Regulation (EC)
No 45/2001.

2. Fines and periodic penalty payments imposed pursuant to
Articles 65 and 66 shall be of an administrative nature.

3. Where ESMA decides to impose no fines or penalty
payments, it shall inform the European Parliament, the
Council, the Commission, and the competent authorities of
the Member State concerned accordingly and shall set out the
reasons for its decision.

4. Fines and periodic penalty payments imposed pursuant to
Articles 65 and 66 shall be enforceable.

Enforcement shall be governed by the rules of civil procedure in
force in the State in the territory of which it is carried out, The
order for its enforcement shall be appended to the decision
without other formality than verification of the authenticity of
the decision by the authority which the government of each
Member State shall designate for that purpose and shall make
known to ESMA and to the Court of Justice.


Exhibit A-3 to Supplement S-1 to Form FBOT

(1) Membership and trading participant agreements.
(2) Clearing agreements.

Copies of the membership and trading participant agreements (the “Trading Agreements”) and
the clearing agreements (the “Clearing Agreements”) are attached hereto as follows:

Trading Agreements:

e Trading Agreement A — Exchange Membership Agreement: Document 2

e Trading Agreement B — Non-Clearing Membership Agreement: Document 3

® Trading Agreement C - Block Broker Membership Agreement: Document 3a
Clearing Agreements:

« Clearing Agreement A — General Clearing Membership Agreement: Document 4

© Clearing Agreement B — Clearing Membership Agreement: Document 5

© Clearing Agreement C — Clearing Client Agreement: Document 6

¢ Collateral Custody Account Agreement — Document 7

« General Terms for Collateral Custody Account- Document 8

« Default Fund Custody Account Agreement — Document 9

« General Terms for Default Fund Custody Accounts— Document 10

« Loss Sharing Custody Account Agreement— Document 11

¢ General Terms for Loss Sharing Custody Account — Document 12

* Clearing Agreement F — Broker Agreement — Document 14

LONO1_8129617v4


L 201/30

Official Journal of the European Union

27.7.2012

6. The Commission may adopt an implementing act under
Article 5 of Regulation (EU) No 182/2011, determining that the
legal and supervisory arrangements of a third country ensure
that CCPs authorised in that third country comply with legally
binding requirements which are equivalent to the requirements
laid down in Title IV of this Regulation, that those CCPs are
subject to effective supervision and enforcement in that third
country on an ongoing basis and that the legal framework of
that third country provides for an effective equivalent system for
the recognition of CCPs authorised under third-country legal
regimes,

7. _ ESMA shall establish cooperation arrangements with the
relevant competent authorities of third countries whose legal
and supervisory frameworks have been recognised as equivalent
to this Regulation in accordance with paragraph 6. Such
arrangements shall specify at least:

(a) the mechanism for the exchange of information between
ESMA and the competent authorities of the third
countries concerned, including access to all information
requested by ESMA regarding CCPs authorised in third
countries;

(b) the mechanism for prompt notification to ESMA where a
third-country competent authority deems a CCP it is super-
vising to be in breach of the conditions of its authorisation
or of other law to which it is subject;

©

the mechanism for prompt notification to ESMA by a third-
country competent authority where a CCP it is supervising
has been granted the right to provide clearing services to
clearing members or clients established in the Union:

S

the procedures concerning the coordination of supervisory
activities including, where appropriate, on-site inspections.

8. In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the information that the applicant CCP shall provide
ESMA in its application for recognition,

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

TITLE IV
REQUIREMENTS FOR CCPs
CHAPTER 1
Organisational requirements
Article 26
General provisions

1. A CCP shall have robust governance arrangements, which
include a clear organisational structure with well-defined, trans-
parent and consistent lines of responsibility, effective processes

to identify, manage, monitor and report the risks to which it is
or might be exposed, and adequate internal control mech-
anisms, including sound administrative and accounting
procedures.

2, A CCP shall adopt policies and procedures which are
sufficiently effective so as to ensure compliance with this Regu-
lation, including compliance of its managers and employees
with all the provisions of this Regulation.

3. A CCP shall maintain and operate an organisational
structure that ensures continuity and orderly functioning in
the performance of its services and activities. It shall employ
appropriate and proportionate systems, resources and
procedures.

4. A CCP shall maintain a clear separation between the
reporting lines for risk management and those for the other
operations of the CCP.

5. A CCP shall adopt, implement and maintain a remun-
eration policy which promotes sound and effective risk
management and which does not create incentives to relax
risk standards.

6. A CCP shall maintain information technology systems
adequate to deal with the complexity, variety and type of
services and activities performed so as to ensure high
standards of security and the integrity and confidentiality of
the information maintained.

7. A CCP shall make its governance arrangements, the rules
governing the CCP, and its admission criteria for clearing
membership, available publicly free of charge.

8. The CCP shall be subject to frequent and independent
audits. The results of those audits shall be communicated to
the board and shall be made available to the competent auth-

ority.

9. In order to ensure consistent application of this Article,
ESMA, after consulting the members of the ESCB, shall develop
draft regulatory technical standards specifying the minimum
content of the mules and governance arrangements referred to
in paragraphs 1 to 8.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 27
Senior management and the board

1. The senior management of a CCP shall be of sufficiently
good repute and shall have sufficient experience so as to ensure
the sound and prudent management of the CCP.


GN]

L 201/36

Official Journal of the European Union

27.7.2012

A CCP shall account separately for costs and revenues of the
services provided and shall disclose that information to the
competent authority.

2. A CCP shall disclose to clearing members and clients the
risks associated with the services provided.

3. A CCP shall disclose to its clearing members and to its
competent authority the price information used to calculate its
end-of-day exposures to its clearing members.

A CCP shall publicly disclose the volumes of the cleared trans-
actions for each class of instruments cleared by the CCP on an
aggregated basis.

4, ACCP shall publicly disclose the operational and technical
requirements relating to the communication protocols covering
content and message formats it uses to interact with third
parties, including the operational and technical requirements
referred to in Article 7.

5. A CCP shall publicly disclose any breaches by clearing
members of the criteria referred to in Article 37(1) and the
requirements laid down in paragraph 1 of this Article, except
where the competent authority, after consulting ESMA,
considers that such disclosure would constitute a threat to
financial stability or to market confidence or would seriously
jeopardise the financial markets or cause disproportionate
damage to the parties involved.

Article 39
Segregation and portability

1. ACCP shall keep separate records and accounts that shall
enable it, at any time and without delay, to distinguish in
accounts with the CCP the assets and positions held for the
account of one clearing member from the assets and
positions held for the account of any other clearing member
and from its own assets.

2. ACCP shall offer to keep separate records and accounts
enabling each clearing member to distinguish in accounts with
the CCP the assets and positions of that clearing member from
those held for the accounts of its clients (‘omnibus client segre-
gation’).

3. A CCP shall offer to keep separate records and accounts
enabling each clearing member to distinguish in accounts with
the CCP the assets and positions held for the account of a client
from those held for the account of other clients (individual
client segregation’). Upon request, the CCP shall offer clearing
members the possibility to open more accounts in their own
name or for the account of their clients.

4. A clearing member shall keep separate records and
accounts that enable it to distinguish both in accounts held
with the CCP and in its own accounts its assets and positions
from the assets and positions held for the account of its clients
at the CCP.

5. A clearing member shall offer its clients, at least, the
choice between omnibus client segregation and individual
client segregation and inform them of the costs and level of
protection referred to in paragraph 7 associated with each
option. The client shall confirm its choice in writing.

6. When a client opts for individual client segregation, any
margin in excess of the client's requirement shall also be posted
to the CCP and distinguished from the margins of other clients
or clearing members and shall not be exposed to losses
connected to positions recorded in another account.

7. CCPs and clearing members shall publicly disclose the
levels of protection and the costs associated with the different
levels of segregation that they provide and shall offer those
services on reasonable commercial terms. Details of the
different levels of segregation shall include a description of
the main legal implications of the respective levels of segre-
gation offered including information on the insolvency law
applicable in the relevant jurisdictions.

8. A CCP shall have a right of use relating to the margins or
default fund contributions collected via a security financial
collateral arrangement, within the meaning of Article 2(1)(c)
of Directive 2002/47/EC of the European Parliament and of
the Council of 6 June 2002 on financial collateral arrange-
ments (') provided that the use of such arrangements is
provided for in its operating rules. The clearing member shall
confirm its acceptance of the operating rules in writing. The
CCP shall publicly disclose that right of use, which shall be
exercised in accordance with Article 47.

9. The requirement to distinguish assets and positions with
the CCP in accounts is satisfied where:

(a) the assets and positions are recorded in separate accounts;

(b) the netting of positions recorded on different accounts is
prevented;

(©) the assets covering the positions recorded in an account are
not exposed to losses connected to positions recorded in
another account.

10. Assets refer to collateral held to cover positions and
include the right to the transfer of assets equivalent to that
collateral or the proceeds of the realisation of any collateral,
but does not include default fund contributions.

(}) Of L 168, 27.6.2002, p. 43.


ant,

ART,

ang,

for the Riksbank’s balance of payments statistics and
international investment position statistics.

More detailed regulations concerning the reporting
obligation under the first and second paragraphs may
be issued by the Riksbank,

‘CHAPTER 7 FOREIGN EXCHANGE POLICY

The Riksbank shall decide on the application of the
foreign exchange rate system decided upon by the
Government.

In pursuance of its foreign exchange policy, the Riks-
bank is to hold assets in foreign currencies, foreign
claims and gold.

In pursuance of its foreign exchange policy, the Riks-

bank may

4. purchase, sell and mediate foreign currencies,
foreign government securities, other liquid debt
instruments in foreign currency and gold, as well
as rights and obligations linked to such assets,

2. issue its own debt instruments denominated in
foreign currency for the purposes referred to in the
second paragraph of Article 1 of the Act on State
Borrowings (1988:1387).

in pursuance of its foreign exchange policy, the Riks-
bank may obtain foreign credit and credit in foreign
currency, grant credit to other central banks, grant
credit within the framework of activities at the Bank

60]


ll

Internal Audit

Internal audit is the responsibility of the Nasdaq Group’s internal _audit department.

4. Current or anticipated presence of offices or staff in the United States

Nasdaq Clearing as such does not have any offices in the United States, yet there are several
ntities and offices within the Nasdaq Group located in the United States.

|

LONO1_8129617¥4


I. Summary of major changes since the last update of the
disclosure

This Disclosure Framework has been conducted on the basis of Nasdaq Clearing’s
activities as a central counterparty as per 1 March 2016.

The first version of Nasdaq Clearing’s Disclosure Framework was published in March
2014. This is the first bi-annual update and material changes include the merger of
NOS clearing house into Nasdaq Clearing in April 2014, adding freight, fuel-oil and
seafood to the range of products cleared.

Ml. General background on the FMI

General description of the FMI and the markets it serves

Nasdaq Clearing’s role in the overall payment, clearing and settlement landscape

One of the principal functions of a clearing house is to guarantee that all contracts
traded will be honored. The derivatives trading carried out at Nasdaq Stockholm AB
(the financial derivatives exchange) and Nasdaq Oslo ASA (the commodities
derivatives exchange) is automatically subject to clearing at Nasdaq Clearing,
whereby Nasdaq Clearing becomes the counterparty in all transactions, i.e. acts as a
buyer to the seller and as a seller to the buyer. Counterparty risk is the risk that one
party in a transaction will not be able to fulfill its obligations in due time. In its
capacity as a clearing house, counterparty risk is always present for Nasdaq Clearing.
In order to ensure that the clearing house has the capacity to fulfill its obligations, it
requires and receives collateral from the participating counterparties. In addition, it
holds a member-sponsored default fund and retains its own capital resources.

As part of the clearing house operations, Nasdaq Clearing carries out expiration
procedures, cash settlement and deliveries that arise from the contractual
responsibilities established between the clearing house and its members. Daily cash
settlement related to premiums, fees, mark-to-market (variation margin) and other
cash settlement not related to delivery of securities are settled through one of
Nasdaq Clearing’s approved settlement banks. Members of Nasdaq Clearing are
required to hold a bank account with such approved settlement banks for purposes
of managing daily cash settlement.

In addition to the settlement banks, Nasdaq Clearing has appointed concentration
banks which act as an intermediary between Nasdaq Clearing’s approved settlement
banks. All transfers between Nasdaq Clearing’s accounts with approved settlement
banks are done through a concentration bank. For payments in SEK, DKK, EUR and
GBP, the Swedish Riksbank, the Danish National Bank, the Finnish Central Bank, and
The Bank of England respectively are engaged as concentration banks. For other
currencies, a commercial bank is engaged as concentration bank.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


L 201/34

Official Journal of the European Union

27.7.2012

7. The competent authorities shall, without undue delay,
provide each other with any information which is essential or
relevant for the assessment. The competent authorities shall,
upon request, communicate all relevant information to each
other and shall communicate all essential information at their
own initiative. A decision by the competent authority that has
authorised the CCP in which the acquisition is proposed shall
indicate any views or reservations expressed by the competent
authority responsible for the proposed acquirer.

Article 33
Conflicts of interest

1. ACCP shall maintain and operate effective written organi-
sational and administrative arrangements to identify and
manage any potential conflicts of interest between itself,
including its managers, employees, or any person with direct
or indirect control or close links, and its clearing members or
their clients known to the CCP. It shall maintain and implement
adequate procedures aiming at resolving possible conflicts of
interest,

2. Where the organisational or administrative arrangements
of a CCP to manage conflicts of interest are not sufficient to
ensure, with reasonable confidence, that risks of damage to the
interests of a clearing member or client are prevented, it shall
clearly disclose the general nature or sources of conflicts of
interest to the clearing member before accepting new trans-
actions from that clearing member. Where the client is
known to the CCP, the CCP shall inform the client and the
clearing member whose client is concerned.

3. Where the CCP is a parent undertaking or a subsidiary,
the written arrangements shall also take into account any
circumstances, of which the CCP is or should be aware,
which may give rise to a conflict of interest arising as a result
of the structure and business activities of other undertakings
with which it has a parent undertaking or a subsidiary rela-
tionship.

4, The written arrangements established in accordance with
paragraph 1 shall include the following:

(a) the circumstances which constitute or may give rise to a
conflict of interest entailing a material risk of damage to the
interests of one or more clearing members or clients;

(0) procedures to be followed and measures to be adopted in
order to manage such conflict.

5, A CCP shall take all reasonable steps to prevent any
misuse of the information held in its systems and shall
prevent the use of that information for other business activities.
A natural person who has a close link to a CCP or a legal
person that has a parent undertaking or a subsidiary rela-
tionship with a CCP shall not use confidential information

recorded in that CCP for any commercial purposes without
the prior written consent of the client to whom such
confidential information belongs.

Article 34
Business continuity

1, A CCP shall establish, implement and maintain an
adequate business continuity policy and disaster recovery plan
aiming at ensuring the preservation of its functions, the timely
recovery of operations and the fulfilment of the CCP’
obligations. Such a plan shall at least allow for the recovery
‘of all transactions at the time of disruption to allow the CCP to
continue to operate with certainty and to complete settlement
on the scheduled date.

2. A CCP shall establish, implement and maintain an
adequate procedure ensuring the timely and orderly settlement
or transfer of the assets and positions of clients and clearing
members in the event of a withdrawal of authorisation pursuant
to a decision under Article 20.

3. In order to ensure consistent application of this Article,
ESMA shall, after consulting the members of the ESCB, develop
draft regulatory technical standards specifying the minimum
contemt and requirements of the business continuity policy
and of the disaster recovery plan.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 35
Outsourcing

1. Where a CCP outsources operational functions, services or
activities, it shall remain fully responsible for discharging all of
its obligations under this Regulation and shall ensure at all
times that:

(a) outsourcing does not result in the delegation of its respon-
sibility;

S

the relationship and obligations of the CCP towards its
clearing members or, where relevant, towards their clients
are not altered;

the conditions for authorisation of the CCP do not effec-
tively change;

C

S

outsourcing does not prevent the exercise of supervisory
and oversight functions, including on-site access to acquire
any relevant information needed to fulfil those mandates;


6§

andra stycket tillgangar och avtal eller krediter och
andra skulder inte anmalas vid denna tidpunkt skall
anmiélan ske senast inom fyra veckor fran det att den
i andra stycket angivna gransen uppnatts.

Anmiaian skall darefter g6ras av férandring som inne-
bar att

1. tillgding som avses i férsta stycket 1 férvarvas,

2. det sammanlagda vardet av tillgngar och avtal
enligt férsta stycket 2-4 eller det sammanlagda
beloppet av krediter och andra skulder enligt
férsta stycket 5 férandrats med mer an 100 000
kronor sedan anmalan senast gjordes, under férut-
sattning att det sammanlagda vardet eller belop-
pet efter forandringen inte understiger 500 000
kronor eller

villkorsandring sker betraffande krediter och andra
skulder som har anmalts.

v

Anméalan av sadana férandringar som avses i fjarde
stycket skall gras senast fyra veckor fran det att
férandringen intraffade.

Bestdmmelser om ersattning till ledaméter och
suppleanter i fullmaktige finns i lagen (1989:185)
om arvoden m.m. fér uppdrag inom riksdagen, dess
myndigheter och organ.

L6n och andra anstallningsformaner fér ledamdter i
direktionen faststalls av fuilmaktige.

Fullmaktige och direktionen far inte sammantrada pa
ett omrade som ar ockuperat av frimmande makt.

(21)


-#- Nasda

Nasdaq Clearing AB

Disclosure framework

Published:

Based on activities of Nasdaq Clearing AB as at 1st March 2016

© 2016, The Nasdaq Group, Inc. All Rights Reserved. 1


27.7.2012 LEN

Official Journal of the European Union

L 201/45

Article 63
On-site inspections

1. In order to carry out its duties under this Regulation,
ESMA may conduct all necessary on-site inspections at any
business premises or land of the legal persons referred to in
Article 61(1). Where the proper conduct and efficiency of the
inspection so require, ESMA may carry out the on-site
inspection without prior announcement.

2. The officials and other persons authorised by ESMA to
conduct an on-site inspection may enter any business
premises or land of the legal persons subject to an investigation
decision adopted by ESMA and shall have all the powers
stipulated in Article 62(1), They shall also have the power to
seal any business premises and books or records for the period
of, and to the extent necessary for, the inspection.

3. The officials and other persons authorised by ESMA to
conduct an on-site inspection shall exercise their powers upon
production of a written authorisation specifying the subject
matter and purpose of the inspection and the periodic penalty
payments provided for in Article 66 where the persons
concerned do not submit to the inspection. In good time
before the inspection, ESMA shall give notice of the inspection
to the competent authority of the Member State where the
inspection is to be conducted.

4, The persons referred to in Article 61(1) shall submit to
on-site inspections ordered by decision of ESMA. The decision
shall specify the subject matter and purpose of the inspection,
appoint the date on which it is to begin and indicate the
eriodic penalty payments provided for in Article 66, the
legal remedies available under Regulation (EU) No 1095/2010
as well as the right to have the decision reviewed by the Court
of Justice. ESMA shall take such decisions after consulting the
competent authority of the Member State where the inspection
is to be conducted.

5. Officials of, as well as those authorised or appointed by,
the competent authority of the Member State where the
inspection is to be conducted shall, at the request of ESMA,
actively assist the officials and other persons authorised by
ESMA. To that end, they shall enjoy the powers set out in
paragraph 2. Officials of the competent authority of the
Member State concerned may also attend the on-site inspections
on request.

6. ESMA may also require competent authorities to carry out
specific investigatory tasks and on-site inspections as provided
for in this Article and in Article 62(1) on its behalf. To that end,
competent authorities shall enjoy the same powers as ESMA as
set out in this Article and in Article 62(1).

7. Where the officials and other accompanying persons auth-
orised by ESMA find that a person opposes an inspection
ordered pursuant to this Article, the competent authority of
the Member State concerned shall afford them the necessary

assistance, requesting, where appropriate, the assistance of the
police or of an equivalent enforcement authority, so as to
enable them to conduct their on-site inspection.

8. If the on-site inspection provided for in paragraph 1 or
the assistance provided for in paragraph 7 requires authorisation
by a judicial authority according to national law, such auth-
orisation shall be applied for. Such authorisation may also be
applied for as a precautionary measure.

9. Where authorisation as referred to in paragraph 8 is
applied for, the national judicial authority shall verify that
ESMA's decision is authentic and that the coercive measures
envisaged are neither arbitrary nor excessive having regard to
the subject matter of the inspection. In its control of the
proportionality of the coercive measures, the national judicial
authority may ask ESMA for detailed explanations. Such a
request for detailed explanations may in particular relate to
the grounds ESMA has for suspecting that an infringement of
this Regulation has taken place, as well as to the seriousness of
the suspected infringement and the nature of the involvement
of the person who is subjected to the coercive measures.
However, the national judicial authority may not review the
necessity for the inspection or demand to be provided with
the information on ESMA’s file. The lawfulness of ESMA’s
decision shall be subject to review only by the Court of
Justice following the procedure set out in Regulation (EU)
No 1095/2010.

Article 64

Procedural rules for taking supervisory measures and
imposing fines

1. Where, in carrying out its duties under this Regulation,
ESMA finds that there are serious indications of the possible
existence of facts liable to constitute one or more of the
infringements listed in Annex 1, ESMA shall appoint an inde-
pendent investigation officer within ESMA to investigate the
matter. The appointed officer shall not be involved or have
been directly or indirectly involved in the supervision or the
registration process of the trade repository concerned and shall
perform his functions independently from ESMA.

2. The investigation officer shall investigate the alleged
infringements, taking into account any comments submitted
by the persons who are subject to the investigations, and
shall submit a complete file with his findings to ESMA.

In order to carry out his tasks, the investigation officer may
exercise the power to request information in accordance with
Article 61 and to conduct investigations and on-site inspections
in accordance with Articles 62 and 63. When using those
powers, the investigation officer shall comply with Article 60.

Where carrying out his tasks, the investigation officer shall have
access to all documents and information gathered by ESMA in
its supervisory activities.


m Lag (1988:1385)
om Sveriges riksbank

| DESS LYDELSE DEN 1 JULI 2008

1931


5§

1§

Fullmaktige skall nar det behdvs bestamma i vilken
inbdrdes ordning vice riksbankschefer skall tjanstgora
iriksbankschefens stalle nar riksbankschefen har
forhinder.

Arenden som inte skall avgdras av fullmaktige avgrs
av direktionen. Direktionen kan besluta att arenden
far avgoras av riksbankschefen eller nagon annan
tjansteman i Riksbanken.

2 **" FULLMAKTIGE

Ledamdter av fullmaktige far inte

4. vara statsrad,

2. vara ledamot av Riksbankens direktion,

3. vara ledamot eller suppleant i styrelsen for en bank
eller ett annat féretag som star under Finans-
inspektionens tillsyn eller

4. inneha en annan anstallning eller ett annat upp-
drag som gér dem olampliga for uppdraget som
fullmaktig.

Ledaméterna far inte heller vara underariga, i kon-
kurs, underkastade naringsférbud eller ha férvaltare
enligt 11 kap. 7 § féraldrabalken.

Om en ledamot tar en sAdan anstallning eller ett
sadant uppdrag som kan strida mot bestammel-
serna i férsta stycket, skall riksdagen pa forslag av
finansutskottet entlediga ledamoten fran uppdraget
i fullmaktige. De anstallningar eller uppdrag som en
ledamot tar skall anmélas till riksdagen.

161


27.7.2012

Official Journal of the European Union

L 201/13

(92)

Regulation, further niles of procedure relating to the
imposition of fines or periodic penalty payments,
including provisions on the rights of the defence, time
limits, the collection of fines or periodic penalty
payments and the limitation periods for the imposition
and enforcement of penalty payments or fines; measures
to amend Annex iI in order to take account of devel-
opments in the financial markets; the further specifi-
cation of the type of fees, the matters for which fees
are due, the amount of the fees and the manner in
which they are to be paid. It is of particular importance
that the Commission carry out appropriate consultations
during its preparatory work, including at expert level.
The Commission, when preparing and drawing up
delegated acts, should ensure a simultaneous, timely
and appropriate transmission of relevant documents to
the European Parliament and to the Council.

In order to ensure consistent harmonisation, power
should be delegated to the Commission to adopt
the ESAs’ draft regulatory technical standards in
accordance with Articles 10 to 14 of Regulations (EU)
No 1093/2010, (EU) No1094/2010 and (EU)
No 1095/2010 for the application, for the purposes of
this Regulation, of points (4) to (10) of Section C of
Anmex 1 to Directive 2004/39/EC and in order to
specify: the OTC derivative contracts that are considered
to have a direct, substantial and foreseeable effect within
the Union or the cases where it is necessary or appro-
priate to prevent the evasion of any provision of this
Regulation; the types of indirect contractual
arrangements that meet the conditions set out in this
Regulation; the classes of OTC derivative contracts that
should be subject to the clearing obligation, the date or
dates from which the clearing obligation is to take effect,
including any phase-in, the categories of counterparties
to which the clearing © obligation applies, and the
minimum remaining maturity of the OTC derivative
contracts entered into or novated before the date on
which the clearing obligation takes effect; the details to
be included in a competent authority's notification to
ESMA of its authorisation of a CCP to clear a class of
OTC derivative contract; particular classes of OTC
derivative contracts, the degree of standardisation of the
contractual terms and operational processes, the volume
and the liquidity, and the availability of fair, reliable and
generally accepted pricing information; the details to be
included in ESMA's register of classes of OTC derivative
contracts subject to the clearing obligation; the details
and type of the reports for the different classes of deriva
tives; criteria to determine which OTC derivative
contracts are objectively measurable as reducing risks
directly relating to the commercial activity or treasury
financing activity and values of the clearing thresholds,
the procedures and the arrangements in regard to risk-
mitigation techniques for OTC derivative contracts not
cleared by a CCP; the risk-management procedures,
including the required levels and type of collateral and
segregation arrangements and the required level of
capita; the notion of liquidity fragmentation;
requirements regarding the capital, retained earnings
and reserves of CCPs; the minimum content of the
rules and governance arrangements for CCPs; the
details of the records and information to be retained
by CCPs; the minimum content and requirements for
CCPs’ business continuity policies and disaster recovery

(93)

(94)

(95)

(96)

() OL

plans: the appropriate percentage and time horizons for
the liquidation period and the calculation of historical
volatility 10 be considered for the different classes of
financial instruments taking into account the objective
to limit pro-cyclicality and the conditions under which
portfolio margining practices can be implemented; the
framework for defining extreme but plausible market
conditions which should be used when defining the
size of the default fund and the resources of CCPs; the
methodology for calculating and maintaining the amount
of CCPs' own resources; the type of collateral that could
be considered highly liquid, such as cash, gold,
government and high-quality corporate bonds, covered
bonds and the haircuts and the conditions under which
commercial bank guarantees can be accepted as
collateral; the financial instruments that can be
considered highly liquid, bearing minimal credit and
market risk, highly secured arrangements and concen-
tration limits; the type of stress tests to be undertaken
by CCPs for different classes of financial instruments and
portfolios, the involvement of clearing members or other
parties in the tests, the frequency and timing of the tests
and the key information that the CCP is to disclose on its
risk-management model and assumptions adopted to
perform the stress tests; the details of the application
by trade repositories for registration with ESMA; the
frequency and the detail in which trade repositories are
to disclose information relating to aggregate positions by
class of OTC derivative contract; and the operational
standards required in order to aggregate and compare
data across repositories.

Any obligation imposed by this Regulation which is to
be further developed by means of delegated or imple-
menting acts adopted under Article 290 or 291 TFEU
should be understood as applying only from the date on
which those acts take effect.

As a part of its development of technical guidelines and
regulatory technical standards, and in particular when
setting the clearing threshold for non-financial counter-
parties under this Regulation, ESMA should organisé
public hearings of market participants.

In order to ensure uniform conditions for the implemen-
tation of this Regulation, implementing powers should be
conferred on the Commission. Those powers should be
exercised in accordance with Regulation (EU)
No 182/2011 of the European Parliament and of the
Council of 16 February 2011 laying down the rules
and general principles concerning mechanisms for
control by Member States of the Commission's exercise
of implementing powers (').

The Commission should monitor and assess the need for
any appropriate measures to ensure the consistent and
effective application and development of regulations,
standards and practices falling within the scope of this
Regulation, taking into consideration the outcome of the
work performed by relevant international forums,

2.2011, p. 13.


27.7.2012

am)

Official Journal of the European Union

L 201/9

(53)

(54)

(55)

(56)

in every college in order to ensure the consistent and
cortect application of this Regulation. ESMA should
involve other competent authorities in the Member
States concerned in the work of preparing recommen-
dations and decisions.

In light of the role assigned to colleges, it is important
that alf the relevant competent authorities as well as
members of the ESCB are involved in performing their
tasks. The college should consist not only of the
competent authorities supervising the CCP but also of
the supervisors of the entities on which the operations
of that CCP might have an impact, namely selected
clearing members, trading venues, interoperable CCPs
and central securities depositories, Members of the
ESCB that are responsible for the oversight of the CCP
and interoperable CCPs as well as those responsible for
the issue of the currencies of the financial instruments
cleared by the CCP, should be able to participate in the
college. As the supervised or overseen entities would be
established in a limited range of Member States in which
the CCP operates, a single competent authority or
member of the ESCB could be responsible for supervision
or oversight of a number of those entities. In order to
ensure smooth cooperation between all the members of
the college, appropriate procedures and mechanisms
should be put in place.

Since the establishment and functioning of the college is
assumed to be based on a written agreement between all
of its members, it is appropriate to confer upon them the
power to determine the college's decision-making
procedures, given the sensitivity of the issue. Therefore,
detailed rules on voting procedures should be laid down
in a written agreement between the members of the
college. However, in order to balance the interests of
all the relevant market participants and Member States
appropriately, the college should vore in accordance with
the general principle whereby each member has one vote,
irrespective of the number of functions it performs in
accordance with this Regulation, For colleges with up
to and including 12 members, a maximum of two
college members belonging to the same Member State
should have a vote and each voting member should
have one vote. For colleges with more than 12
members, a maximum of three college members
belonging to the same Member State should have a
vote and each voting member should have one vote.

The very particular situation of CCPs requires that
colleges are organised and function in accordance with
arrangements that are specific to the supervision of CCPs.

The arrangements provided for in this Reguiation do not
constitute a precedent for other legislation on the super
vision and oversight of financial marker infrastructures,
in particular with regard to the voting modalities for
referrals to ESMA.

(57)

(58)

(59)

A CCP should not be authorised where all the members
of the college, excluding the competent authorities of the
Member State where the CCP is established, reach a joint
opinion by mutual agreement that the CCP should not be
authorised. If, however, a sufficient majority of the
college has expressed 2 negative opinion and any of
the competent authorities concerned, based on that
majority of two-thirds of the college, has referred the
matter to ESMA, the competent authority of the
Member State where the CCP is established should
defer its decision on the authorisation and await any
decision that ESMA may take regarding conformity
with Union law. The competent authority of the
Member State where the CCP is established should take
its decision in accordance with such a decision by ESMA.
Where all the members of the college, excluding the
authorities of the Member State where the CCP is estab-
fished, reach a joint opinion to the effect that they
consider that the requirements are not met and that
the CCP should not receive authorisation, the
competent authority of the Member State where the
CCP is established should be able to refer the matter to
ESMA to decide on conformity with Union law.

It is necessary to reinforce provisions on exchange of
information between competent authorities, ESMA and
other relevant authorities and to strengthen the duties
of assistance and cooperation between them, Due to
increasing cross-border activity, those authorities should
provide each other with the relevant information for the
exercise of their functions so as to ensure the effective
enforcement of this Regulation, including in situations
where infringements or suspected infringements may be
of concern to authorities in two or more Member States.
For the exchange of information, strict professional
secrecy is needed. It is essential, due to the wide
impact of OTC derivative contracts, that other relevant
authorities, such as tax authorities and energy regulators,
have access to information necessary to the exercise of
their functions.

In view of the global nature of financial markets, ESMA
should be directly responsible for recognising CCPs
established in third countries and thus allowing them
to provide clearing services within the Union, provided
that the Commission has recognised the legal and super-
visory framework of that third country as equivalent to
the Union framework and that certain other conditions
are met. Therefore, a CCP established in a third country,
providing clearing services to clearing members or
trading venues established in the Union should be
recognised by ESMA. However, in order not to hamper
the further development of cross-border investment
management business in the Union, a third-country
CCP providing services to clients established in the
Union through a clearing member established in a
third country should not have to be recognised by
ESMA. In this context, agreements with the Union's
major international partners will be of particular
importance in order to ensure a global level playing
field and financial stability.


(2) A description of all requirements for each category of membership and participation and the
manner in which members and other participants are required to demonstrate their compliance with
these requirements. The description should include, but not be limited to, the following:

(i) Professional Qualification. A description of the specific professional requirements, qualifications,
and/or competencies required of members or other participants and/or their staff and a description of
the process by which the clearing organization confirms compliance with such requirements.

(ii) Authorization, Licensure and Registration. A description of any regulatory or self-regulatory
authorization, licensure or registration requirements that the clearing organization imposes upon, or
enforces against, its members and other participants including, but not limited to any authorization,
licensure or registration requirements imposed by the regulatory regime/authority in the home country
jurisdiction(s) of the clearing organization, and a description of the process by which the clearing
organization confirms compliance with such requirements,

(iii) Financial Integrity. A description of the following:

(A) The financial resource requirements, standards, guides or thresholds required of members
and other participants.

(B) The manner in which the clearing organization evaluates the financial resources/holdings
of its members or other participants.

(© The process by which applicants for clearing membership or participation demonstrate
compliance with financial requirements including:

(1) Working capital and collateral requirements, and
(2) Risk management mechanisms.

(iv) Fit and Proper Standards. A description of any other ways in which the clearing organization
ensures that potential members/other participants meet fit and proper standards.

We refer to the information provided in Exhibit B to Form FBOT.


the budget to the Riksdag Committee on Finance
and the Swedish National Audit Office as well as the
General Council for information.

“73, The Riksbank is required to keep accounts. This
requirement shall be met in accordance with ge-
nerally accepted accounting principles. In addition,
the European Central Bank's guidelines on the legal
framework for accounting and financial reporting
within the European System of Central Banks shall be
applied.

Each year, before 15 February, the Executive Board
shall submit an Annual Report of the Riksbank's
activities during the preceding accounting year to the
Riksdag, the Swedish National Audit Office and the
General Council. The General Council shall make pro-
posals to the Riksdag and the Swedish National Audit
Office on the allocation of the profit of the Riksbank.
The Annual Report shall comprise a Profit and Loss
Account, a Balance Sheet, a Directors’ Report and an
account of foreign exchange and monetary policies
and on how the Riksbank has promoted a safe and
efficient payments system.

44. The Riksbank's Profit and Loss Account and Balance
Sheet are approved by the Riksdag, which also de-
termines the allocation of the Riksbank’s profit. If the
value of the reserve fund has declined to less than
SEK 500 million, at least ten per cent of the profit for
the year shall be allocated to the reserve fund until it
has retained a level of this amount.

[68]


(3) A statement as to whether the regulatory authorities governing the activities of the foreign board of
trade and clearing organization are signatories to the Declaration on Cooperation and Supervision of
International Futures Exchanges and Clearing Organizations. If not, a statement as to whether and
how they have committed to share the types of information contemplated by the International
Information Sharing Memorandum of Understanding and Agreement with the Commission, whether
pursuant to an existing memorandum of understanding or some other arrangement.

FI (primarily supervising the Clearinghouse) is a signatory to the Declaration on Cooperation and
Supervision of International Futures Exchanges and Clearing Organizations. To our knowledge
Finanstilsynet is not a signatory to this declaration. Finanstilsynet is however a signatory to other
information sharing agreements (see above) and has welcomed a close cooperation with the Commission
regarding the business which is covered by this registration.

LONO1_8129635v4


L 201/4 EN Official Journal of the European Union 27.7.2012
(21) In determining whether a class of OTC derivative (25) Rules on clearing OTC derivative contracts, reporting on
contract is to be subject to clearing requirements, derivative transactions and risk-mitigation techniques for
ESMA should aim for a reduction in systemic risk, This OTC derivative contracts not cleared by a CCP should
includes taking into account in the assessment factors apply to financial counterparties, namely investment
such as the level of contractual and operational standard- firms as authorised in accordance with Directive
isation of contracts, the volume and the liquidity of the 2004/39/EC, credit institutions as authorised _ in
relevant class of OTC derivative contract as well as the accordance with Directive 2006/48/EC of the European
availability of fair, reliable and generally accepted pricing Parliament and of the Council of 14 June 2006 relating
information in the relevant class of OTC derivative to the taking up and pursuit of the business of credit
contract. institutions ('), insurance undertakings as authorised in
accordance with First Council Directive 73/239/EEC of
24 July 1973 on the coordination of laws, Regulations
and administrative provisions relating to the taking-up
and pursuit of the business of direct insurance other
than life insurance (?), assurance undertakings as auth-
orised in accordance with Directive 2002/83/EC of the
(22) For an OTC derivative contract to be cleared, both parties European Parliament and of the Council of 5 November
to that contract must be subject to a clearing obligation 2002 concerning life assurance (?), reinsurance under-
or must consent. Exemptions to the clearing obligation takings as authorised in accordance with Directive
should be narrowly tailored as they would reduce the 2005/68/EC of the European Parliament and of the
effectiveness of the obligation and the benefits of CCP Council of 16 November 2005 on reinsurance (*), under-
clearing and may lead to regulatory arbitrage between takings for collective investments in transferable
groups of market participants. securities (UCITS) and, where relevant, their management
companies, as authorised in accordance with Directive
2009/65/EC of the European Parliament and of the
Council of 13 July 2009 on the coordination of laws,
regulations and administrative provisions relating to
undertakings for collective investment in transferable
securities (UCITS}(), institutions for occupational
(23) In order to foster financial stability within the Union, it retirement provision as defined in Directive 2003/41/EC
might be necessary also to subject the transactions of the European Parliament and of the Council of 3 June
entered into by entities established in third countries to 2003 on the activities and supervision of institutions for
the clearing and risk-mitigation techniques obligations, occupational retirement provision (°) and alternative
provided that the transactions concerned have a direct, investment funds managed by alternative investment
substantial and foreseeable effect within the Union or fund managers (AIFM) as authorised or registered in
where such obligations are necessary or appropriate to accordance with Directive 2011/61/EU of the European
prevent the evasion of any provisions of this Regulation. Parliament and of the Council of 8 June 2011 on Alter-

native Investment Fund Managers (’).

(24) OTC derivative contracts that are not considered suitable

(26) Entities operating pension scheme artangements, the

for CCP clearing entail counterparty credit and oper-
ational risk and therefore, rules should be established
to manage that risk. To mitigate counterparty credit
risk, market participants that are subject to the clearing
obligation should have risk-management procedures that
require the timely, accurate and appropriately segregated
exchange of collateral. When preparing draft regulatory
technical standards specifying those risk-management
procedures, ESMA should take imo account the
proposals of the international standard setting bodies
on margining requirements for non-centrally cleared
derivatives. When developing draft regulatory technical
standards to specify the arrangements required for the
accurate and appropriate exchange of collateral to
manage risks associated with uncleared trades, ESMA
should take due account of impediments faced by
covered bond issuers or cover pools in providing
collateral in a number of Union jurisdictions. ESMA
should also take into account the fact that preferential
claims given to covered bond issuers counterparties on
the covered bond issuer's assets provides equivalent
protection against counterparty credit risk.

primary purpose of which is to provide benefits upon
retirement, usually in the form of payments for life, bur
also as payments made for a temporary period or as a
lump sum, typically minimise their allocation to cash in
order to maximise the efficiency and the return for their
policy holders, Hence, requiring such entities to clear
OTC derivative contracts centrally would lead to
divesting a significant proportion of their assets for
cash in order for them to meet the ongoing margin
requirements of CCPs. To avoid a likely negative
impact of such a requirement on the retirement
income of future pensioners, the clearing obligation
should not apply to pension schemes until a suitable
technical solution for the transfer of non-cash collateral

() Of L 177, 30.6,2006, p. 1.

@) OJ L 228, 16,8.1973, p. 3.
() Of L 345, 19.12.2002, p. 1.
(8) OJ L 323, 9.12.2005, p. 1.

(°) O) L 302, 17.

-2009, p. 32.

(°) O} L 235, 23.9.2003, p. 10.
(?) OJ L 174, 1.7.2011, p. 1.


GN)

27.7.2012

Official Journal of the European Union

L 201/33

notify the college referred to in Article 18 accordingly. Subject
10 national law, an appropriate statement of the reasons for the
decision may be made accessible to the public at the request of
the proposed acquirer, However, Member States may allow a
competent authority to make such disclosure in the absence of
a request by the proposed acquirer.

6. Where the competent authority does not oppose the
proposed acquisition within the assessment period, it shall be
deemed to be approved.

7. The competent authority may fix a maximum period for
concluding the proposed acquisition and extend it where appro-
priate.

8. Member States shall not impose requirements for notifi-
cation to, and approval by, the competent authority of direct or
indirect acquisitions of voting rights or capital that are more
stringent than those set out in this Regulation.

Article 32
Assessment

1. Where assessing the notification provided for in
Article 31(2) and the information referred to in Article 31(3),
the competent authority shall, in order to ensure the sound and
prudent management of the CCP in which an acquisition is
proposed, and having regard to the likely influence of the
proposed acquirer on the CCP, appraise the suitability of the
proposed acquirer and the financial soundness of the proposed
acquisition against all of the following:

(a) the reputation and financial soundness of the proposed
acquirer;

(b) the reputation and experience of any person who will direct
the business of the CCP as a result of the proposed
acquisition;

(c) whether the CCP will be able to comply and continue to
comply with this Regulation;
(@) whether there are reasonable grounds to suspect that, in

connection with the proposed acquisition, money laun-
dering or terrorist financing within the meaning of
Article 1 of Directive 2005/60/EC is being or has been
committed or attempted, or that the proposed acquisition
could increase the risk thereof.

Where assessing the financial soundness of the proposed
acquirer, the competent authority shall pay particular attention
to the type of business pursued and envisaged in the CCP in
which the acquisition is proposed.

Where assessing the CP's ability to comply with this Regu-
lation, the competent authority shall pay particular attention to

whether the group of which it will become a part has a
structure that makes it possible to exercise effective supervision,
to effectively exchange information among the competent auth-
orities and to determine the allocation of responsibilities among
the competent authorities.

2. The competent authorities may oppose the proposed
acquisition only where there are reasonable grounds for doing
so on the basis of the criteria set out in paragraph 1 or where
the information provided by the proposed acquirer is incom-
plete.

3. Member States shall neither impose any prior conditions
in respect of the level of holding that shall be acquired nor
allow their competent authorities to examine the proposed
acquisition in terms of the economic needs of the market.

4. Member States shall make publicly available a {ist spec-
ifying the information that is necessary to carry out the
assessment and that shall be provided to the competent auth-
orities at the time of notification referred to in Article 31(2).
The information required shall be proportionate and shall be
adapted to the nature of the proposed acquirer and the
proposed acquisition, Member States shall not require
information that is not relevant for a prudential assessment.

5, Notwithstanding Article 31(2), (3) and (4), where two or
more proposals to acquire or increase qualifying holdings in the
same CCP have been notified to the competent authority, the
latter shall treat the proposed acquirers in a non-discriminatory
manner.

6. The relevant competent authorities shall cooperate closely
with each other when carrying out the assessment where the
proposed acquirer is one of the following:

(a) another CCP, a credit institution, assurance undertaking,
insurance undertaking, reinsurance undertaking, investment
firm, market operator, an operator of a securities settlement
system, @ UCITS management company or an ALFM auth-
orised in another Member State;

=

the parent undertaking of another CCP, a credit institution,
assurance undertaking, insurance undertaking, reinsurance
undertaking, investment firm, market operator, an
operator of a securities settlement system, a UCITS
management company or an AIFM authorised in another
Member State;

=

a natural or legal person controlling another CCP, a credit
institution, assurance undertaking, insurance undertaking,
reinsurance undertaking, investment firm, market operator,
an operator of a securities settlement system, a UCITS
management company or an AIFM authorised in another
Member State.


Principle 13: Participant-default rules and procedures

An FMI should have effective and clearly defined rules and procedures to manage a
participant default. These rules and procedures should be designed to ensure that
the FMI can take timely action to contain losses and liquidity pressures and continue
to meet its obligations.

Nasdaq Clearing has default rules and procedures that enable it to continue to meet
its obligations in the event of a participant default and to address the replenishment
of resources following a default. The R&R clearly states what constitutes a default
and the procedures available to Nasdaq Clearing in the event of a default. Nasdaq
Clearing has wide discretion as to the actions it may take in the event of a default by
a member, with any such discretion being exercised by the Clearing Default
Committee.

The Default Policy approved by the Board, and the operational procedures and
arrangement in relation to this outline the management of transactions in the
different stages of the default process, including the role and obligations of the
Clearing Default Committee and non-defaulting members,

In respect of a defaulting participant’s customer transactions, Nasdaq Clearing may
transfer some or all open positions, pending settlement and collateral provided for
such positions to another participant in accordance with the R&R. Should such
transfer not be possible Nasdaq Clearing will close out the open positions of the
customer. The participant’s proprietary positions will be forced closed out in case of
a member default.

The order in which the financial resources can be utilized is described in the default
rules and on the website.° The collateral structure and the liquidity facilities available
to Nasdaq Clearing in a pressured liquidity situation provide Nasdaq Clearing with
prompt access to liquidity resources (both from the participants in regards of
margin, default fund contributions and the assessment power and also Nasdaq
Clearing’s own capital, outlined in the waterfall). Under the default rules, Nasdaq
Clearing is entitled to realize the default fund contributions, including the
replenishment, without requiring additional consent from participants. The default
rules also stipulate that any realized default fund contributions shall be replenished
by new contributions by each non-defaulting default fund participant and Nasdaq
Clearing so that the fund requirement is fulfilled within ten (10) business days
following a replenishment request. Replenishment refers to the participant’s
obligation to provide new (pre-funded) default fund contributions to restore the size
of the fund in the event the clearing house has had to use any contributions to the
default fund.

Instructions to the Clearing Default Committee state that it shall convene when a

® http://www.nasdagomx.com/europeanclearing/risk-management/default-management

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

36


supranational. The securities are highly liquid and credit worthy securities
denominated in each currency. The available QLR and ALR, shall always be sufficient
to meet the MR respectively AR with minimum 10 percent buffer which is according
to Nasdaq Clearing Liquidity Policy, both in total and in each individual currency.

The process to establish the MR and AR includes a daily report which is run by
Nasdaq Clearing. The report identifies the estimated liquidity requirement based on
current positions and various default assumptions in a range of stressed market
scenarios. This process includes a check on whether a new historic “High Point” has
occurred.

The stress model is based upon a variety of scenarios where the main markets (Fixed
Income, Equity, Commodity and Seafood, per currency) are fully uncorrelated and
can move either in same or opposite market direction. A combination of peak
historic price volatilities shifts in other market factors such as price determinants
and yield curves are captured. Nasdaq Clearing utilizes a 12 month look-back period
to determine the “High Point”.

Other types of liquidity risks, deliveries, settlement amounts and cash outflows in
terms of cash callbacks are assessed based on maximum historical values.

The liquidity model is based on rigorous stress testing and the results are presented
and used in a predetermined process according to the Nasdaq Clearing Liquidity
Policy. Nasdaq Clearing’s Treasury department should ensure and verify that the
total available liquidity resources exceed the AR on a daily basis. In the event a new
High Point has occurred, when there is still sufficient available resources the Risk
Manager should inform Treasury. If the buffer in QLR or ALR is utilized (due to either
new High Point or decrease in QLR and/or ALR) the Treasury department should
escalate and inform the Chief Risk Officer and the Chief Risk Officer shall convene a
Clearing Risk Committee meeting. The Clearing Risk Committee should determine
how the liquidity resources should be increased in order to retain the buffer. If a
new High Point exceeds the available liquid resources the Chief Risk Officer should
immediately communicate the results and the remediation plans to Nasdaq Clearing
Board of Directors and the Chief Compliance Officer should communicate results and
remediation plans to the Swedish FSA. Measures to remedy the liquidity readiness
shortfall should be implemented immediately. The Chief Risk Officer should inform
the Board of Directors and the Chief Compliance Officer should inform the Swedish
FSA when the measures have been implemented.

Nasdaq Clearing has documented its Liquidity method in the Nasdaq Clearing AB
Liquidity Policy and Liquidity at Risk Stress Test Policy. The Liquidity Policy is subject
for approval by the Nasdaq Clearing Board of Directors and is reviewed annually.
Nasdaq Clearing Risk Committee approves Liquidity at Risk Stress Test Policy and will
review it annually. If deemed necessary, both policies can be reviewed more
frequently due to change in risk exposure for Nasdaq Clearing.

Nasdaq Clearing utilizes central bank services in SEK and DKK, where intra-day
liquidity is also obtained. The services consist of accounts and payments. For EUR
and GBP the Bank of Finland respectively the Bank of England provide central bank

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

29


© Clearing Appendix 6 ~ Market Conduct Rules (joint with the Trading Rules): see
Document 24

© Clearing Appendix 7 — Fee List (joint with the Trading Rules): see Document 25
« Clearing Appendix 8 - Membership Requirements: Document 29

* Clearing Appendix 9 — Default Fund Rules: Document 30

* Clearing Appendix 10 -Collateral List Document 30a

® Clearing Appendix 11- List of Approved Settlement Banks Document 30b

* Clearing Appendix 12 - Supplemental default rules - Client Clearing Accounts Document
30¢

¢ Clearing Appendix 13 - Supplemental default rules - Clearing Clients Document 30d
¢ Clearing Appendix 14 - Block Trade, EFP and EFS Clearing Procedures Document 30e

e Clearing Appendix 15 — Third Party Exchange Transaction Clearing
Procedures Document 30f

LONO1_8129617v4


Protests submitted at times later than stated in section 2.10 of the Nasdaq FIN R&R
shall be invalid.

Settlement banks and Central Banks engaged by Nasdaq Financial are domiciled in
countries which have implemented the Settlement Finality Directive. i.e. a transfer
order entered by a participant of a settlement system to place an amount of money
by means of book entry in the account of a credit institution (or Central Bank) are
covered by the Settlement Finality Directive (c.f. Settlement Finality Directive Article
2 (i). Hence transfer orders regarding cash settlement via a credit institution (as well
as via a Central Bank) may not be revoked in the event of a participant's default
(including insolvency) and the insolvency of a participant may not have retroactive
effect. The effect of this is that transfer of funds by participants in accordance with
transfer orders under the Nasdaq FIN R&R (see section 2.9.30 of the Nasdaq FIN
R&R) are final once the transfer of funds have been completed by way of book
entries to Nasdaq Clearing’s accounts with the applicable credit institutions/Central
Banks.

Nasdaq Commodities

Section 4.1.1 of the Nasdaq COM R&R stipulates that a clearing transaction shall be
deemed entered into the Securities Settlement System when it has been created and
may not be revoked, other than as set forth in Nasdaq COM R&R Section 4.6 and in
Clearing Appendix 4 OTC Clearing Procedures section 6. According to section 7.1 of
the Nasdaq COM R&R, each account holder warrants to the clearing house on each
date on which a transaction is registered for clearing that its obligations under each
clearing transaction and the clearing rules constitute legal, valid and binding
obligations.

Cash settlement shall be performed in accordance with section 6.2.5 of the Nasdaq
COM R&R and is final by way of book entries to Nasdaq Clearing’s accounts and
binding on all parties except as explicitly set out in the Nasdaq COM R&R regarding
settlement errors (section 6.6 of the Nasdaq COM R&R). Settlement banks engaged
by Nasdaq Clearing are domiciled in countries which have implemented the
Settlement Finality Directive.

Nasdaq Commodities specifies the applicable volume of allowances and electricity
certificates due for delivery and a counterparty that has a delivery obligation shall
act in accordance with the settlement schedules 3.3.1 and 4.3.1 of Appendix 2 of the
Nasdaq COM R&R. A delivery shall be deemed completed when the delivering
counterparty has received a confirmation that the relevant deliverables have been
deposited to the applicable delivery point of the receiving counterparty without any
possibility of revocation by the delivering counterparty (section 6.3.3 of the Nasdaq
COM R&R). If the account holder believes that settlement has been carried out
incorrectly and submitted the protest in accordance with the timing stipulated by
section 6.6 of the Nasdaq COM R&R, the protest shall be deemed valid. The clearing
house shall then as soon as possible inform the concerned account holders and
perform the corrected settlement. Any correction in accordance with the Nasdaq
COM R&R will be binding on all counterparties concerned.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

31


L 201/8

LEN |

Official Journal of the European Union

27.7.2012

(46)

(47)

(48)

(49)

preparing the draft regulatory technical standards
regarding reporting, ESMA should take into account the
progress made in the development of a unique contract
identifier and the list of required reporting data in
Annex I, Table 1 of Commission Regulation (EC)
No 1287/2006 (!) implementing Directive 2004/39/EC
and consult other relevant authorities such as the
Agency for the Cooperation of Energy Regulators.

Taking into consideration the principles set out in the
Commission's Communication on reinforcing _sanc-
tioning regimes in the financial services sector and legal
acts of the Union adopted as a follow-up to that
Communication, Member States should lay down rules
on penalties applicable to infringements of this Regu-
lation. Member States should enforce those penalties in
a manner that does not reduce the effectiveness of those
rules, Those penalties should be effective, proportionate
and dissuasive. They should be based on guidelines
adopted by ESMA to promote convergence and cross-
sector consistency of penalty regimes in the financial
sector. Member States should ensure that the penalties
imposed are publicly disclosed, where appropriate, and
that assessment reports on the effectiveness of existing
rules are published at regular intervals.

A CCP might be established in accordance with this
Regulation in any Member State. No Member State or
group of Member States should be discriminated against,
directly or indirectly, as a venue for clearing services.
Nothing in this Regulation should attempt to restrict or
impede a CCP in one jurisdiction from clearing a product
denominated in the currency of another Member State or
in the currency of a third country.

Authorisation of a CCP should be conditional on a
minimum amount of initial capital. Capital, including
retained earnings and reserves of a CCP, should be
proportionate to the risk stemming from the activities
of the CCP at all times in order to ensure that it is
adequately capitalised against credit, counterparty,
market, operational, legal and business risks which are
not already covered by specific financial resources and
that it is able to conduct an orderly winding-up or
restructuring of its operations if necessary.

As this Regulation introduces a legal obligation to clear
through specific CCPs for regulatory purposes, it is
essential to ensure that those CCPs are safe and sound
and comply at all times with the stringent organisational,
business conduct, and prudential requirements estab-
lished by this Regulation. In order to ensure uniform

(}) Of L 241, 2.9.2006, p. 1.

(50)

(51)

(52)

application of this Regulation, those requirements should
apply to the clearing of all financial instruments in which
the CCPs deal.

It is therefore necessary, for regulatory and harmon-
isation purposes, to ensure that counterparties only use
CCPs which comply with the requirements laid down in
this Regulation. Those requirements should not prevent
Member States from adopting or continuing to apply
additional requirements in respect of CCPs established
in their territory including certain authorisation
requirements under Directive 2006/48/EC. However,
imposing such additional requirements should not
influence the right of CCPs authorised in other Member
States or recognised, in accordance with this Regulation,
to provide clearing services to clearing members and
their clients established in the Member State introducing
additional requirements, since those CCPs are not subject
to those additional requirements and do not need to
comply with them. By 30 September 2014, ESMA
should draft a report on the impact of the application
of additional requirements by Member States.

Direct rules regarding the authorisation and supervision
of CCPs are an essential corollary to the obligation to
clear OTC derivative contracts. It is appropriate that
competent authorities retain responsibility for all
aspects of the authorisation and the supervision of
CCPs, including the responsibility for verifying that the
applicant CCP complies with this Regulation and with
Directive 98/26/EC of the European Parliament and of
the Council of 19 May 1998 on settlement finality in
payment and securities settlement systems (’), in view of
the fact that those national competent authorities remain
best placed to examine how the CCPs operate on a daily
basis, to carry out regular reviews and to take appro-
priate action, where necessary.

Where a CCP risks insolvency, fiscal responsibility may
lie predominantly with the Member State in which that
CCP is established. It follows that authorisation and
supervision of that CCP should be exercised by the
relevant competent authority of that Member State.
However, since a CCP’s clearing members may be estab-
lished in different Member States and they will be the
first to be impacted by the CCP's default, it is imperative
that all relevant competent authorities and ESMA be
involved in the authorisation and supervisory process.
This will avoid divergent national measures or practices
and obstacles to the proper functioning of the internal
market. Furthermore, no proposal or policy of any
member of a college of supervisors should, directly or
indirectly, discriminate against any Member State or
group of Member States as a venue for clearing
services in any currency. ESMA should be a participant

@ Of L 166, 11.6.1998, p. 45.


Trading of standardized derivatives, including listed options, in Denmark started in 1988 when the
Guarantee Fund for Danish Options and Futures began its operations as a clearinghouse. All derivatives
instruments were traded on the Copenhagen Stock Exchange (“CSE”). The Guarantee Fund for Danish
Options and Futures was founded in 1997 and merged with CSE to form the FUTOP Clearing Center. In
2005, OMX and CSE merged. All trading and clearing of Danish derivatives conducted at CSE and
FUTOP Clearing Center was migrated to NASDAQ OMX Stockholm.

In 2006, OMX and Iceland Stock Exchange merged, and Icelandic derivatives were introduced on
NASDAQ OMX Stockholm to the market in May 2007, but in 2008 NASDAQ OMX Stockholm stopped
offering trading and clearing of Icelandic derivatives.

In October 2008, NASDAQ OMX Stockholm acquired Nord Pool Clearing ASA, a licensed

clearing house in Norway.

In 2012, the Nasdaq Group acquired NOS Clearing ASA (“NOS”), which primarily cleared
freight derivative contracts. NOS has been integrated into Nasdaq Clearing.

As a result of EMIR, clearing operations had to be separated from other operations. Planning of
the separation of all of the company’s non-clearing-related operations into a separate unit, Nasdaq
Stockholm AB, was initiated during 2012. In September 2013, the planned demerger was implemented,
and the CCP company was renamed Nasdaq Clearing (organization number: 556383-9058).

2. Ownership and corporate structure

Nasdaq Clearing is wholly owned by Nasdaq Nordic Ltd..a_limited_liability company
incorporated in Finland. Nasdaq Nordic Ltd. is an indirect (
subsidiary of Nasda

3. Governance and committee structure

General

The board of directors of Nasdaq, Inc. has the ultimate accountability for major strategic and
commercial decisions within the Group, while each subsidiary within the group has primary legal and
regulatory responsibility for its own actions.

The corporate bodies of Nasdaq Clearing comprise of: (1) the general meeting of shareholders; (2)
the board; (3) the president; and (4) the auditors. In legal terms, the decisions relating to the operations of
Nasdaq Clearing are the responsibility of the board of directors_of Nasdaq Clearing (the “Clearing
Board”). Nasdaq Clearing is fully owned by Nasdaq Nordic Ltd.,

Thus, the Clearing

Board shall adhere to the common policies and guidelines within the Nasdaq Group, ==]
In doing so, the Clearing

Board has an obligation to assess that they are appropriate for the purpose of Nasdaq Clearing. The

LONO1_8129617v4


12§

13§

145

g kar

Regeringen har ansvaret for dvergripande valutapoli-
tiska fragor. Ovriga bestammelser om valutapolitiken
meddelas i lag.

Riksbanken 4r rikets centralbank och en myndighet
under riksdagen. Riksbanken har ansvaret for pen-
ningpolitiken. Ingen myndighet far bestamma hur
Riksbanken skall besluta i fragor som rér penning-
politik,

Riksbanken har elva fullmaktige, som vailjs av riksda-
gen. Riksbanken leds av en direktion, som utses av
fullmaktige.

Riksdagen prdvar om ledamdterna i fullmaktige och
direktionen skall beviljas ansvarsfrihet. Om riksdagen
vagrar en fullmaktig ansvarsfrihet ar han darmed
skild fran sitt uppdrag. Fullmaktige far skilja en
ledamot av direktionen fran hans anstallning endast
om han inte langre uppfyller de krav som stalls for
att han skall kunna utféra sina uppgifter eller om han
gjort sig skyldig till allvarlig forsummelse.

Bestammelser om val av fullmaktige och om Riksban-
kens ledning och verksamhet meddelas i lag.

Endast Riksbanken har ratt att ge ut sedlar och mynt.

Bestammelser om penning- och betalningsvasendet
meddelas i évrigt genom lag.

71


5§

6§

75

som rér anstallda och uppdragstagare hos banken,
om inte annat féljer av lag eller beslut av riksdagen
eller av riksdagsférvaltningen.

Ledaméter i fullmaktige samt sAdana anstallda och
uppdragstagare hos Riksbanken som Riksbanken
bestammer skall skriftligen anmala sit innehav av
finansiella instrument som anges i 1 kap. 1 § lagen
(1991:980) om handel med finansiella instrument till
Riksbanken. Detsamma galler andringar i innehavet.
Anméalningsskyldigheten enligt denna paragraf galler
dock inte for ordféranden och vice ordféranden i
fullmaktige samt ledaméter i direktionen.

Hos Riksbanken skall det finnas en personalan-

svarsnamnd med riksbankschefen som ordférande.

Namnden skall darutéver besta av, férutom perso-

nalféretradarna, de ledaméter som Riksbanken utser.

Féljande fragor skall, om de rér andra an ledamdter

av direktionen, prévas av ansvarsnamnden:

1. skiljande fran anstallning pa grund av personliga
férhallanden, dock inte i fraga om provanstallning,

2. disciplinansvar,

3. atalsanmélan,

4 avstangning,

Personalansvarsnamnden ar beslutfér nar ordféran-
den och minst halften av de andra ledaméterna ar
narvarande.

Vid planeringen och genomférandet av Riksbankens
verksamhet i fred skall de krav beaktas som totalfér-
svaret staller.

11


ARTS,

commenced. If, according to the second paragraph,
notification of assets and agreements or credits and
other liabilities needs not be made at this time, noti-
fication shall be made at the latest within four weeks
of exceeding the threshold stipulated in the second
paragraph.
Notification shall thereafter be made for every
change that entails that

an asset as stipulated in the first paragraph 1 has

been acquired,

2. the total value of assets and agreements pursuant
to the first paragraph 2-4 or the total value of
credits and other liabilities pursuant to the first
paragraph 5 has changed by more than
‘SEK 100,000 since notification was last made on
condition that the total value or amount after the
change Is not less than SEK 500,000, or
a change in conditions has taken place with
respect to credits and other liabilities that have
been notified.

Notification of such changes as stipulated in the
fourth paragraph shall be made no later than four
weeks after the change has taken place.

iad

Stipulations governing the remuneration to members
and deputy members of the General Council are
contained in the Act (1989:185) on Fees, etc. for
Assignments within the Riksdag, its Authorities and
Bodies.

154)


Principle 23: Disclosure of rules, key procedures, and market data

An FMI should have clear and comprehensive rules and procedures and should
provide sufficient information to enable participants to have an accurate
understanding of the risks, fees, and other material costs they incur by participating
in the FMI. All relevant rules and key procedures should be publicly disclosed.

Nasdaq Clearing has developed and publicly disclosed information on the systems
rules and procedures and is continuously taking steps to enhance the member's
knowledge of the system. This is done through a website designated for clearing
participants, including the respective R&R, the Investor Risks document, Nasdaq
Clearing as a Counterparty and other various documents provide support for the
participants to understand the rules, risks and procedures they face from
participation. Fees and other material costs are publicly disclosed and changes are
notified well in advance, if such change is not made as a discretionary decision due
to extraordinary circumstances. Fees are separated into two different areas;
business related fees and technical fees. The fees are specified per individual service
offered and any discounts are made publicly available in the respective fee list.
Nasdaq Clearing offer volume discounts on participant level, transaction level,
participant type level, and account level where aggregated monthly or yearly volume
is considered. These discounts apply equally for all participants. Services that are
free of charge are not listed in price lists.

Nasdaq Clearing’s respective R&R underpins the various stages of derivatives
clearing. The R&Rs provide instructions regarding risk management policy and
security policy, if and when Nasdaq Clearing assumes counterparty risks, the rights
and obligations of Nasdaq Clearing and dealing with the parties involved in a default
situation.

Specific information about risk management is also displayed on the Nasdaq Clearing
website — this includes back test and stress test results and information on the
different margin models as well as external validation reports, default management
procedures, parameter and collateral lists and details of the investment policy and
default fund. As well as information on risk management the website includes
information regarding Nasdaq Clearing’s corporate governance, strategy, BCPs,
remuneration, accounts, collateral management, settlement, the clearing system
and latest news. Related policies, strategies and margin models are also available.

Should a member request additional information on the systems rules, procedures,
technology or operations, Nasdaq Clearing can provide specific training and
education in that area.

Nasdaq Clearing has a structure for facilitating the participants understanding of the
procedures and risks, and members have, in a vast majority, expressed that they are
content with the information provided by Nasdaq Clearing.

The CPMI-IOSCO Quantitative Disclosure is publicly available on the website and
updated quarterly as of the beginning of 2016. Nasdaq Clearing intends to meet the

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

57


27.7.2012 LEN

Official Journal of the European Union

L 201/25

(0) are being effectively applied and enforced in an equitable
and non-distortive manner so as to ensure effective super-
vision and enforcement in that third country.

Those implementing acts shall be adopted in accordance with
the examination procedure referred to in Article 86(2).

3, An implementing act on equivalence as referred to in
paragraph 2 shall imply that counterparties entering into a
transaction subject to this Regulation shall be deemed to have
fulfilled the obligations contained in Articles 4, 9, 10 and 11
where at least one of the counterparties is established in that
third country.

4. The Commission shall, in cooperation with ESMA,
monitor the effective implementation by third countries, for
which an implementing act on equivalence has been adopted,
of the requirements equivalent to those laid down in Articles 4,
9, 10 and 11 and regularly report, at least on an annual basis,
to the European Parliament and the Council. Where the report
reveals an insufficient or inconsistent application of the
equivalent requirements by third country authorities, the
Commission shall, within 30 calendar days of the presentation
of the report, withdraw the recognition as equivalent of the
third country legal framework in question. Where an imple-
menting act on equivalence is withdrawn, counterparties shall
automatically be subject again to all requirements laid down in
this Regulation.

TITLE Uh
AUTHORISATION AND SUPERVISION OF CCPs
CHAPTER 1
Conditions and procedures for the authorisation of a CCP
Article 14
Authorisation of a CCP

1. Where a legal person established in the Union intends to
provide clearing services as a CCP, it shall apply for authori-
sation to the competent authority of the Member State where it
is established (the CCP’s competent authority), in accordance
with the procedure set out in Article 17.

2. Once authorisation has been granted in accordance with
Article 17, it shall be effective for the entire territory of the
Union.

3. Authorisation referred to in paragraph 1 shall be granted
only for activities linked to clearing and shall specify the
services or activities which the CCP is authorised to provide
or perform including the classes of financial instruments
covered by such authorisation.

4. A CCP shall comply at all times with the conditions
necessary for authorisation.

A CCP shall, without undue delay, notify the competent
authority of any material changes affecting the conditions for
authorisation.

5. Authorisation referred to in paragraph 1 shall not prevent
Member States from adopting or continuing to apply, in respect
of CCPs established in their territory, additional requirements
including certain requirements for authorisation under Directive
2006/48/EC.

Article 15
Extension of activities and services

1. A CCP wishing to extend its business to additional
services or activities not covered by the initial authorisation
shall submit a request for extension to the CC?'s competent
authority. The offering of clearing services for which the CCP
has not already been authorised shall be considered to be an
extension of that authorisation.

The extension of authorisation shall be made in accordance
with the procedure set out under Article 17.

2. Where a CCP wishes to extend its business into a Member
State other than that where it is established, the CCP's
competent authority shall immediately notify the competent
authority of that other Member State.

Article 16
Capital requirements

1. A CCP shall have a permanent and available initial capital
of at least EUR 7,5 million to be authorised pursuant to
Article 14.

2. A CCP's capital, including retained earnings and reserves,
shall be proportionate to the risk stemming from the activities
of the CCP. It shall at all times be sufficient to ensure an orderly
winding-down or restructuring of the activities over an appro-
priate time span and an adequate protection of the CCP against
credit, counterparty, market, operational, legal and business
risks which are not already covered by specific financial
resources as referred to in Articles 41 to 44.

3. In order to ensure consistent application of this Article,
EBA shall, in close cooperation with the ESCB and afer
consulting ESMA, develop draft regulatory technical standards
specifying requirements regarding the capital, retained earnings
and reserves of a CCP referred to in paragraph 2.

EBA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1093/2010.

Article 17
Procedure for granting and refusing authorisation

1. The applicant CCP shall submit an application for auth-
orisation to the competent authority of the Member State where
it is established.


FI’s operations are governed by the government’s Letter of Appropriation. In this document, the
government outlines the general objective of the operations and assignments of FI.

FI’s operations are also governed by an ordinance which details the authority’s specific
objectives, assignments and responsibilities and by an operational ordinance that describes the joint
assignments and responsibilities applicable to all authorities.

2. RiksbankenTM

Sveriges Riksbank is Sweden’s central bank and a public authority under the Swedish Parliament
(Sw. Riksdagen). Riksbanken is responsible for monetary policy with the objective to maintain price
stability. The bank has also been given the task to promote a safe and efficient payment system.
Riksbanken’s operations are governed by the Instrument of Government, the Sveriges Riksbank Act (Sw.
lag (1988:1385) om Sveriges riksbank) attached hereto as Document S-S, the Rules of Procedure and
Instructions and Riksbanken’s statute book. In these documents, the Government and Riksbanken itself
outline the general objective of the operations and assignments of Riksbanken.

Representatives from the Swedish parliament are members of Riksbanken’s General Council and
they appoint the Executive Board members who lead the bank.

Riksbanken consists of seven departments:

The Corporate Services Department

The Financial Stability Department

The Markets Department

The Monetary Policy Department

The Cash and Payment Systems Department
The Internal Audit Department

The General Secretariat

All heads of department and the communications manager participate in Riksbanken’s
management group. The management group coordinates Riksbanken’s activities and is led by the head of
the General Secretariat.

One of Riksbanken’s core functions is to promote a safe and efficient payment system. The
payment system is important for all economic activities and is a central component of the financial system.
For that reason Riksbanken regularly analyses the risks and threats to the stability of the Swedish financial
system.

In the oversight of the financial infrastructure, Riksbanken proceeds from the requirements for
security and efficiency set in accordance with international standards. For infrastructure companies, there
are the Principles for Financial Market Infrastructures (“PFMI”) issued by the Committee on Payment
and Settlement Systems (“CPSS”) and the International Organization of Securities Commissions
(“IOSCO”). The principles are minimum requirements, and the specific characteristics of the Swedish
market may mean that Riksbanken needs to place higher requirements than those placed by the principles.

2 Please note that this Section covers also certain areas of paragraph (2) and (3) of this Exhibit E as regards
Riksbanken’s oversight of the Clearinghouse.

3 All information provided in this Section is based on information provided by Riksbanken. For further information
about Riksbanken please see www.riksbanken.se,

LONO1_8129630v4


|

27.7.2012

Official Journal of the European Union

L 201/23

If the competent authorities fail to reach a positive decision
within 30 calendar days of receipt of the application for
exemption, ESMA may assist those authorities in reaching
agreement in accordance with its powers under Article 19 of
Regulation (EU) No 1095/2010.

7. An intragroup transaction referred to in Article 3(1) that
is entered into by non-financial counterparties which are estab-
lished in different Member States shall be exempt from the
requirement laid down in paragraph 3 of this Article,
provided that the following conditions are fulfilled:

(a) the risk-management procedures of the counterparties are
adequately sound, robust and consistent with the level of
complexity of the derivative transaction;

(b) there is no current or foreseen practical or legal impediment
to the prompt transfer of own funds or repayment of
liabilities between the counterparties.

The non-financial counterparties shall notify their intention to
apply the exemption to the competent authorities referred to in
Article 10(5). The exemption shall be valid unless either of the
notified competent authorities does not agree upon fulfilment
of the conditions referred to in point (a) or (b) of the first
subparagraph within three months of the date of the notifi-
cation.

8, An intragroup tansaction referred to in Article 3(2){a) to
@ that is entered into by a counterparty which is established in
the Union and a counterparty which is established in a third-
country jurisdiction shall be exempt totally or partially from the
requirement laid down in paragraph 3 of this Article, on the
basis of a positive decision of the relevant competent authority
responsible for supervision of the counterparty which is estab-
lished in the Union, provided that the following conditions are
fulfilled:

(a) the risk-management procedures of the counterparties are
adequately sound, robust and consistent with the level of
complexity of the derivative transaction;

(b) there is no current or foreseen practical or legal impediment
to the prompt transfer of own funds or repayment of
liabilities between the counterparties.

9. An intragroup transaction referred to in Article 3(1) that
is entered into by a non-financial counterparty which is estab-
lished in the Union and a counterparty which is established in a
third-country jurisdiction shall be exempt from the requirement
laid down in paragraph 3 of this Article, provided that the
following conditions are fulfilled:

{a) the risk-management procedures of the counterparties are
adequately sound, robust and consistent with the level of
complexity of the derivative transaction;

(b) there is no current or foreseen practical or legal impediment
to the prompt transfer of own funds or repayment of
liabilities between the counterparties.

The non-financial counterparty shall notify its intention to
apply the exemption to the competent authority referred to in
Article 10(5). The exemption shall be valid unless the notified
competent authority does not agree upon fulfilment of the
conditions referred to in point (a) or (6) of the first
subparagraph within three months of the date of notification.

10. An intragroup transaction referred to in Article 3{1) that
is entered into by a non-financial counterparty and a financial
counterparty which are established in different Member States
shall be exempt totally or partially from the requirement laid
down in paragraph 3 of this Article, on the basis of a positive
decision of the relevant competent authority responsible for
supervision of the financial counterparty, provided that the
following conditions are fulfilled:

(a) the risk-management procedures of the counterparties are
adequately sound, robust and consistent with the level of
complexity of the derivative transaction;

(b) there is no current or foreseen practical or legal impediment
to the prompt transfer of own funds or repayment of
liabilities between the counterparties.

‘The relevant competent authority responsible for supervision of
the financial coumterparty shall notify any such decision to the
competent authority referred to in Article 10(5). The exemption
is valid unless the notified competent authority does not agree
upon fulfilment of the conditions referred to in point (a) or (b}
of the first subparagraph. If there is disagreement between the
competent authorities, ESMA may assist those authorities in
reaching an agreement in accordance with its powers under
Article 19 of Regulation (EU) No 1095/2010.

11. The counterparty of an intragroup transaction which has
been exempted from the requirement laid down in paragraph 3
shall publicly disclose information on the exemption.

A competent authority shall notify ESMA of any decision
adopted pursuant to paragraph 6, 8 or 10, or any notification
received pursuant to paragraph 7, 9 or 10, and shall provide
ESMA with the details of the intragroup transaction concerned.

12. The obligations set out in paragraphs 1 to 11 shall apply
to OTC derivative contracts entered into between third country
entities that would be subject to those obligations if they were
established in the Union, provided that those contracts have a
direct, substantial and foreseeable effect within the Union or
where such obligation is necessary or appropriate to prevent
the evasion of any provision of this Regulation.

13. ESMA shall regularly monitor the activity in derivatives
not eligible for clearing in order to identify cases where a
particular class of derivatives may pose systemic risk and to
prevent regulatory arbitrage between cleared and non-cleared
derivative transactions. In particular, ESMA shall, after
consulting the ESRB, take action in accordance with Article 5(3)
or review the regulatory technical standards on margin
requirements laid down in paragraph 14 of this Article and
in Article 41.


account, no netting of positions with any other account (including the
Omnibus Account to which the Single-client Account is a sub-account).
The Single-client Account is normally used by NCMs. There is no legal
relationship between the customer and Nasdaq Clearing.

4. Indirect Pledge Account - IDP (Nasdaq Financial): One customer per
account, no netting of positions with any other account. The client has
a direct legal relationship with Nasdaq Clearing. The clearing member
administering the Indirect Pledge Account posts collateral to Nasdaq
Clearing on behalf of the customer (Indirect Pledging Customer).

5. Individual Client Segregated Account (Nasdaq Financial and Nasdaq
Commodities): One customer per account, no netting of positions with
any other account. There is no legal relationship between the customer
and Nasdaq Clearing and the clearing member posts collateral directly
to Nasdaq Clearing.

6. Clearing Clients (Nasdaq Commodities): One customer per account, no
netting of positions with any other account. The customer has a direct
legal relationship with Nasdaq Clearing and the customer posts
collateral directly to Nasdaq Clearing without passing through the
clearing member's books (i.e. books of the clearing member who is
representing the Clearing Client).

7 Direct Pledge Account (Nasdaq Financial): One customer per account,
no netting of positions with any other account. The customer (a Direct
Pledging Customer) has a direct legal relationship with Nasdaq Clearing
and posts collateral directly to Nasdaq Clearing, without passing
through the clearing member’s books.

It should be noted that accounts can have sub-accounts set up in the clearing
system. If the clearing members so wish, Nasdaq Clearing can set up a number of
sub-accounts, e.g. one for each customer. But this is only for information purposes
and the internal use of the participant. The sub-account and the “main account” will
be regarded and managed as one account and hence follow the segregation
requirements applicable for the main account.

In all account types, positions are always segregated between the participant and its
customers (i.e. its customers, Direct Pledging Customers, Indirect Pledging
Customers and Clearing Clients), at a minimum. There are no accounts that hold a
mix of positions from participants and customers. Further, there are no accounts
above that hold any positions of the clearing house.

With regard to segregation of collateral, this is fully achieved for account types 5, 6
and 7. For Clearing Clients and Direct Pledging Customers (6 and 7 above), the
customer has a direct legal relationship with Nasdaq Clearing and posts collateral
directly to the clearing house. Collateral is held on accounts with an individual
customer identifier and is never mixed with the collateral of other customers, the
participant, or the clearing house. For customers with Individual Cllent Segregated

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

40


G4

L 201/16

Official Journal of the European Union

27.7.2012

(17) ‘financial institution’ means an undertaking other than a
credit institution, the principal activity of which is to
acquire holdings or to carry on one or more of the
activities listed in points (2) to (12) of Annex I to
Directive 2006/48/EC;

(18) ‘financial holding company’ means a financial institution,
the subsidiary undertakings of which are either exclusively
or mainly credit institutions or financial institutions, at
least one of such subsidiary undertakings being a credit
institution, and which is not a mixed financial holding
company within the meaning of Article 2(15) of
Directive 2002/87/EC of the European Parliament and of
the Council of 16 December 2002 on the supplementary
supervision of credit institutions, insurance undertakings
and investment firms in a financial conglomerate (1);

(19) ‘ancillary services undertaking’ means an undertaking the
principal activity of which consists in owning or managing
property, managing data-processing services, or a similar
activity which is ancillary to the principal activity of one
or more credit institution;

(20)

‘qualifying holding’ means any direct or indirect holding in
a CCP or trade repository which represents at least 10 % of
the capital or of the voting rights, as set out in Articles 9
and 10 of Directive 2004/109/EC of the European
Parliament and of the Council of 15 December 2004 on
the harmonisation of transparency requirements in relation
to information about issuers whose securities are admitted
to trading on a regulated market (?), taking into account
the conditions regarding aggregation thereof laid down in
Article 12(4) and (5) of that Directive, or which makes it
possible to exercise a significant influence over the
management of the CCP or trade repository in which
that holding subsists;

(21) ‘parent undertaking’ means a parent undertaking as
described in Articles 1 and 2 of Directive 83/349/EEC;

(22) ‘subsidiary’ means a subsidiary undertaking as described in
Articles 1 and 2 of Directive 83/349/EEC, including a
subsidiary of a subsidiary undertaking of an ultimate
parent undertaking;

(23) ‘control’ means the relationship between a parent under-
taking and a subsidiary, as described in Article 1 of
Directive 83/349/EEC;

(24) ‘close links’ means a situation in which two or more
natural or legal persons are linked by:

(a) participation, by way of direct ownership or control, of
20% or more of the voting rights or capital of an
undertaking; or

() OJ L 35, 11.2.2003, p. 1.
() OJ L 390, 31.12.2004, p. 38.

(b) control or a similar relationship berween any natural
or legal person and an undertaking or a subsidiary of a
subsidiary also being considered .a subsidiary of the
parent undertaking which is at the head of those
undertakings.

A situation in which two or more natural or legal persons
are permanently linked to one and the same person by a
control relationship shall also be regarded as constituting a
close link between such persons.

(25) ‘capital’ means subscribed capital within the meaning of
Article 22 of Council Directive 86/635/EEC of
8 December 1986 on the annual accounts and
consolidated accounts of banks and other financial insti-
tutions (°) in so far it has been paid up, plus the related
share premium accounts, it fully absorbs losses in going
concern situations, and, in the event of bankruptcy or
liquidation, it ranks after all other claims;

(26) ‘reserves’ means reserves as set out in Article 9 of Fourth
Council Directive 78/660/EEC of 25 July 1978 based on
Article 54(3)(g) of the Treaty on the annual accounts of
certain types of companies (*} and profits and losses
brought forward as a result of the application of the
final profit or loss;

(27) ‘board’ means administrative or supervisory board, or
both, in accordance with national company law;

(28) ‘independent member’ of the board means a member of
the board who has no business, family or other rela~
tionship that raises a conflict of interests regarding the
CCP concerned or its controlling shareholders, its
management or its clearing members, and who has had
no such relationship during the five years preceding his
membership of the board;

(29) ‘senior management’ means the person or persons who
effectively direct the business of the CCP or the trade
repository, and the executive member or members of the
board.

Article 3
Intragroup transactions

1. In relation to a non-financial counterparty, an intragroup
transaction is an OTC derivative contract entered into with
another counterparty which is part of the same group
provided that both counterparties are included in the same
consolidation on a full basis and they are subject to an appro-
priate centralised risk evaluation, measurement and control
procedures and that counterparty is established in the Union
or, if it is established in a third country, the Commission has
adopted an implementing act under Article 13(2) in respect of
that third country.

0) Of L 372, 31.12.1986, p
() OF L 222, 14.8.1978, p.



(2) A description of how the clearing organization ensures that potential governing board and
committee members meet these standards,

The choice of board members to the Clearing Board is always carried out with great care.
Sufficient experience from the financial market is a requirement. Consequently, the Clearing Board should
be composed of a mix of experts and knowledge of different parts of clearing house businesses. A new
board member is also by law subject to a fit and proper test by FI as presented above.

As mentioned above, it is the Clearing Board who appoints the members of the committees of
Nasdaq Clearing. The Clearing Board has issued instructions for the different committees which define
the composition of the committees. On the basis thereof and on the basis of the requirements described in
paragraph (1) above, the choice of members of the committees is carried with due care by the Clearing
Board and in line with EMIR requirements [for example independent board members in the Risk
Committee, EMIR article 28 (1)] .

LONO1_8129620v5


LONO!_8129630v4


and utility providers are managed in several ways. Operational risks from participant
connections are controlled by secure interfaces providing reliable and secure
information. All internal communication in the platform is based on reliable
messaging technologies to ensure consistent and accurate transactions within the
systems. The messaging system is designed to handle both software and hardware
failures without effect on the business operation. All external access to the clearing
platform is done via well defined, documented, and supported APIs and protocols.
The clearing house is dependent on electronic communications and ensures the
integrity of messages by using reliable networks and procedures to transmit data.
External applications are subjected to a certification process before being permitted
to connect to the production system. The certification process is aimed at securing
that connecting application behaves correctly and doesn’t generate any unwanted
activity, such as excessive transaction rates or erroneously formatted transactions.
Connectivity is provided by approved and certified service providers that offer
dedicated or VPN based communication lines. Two-factor authentication is used for
access directly via Internet. Finally, information transmitted within the clearing
house is protected by IT security processes and controls as outlined in the
Information Security Policy.

None of the clearing house’s operations are subject to external outsourcing. The
clearing house has outsourced parts of the IT responsibilities to the internal Nasdaq
IT services provider.

The risks posed by central banks and CSDs are issues in the settlement process, such
as erroneous or delayed settlement. Risks are managed through real time
monitoring of settlement flows and BCPs. Risks are mitigated through the collection
of detailed statistics from which issues are identified and addressed.

Risks that the clearing house may pose to Central Banks and CSDs are managed in
the BCPs. The clearing house ensures that the operational and technical
requirements for connecting to Central Banks and CSDs are met. In addition, the
clearing house takes part in the planning and execution of industry wide crisis
exercises arranged by FSPOS, “Finansiella Sektorns Privat-Offentliga Samverkan”, an
organization for private-public co-operation in the financial sector.

The clearing house adheres to the business continuity planning requirements with
the Central Banks and CSDs set by FSPOS, and participates in the exercises arranged
by them. Issues that impact the business continuity planning are identified and
changes are introduced in the documentation through regular revisions. The clearing
house keeps itself informed about testing arranged by central banks and CSDs via
newsletters and participation in meetings for this purpose.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

51


L 201/10 EN Official Journal of the European Union 27,7.2012
(60) On 16 September 2010, the European Council agreed on other risks, including the risks that it bears or poses to

(61)

(62)

(63)

(64)

(65)

the need for the Union to promote its interest and values
more assertively and, in a spirit of reciprocity and mutual
benefit, in the context of the Union's external relations
and to take steps, inter alia, to secure greater market
access for European business and deepen regulatory
cooperation with major trade partners.

A CCP should have robust governance arrangements,
senior management of good repute and independent
members on its board, irrespective of its ownership
structure. At least one-third, and no less than two,
members of its board should be independent. However,
different governance arrangements and ownership
structures may influence a CCP's willingness or ability
to clear certain products. It is thus appropriate that the
independent members of the board and the risk
committee to be established by the CCP address any
potential conflict of interests within a CCP. Clearing
members and clients need to be adequately represented
as decisions taken by the CCP may have an impact on
them.

A CCP may outsource functions. The CCP's risk
committee should advise on such outsourcing. Major
activities linked to risk management should not be
outsourced unless this is approved by the competent
authority.

The participation requirements for a CCP should be
transparent, proportionate, and non-discriminatory and
should allow for remote access to the extent that this
does not expose the CCP to additional risks.

Clients of clearing members that clear their OTC
derivative contracts with CCPs should be granted a
high level of protection. The actual level of protection
depends on the level of segregation that those clients
choose. Intermediaries should segregate their assets
from those of their clients. For this reason, CCPs
should keep updated and easily identifiable records, in
order to facilitate the transfer of the positions and
assets of a defaulting clearing member's clients to a
solvent clearing member or, as the case may be, the
orderly liquidation of the cliems’ positions and the
return of excess collateral to the clients. The requirements
laid down in this Regulation on the segregation and
portability of clients’ positions and assets should
therefore prevail over any conflicting laws, regulations
and administrative provisions of the Member States
that prevent the parties from fulfilling them.

A CCP should have a sound risk-management framework
to manage credit risks, liquidity risks, operational and

(66)

(67)

(68)

(69)

other entities as a result of interdependencies. A CCP
should have adequate procedures and mechanisms in
place to deal with the default of a clearing member. In
order to minimise the comtagion risk of such a default,
the CCP should have in place stringent participation
requirements, collect appropriate initial margins,
maintain a default fund and other financial resources to
cover potential losses. In order to ensure that it benefits
from sufficient resources on an ongoing basis, the CCP
should establish a minimum amount below which the
size of the default fund is not generally to fall. This
should not, however, limit the CCP's ability to use the
entirety of the default fund to cover the losses caused by
a clearing member's default.

When defining a sound risk-management framework, a
CCP should take into account its potential risk and
economic impact on the clearing members and their
clients. Although the development of a highly robust
risk management should remain its primary objective, a
CCP may adapt its features to the specific activities and
tisk profiles of the clients of the clearing members, and if
deemed appropriate on the basis of the criteria specified
in the regulatory technical standards to be developed by
ESMA, may include in the scope of the highly liquid
assets accepted as collateral, at least cash, government
bonds, covered bonds in accordance with Directive
2006/48/EC subject to adequate haircuts, guarantees
callable on first demand granted by a member of the
ESCB, commercial bank guarantees under strict
conditions, in particular relating to the creditworthiness
of the guarantor, and the guarantor's capital links with
CCP’s clearing members. Where appropriate, ESMA may
also consider gold as an asset acceptable as collateral.
CCPs should be able to accept, under strict risk-
matiagement conditions, commercial bank guarantees
from non-financial counterparties acting as clearing
members.

CCPs' risk-management strategies should be sufficiently
sound so as to avoid risks for the taxpayer.

Margin calls and haircuts on collateral may have
procyclical effects. CCPs, competent authorities and
ESMA should therefore adopt measures to prevent and
control possible procyclical effects in risk-management
practices adopted by CCPs, to the extent that a CCP's
soundness and financial security is not negatively
affected.

Exposure management is an essential part of the clearing
process. Access to, and use of, the relevant pricing
sources should be granted to provide clearing services


Exhibit D-1 to Supplement S-1 to Form FBOT

A description of the clearing and settlement systems, including, but not limited to, the manner in which
such systems interface with the foreign board of trade’s trading system and its members and other
participants.

The Clearinghouse uses Genium INET ClearingTM system (“Genium INET Clearing”), a
full-featured automated CCP clearing system for financial and commodities markets supporting
the clearing of equities, fixed-income, commodities and over-the-counter instruments. Genium
INET Clearing is fully integrated with its counterpart on the trading side, Genium INET Trading.
This enables instant communication and information flow between the two systems, using
common APIs and secure redundant solution architecture.

IW

LONO1_8129629v2


characteristic and the product liquidity. This means that Nasdaq Clearing has
different arrangement in place for Equity, Fixed Income and Commodities. Default
strategy documentations are in place for each specific product class. Default
management fire drills are conducted on a minimum on an annual basis (semi-
annually for fixed income). The test is conducted according to the product specific
guidelines for default management fire drills. The scope of the fire drill will be set by
Risk Management and the market participants in beforehand of the fire drill and
different scenarios will be tested in each fire drill (inter alia member default, client
default, different type of portfolios, etc.). The result of fire drills are documented ina
final report and presented to the Clearing Risk Committee, the Member Risk
Committee and included in the Board risk report.

Principle 14: Segregation and portability

ACCP should have rules and procedures that enable the segregation and portability
of positions of a participant’s customers and the collateral provided to the CCP with
respect to those positions.

Nasdaq Clearing’s rules and procedures enables segregation and portability on client
by client level for certain categories of members and members’ customers (i.e. so
called Direct Pledging Customers, customers with Individual Client Segregated
Accounts (ICA) and Clearing Clients). This arrangement offers a high level of
protection and a high likelihood of portability for positions and collateral. For
members/customers that have chosen other account types than the
aforementioned, Nasdaq Clearing offers segregation and portability at client/house
level.

With respect to segregation arrangements, Nasdaq Clearing offers a range of
account types, both individual and omnibus, to its members and customers with
varying degrees of separate identification and treatment.

Independent of which account type the customer has chosen, the clearing system
always keeps separate the positions and collateral of participants’ customers from
the positions and collateral of the participant. Nasdaq Clearing provides a separate
account type for participants (i.e. House Accounts) and it is clear from the R&Rs that
this account type may only be used by the participant itself and that it is fully
segregated from the accounts of its customers.

In addition to the protection of a participant’s customer’s positions and related
collateral from the default or insolvency of the participant, Nasdaq Clearing also
offers protection of customer's positions and collateral against default of fellow
customers.

The portability arrangements are designed to facilitate a transfer of a customer's
positions and collateral from a defaulting participant to another clearing participant.
To some extent the likelihood of portability is dependent on the account type the

2016, The Nasdaq Group, Inc. All Rights Reserved.

38


27.7.2012

GN

Official Journal of the European Union

L 201/43

4, In order to ensure uniform conditions of application of
paragraph 1, ESMA shall develop draft implementing technical
standards specifying the format of the application for regis-
tration to ESMA.

ESMA shall submit those draft implementing technical standards
to the Commission by 30 September 2012.

Power is conferred on the Commission to adopt the imple-
menting technical standards referred to in the first subparagraph
in accordance with Article 15 of Regulation (EU)
No 1095/2010.

Article 57

Notification of and consultation with competent
authorities prior to registration

1. Ifa trade repository which is applying for registration is
an entity which is authorised or registered by a competent
authority in the Member State where it is established, ESMA
shall, without undue delay, notify and consult that competent
authority prior to the registration of the trade repository.

2. ESMA and the relevant competent authority shall
exchange all information that is necessary for the registration
of the trade repository as well as for the supervision of the
entity's compliance with the conditions of its registration or
authorisation in the Member State where it is established.

Artide 58
Examination of the application

1. ESMA shall, within 40 working days from the notification
referred to in the third subparagraph of Article 56(2), examine
the application for registration based on the compliance of the
trade repository with Articles 78 to 81 and shall adopt a fully
reasoned registration decision or decision refusing registration.

2. A decision issued by ESMA pursuant to paragraph 1 shall
take effect on the fifth working day following its adoption.

Article 59
Notification of ESMA decisions relating to registration

1. Where ESMA adopts a registration decision or a decision
refusing or withdrawing registration, it shall notify the trade
repository within five working days with a fully reasoned expla~
nation of its decision.

ESMA shall, without undue delay, notify the relevant competent
authority referred to in Article 57(1) of its decision.

2. ESMA shall communicate any decision taken in
accordance with paragraph 1 to the Commission.

3. ESMA shall publish on its website a list of trade reposi-
tories registered in accordance with this Regulation, That list
shall be updated within five working days following the
adoption of a decision under paragraph 1.

Article 60
Exercise of the powers referred to in Articles 61 to 63

The powers conferred on ESMA or any official of or other
person authorised by ESMA by Articles 61 to 63 shall not be
used to require the disclosure of information or documents
which are subject to legal privilege.

Article 61
Request for information

1, ESMA may by simple request or by decision require trade
repositories and related third parties to whom the trade reposi-
tories have outsourced operational functions or activities to
provide all information that is necessary in order to carry out
its duties under this Regulation.

2. When sending a simple request for information under
paragraph 1, ESMA shall:

(a) refer to this Article as the legal basis of the request;
(b) state the purpose of the request;
() specify what information is required;

(d) set a time limit within which the information is to be
provided;

(€) inform the person from whom the information is requested
that he is not obliged to provide the information but that in
case of a voluntary reply to the request the information
provided must not be incorrect and misleading; and

(f) indicate the fine provided for in Article 65 in conjunction
with point (a) of Section IV of Annex I where the answers
to questions asked are incorrect or misleading.

3, When requiring to supply information under paragraph 1
by decision, ESMA shall:

(a) refer to this Article as the legal basis of the request;

(b) state the purpose of the request;

(©) specify what information is required;


® Regeringsformen

151


Exhibit G to Supplement S-1 to Form FBOT

(1) A description of the arrangements among the Commission, the foreign board of trade, the clearing
organization, and the relevant foreign regulatory authorities that govern the sharing of information
regarding the transactions that will be executed pursuant to the foreign board of trade’s registration
with the Commission and the clearing and settlement of those transactions. This description should
address or identify whether and how the foreign board of trade, clearing organization, and the
regulatory authorities governing the activities of the foreign board of trade and clearing organization
agree to provide directly to the Commission information and documentation requested by Commission
staff that Commission staff determines is needed:

(i) To evaluate the continued eligibility of the foreign board of trade for registration.
(ii) To enforce compliance with the specified conditions of the registration.

(iii) To enable the CFTC to carry out its duties under the Act and Commission regulations and
to provide adequate protection to the public or registered entities.

(iv) To respond to potential market abuse associated with trading by direct access on the
registered foreign board of trade.

(v) To enable Commission staff to effectively accomplish its surveillance responsibilities with
respect to a registered entity where Commission staff, in its discretion, determines that a
contract traded on a registered foreign board of trade may affect such ability.

In its supervisory operations, FI co-operates and exchanges information with other competent
authorities to the extent required and as set out under various EU regulations and directives.

With respect to the possibility to share information between the Commission and FI and
Finanstilsynet, respectively, we would also like to mention that both FI and Finanstilsynet are signatories
to the International Organization of Securities Commissions Multilateral Memorandum of Understanding,
which works as a multilateral mechanism for sharing information on a bilateral basis between signatories

1 Act on the Supervision of Credit Institutions, Insurance Companies and Securities Trading etc. (Financial
Supervision Act), Section 7.

LONOI_8129635v4


L 201/38 (aN

Official Journal of the European Union

27.7.2012

Article 43
Other financial resources

1. A CCP shall maintain sufficient pre-funded available
financial resources to cover potential losses that exceed the
losses to be covered by margin requirements laid down in
Article 41 and the default fund as referred to in Article 42.
Such pre-funded financial resources shall include dedicated
resources of the CCP, shall be freely available to the CCP and
shall not be used to meet the capital required under Article 16.

2. The default fund referred to in Article 42 and the other
financial resources referred to in paragraph 1 of this Article
shall at all times enable the CCP to withstand the default of
at least the two clearing members to which it has the largest
exposures under extreme but plausible market conditions.

3. A CCP may require non-defaulting clearing members to
provide additional funds in the event of a default of another
clearing member. The clearing members of a CCP shall have
limited exposures toward the CCP.

Article 44
Liquidity risk controls

1. A CCP shall at all times have access to adequate liquidity
to perform its services and activities. To that end, it shall obtain
the necessary credit lines or similar arrangements to cover its
liquidity needs in case the financial resources at its disposal are
not immediately available. A clearing member, parent under-
taking or subsidiary of that clearing member together shall
not provide more than 25 % of the credit lines needed by the
Cccp.

A CCP shall measure, on a daily basis, its potential liquidity
needs. It shall take into account the liquidity risk generated
by the default of at least the two clearing members to which
it has the largest exposures.

2. In order to ensure consistent application of this Article,
ESMA shall, after consulting the relevant authorities and the
members of the ESCB, develop draft regulatory technical
standards specifying the framework for managing the liquidity
risk that CCPs are to withstand in accordance with paragraph 1.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 45
Default waterfall

1. A CCP shall use the margins posted by a defaulting
clearing member prior to other financial resources in covering
losses.

2. Where the margins posted by the defaulting clearing
member are not sufficient to cover the losses incurred by the
CCP, the CCP shall use the default fund contribution of the
defaulting member to cover those losses.

3. A CCP shall use contributions to the default fund of the
non-defaulting clearing members and any other financial
resources referred to in Article 43(1) only after having
exhausted the contributions of the defaulting clearing member.

4, ACCP shall use dedicated own resources before using the
default fund contributions of non-defaulting clearing members.
A CCP shall not use the margins posted by non-defaulting
clearing members to cover the losses resulting from the
default of another clearing member.

5. In order to ensure consistent application of this Article,
ESMA, shall, after consulting the relevant competent authorities
and the members of the ESCB, develop draft regulatory
technical standards specifying the methodology for calculation
and maintenance of the amount of the CCP's own resources to
be used in accordance with paragraph 4.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 46
Collateral requirements

1. A CCP shall accept highly liquid collateral with minimal
credit and market risk to cover its initial and ongoing exposure
to its clearing members. For non-financial counterparties, a CCP
may accept bank guarantees, taking such guarantees into
account when calculating its exposure to a bank that is a
clearing member. It shall apply adequate haircuts to asset
values that reflect the potential for their value to decline over
the interval between their last revaluation and the time by
which they can reasonably be assumed to be liquidated. It
shall take into account the liquidity risk following the default
of a market participant and the concentration risk on certain
assets that may result in establishing the acceptable collateral
and the relevant haircuts.

2. A CCP may accept, where appropriate and sufficiently
prudent, the underlying of the derivative contract or the
financial instrument that originates the CCP exposure as
collateral to cover its margin requirements.


Lag (1998:1404)
om valutapolitik

191


iw The Sveriges Riksbank Act

Lag (1988:1385) om Sveriges riksbank

AS FROM 1 JULY 2008
(UNAUTHORIZED TRANSLATION)

1451


38

4g

5§

och som darvid varit medveten om att sediarna eller
mynten har forandrats eller bearbetats.

Den som inte fullgér sin skyldighet enligt 6 kap. 9 §
att lamna uppgifter eller visa upp handlingar eller
som lamnar oriktig uppgift nar skyldigheten fullgérs
skall démas till béter, om garningen inte ar belagd
med straff i brottsbalken. Om ett vite har forelagts
med stéd av 11 kap. 2a § far dock inte démas till
straff for garning som omfattas av férelaggandet.

\ringa fall skall inte démas till ansvar.

Riksbanken skall utan hinder av vad som féreskrivs
i8kap. 8 § sekretesslagen (1980:100) underratta
polismyndighet eller akiagarmyndighet om det i verk-
samhet som avses i dessa bestammelser framkommer
uppgifter som ger anledning att anta att ett brott har
begatts.

Om det finns sarskilda skal far Riksbanken underlata
att lamna sadan underrattelse.

Hur talan férs mot fullmaktiges beslut om skiljande
av en ledamot av direktionen fran hans anstallning
regleras i 2 kap. 2 §.

Riksbankens beslut enligt 2a § far dverklagas hos
lansratten.

Riksbankens beslut i évrigt enligt denna lag far 6ver-
klagas endast i den utstrackning och i den ordning


27,7.2012 EN |

Official Journal of the European Union

L 201/15

(2) ‘ttade repository’ means a legal person that centrally
collects and maintains the records of derivatives;

(3) ‘clearing’ means the process of establishing positions,
including the calculation of net obligations, and ensuring
that financial instruments, cash, or both, are available to
secure the exposures arising from those positions;

(4

‘wading venue’ means a system operated by an investment
firm or a market operator within the meaning of
Article 4(1)(1) and 4{1}{13) of Directive 2004/39/EC
other than a systematic internaliser within the meaning
of Article 4(1)(7) thereof, which brings together buying
or selling interests in financial instruments in the system,
in a way that results in a contract in accordance with Title
II or Ill of that Directive;

‘derivative’ or ‘derivative contract’ means a financial
instrument as set out in points (4) to (10) of Section C
of Annex I to Directive 2004/39/EC as implemented by
Article 38 and 39 of Regulation (EC) No 1287/2006;

(5)

Ss

‘class of derivatives’ means a subset of derivatives sharing
common and essential characteristics including at least the
relationship with the underlying asset, the type of
underlying asset, and currency of notional amount,
Derivatives belonging to the same class may have
different maturities;

(7) ‘OTC derivative’ or ‘OTC derivative contract’ means a
derivative contract the execution of which does not take
place on a regulated market as within the meaning of
Article 4(1)(14} of Directive 2004/39/EC or on a third-
country market considered as equivalent to a regulated
market in accordance with Article 19(6} of Directive
2004/39/EC;

(8)

‘financial counterparty’ means an investment firm auth-
orised in accordance with Directive 2004/39/EC, a credit
institution authorised in accordance with Directive
2006/48/EC, an insurance undertaking authorised in
accordance with Directive 73/239/EEC, an assurance
undertaking authorised in accordance with Directive
2002/83/EC, a reinsurance undertaking authorised in
accordance with Directive 2005/68/EC, a UCITS and,
where relevant, its management company, authorised in
accordance with Directive 2009/65/EC, an institution for
occupational retirement provision within the meaning of
Article 6(a) of Directive 2003/41/EC and an alternative
investment fund managed by AlfMs authorised or
registered in accordance with Directive 2011/61 /EU;

(9) ‘non-financial counterparty’ means an undertaking estab-
lished in the Union other than the entities referred to in
points (1) and (8);

(10) ‘pension scheme arrangement’ means:

(11)

(12)

03)

(14)

(15)

(16)

(a) institutions for occupational retirement provision
within the meaning of Article 6(a) of Directive
2003/41jEC, including any authorised emtity
responsible for managing such an institution and
acting on its behalf as referred to in Article 2(1) of
that Directive as well as any legal entity set up for the
purpose of investment of such institutions, acting
solely and exclusively in their interest;

S

occupational retirement provision businesses of insti-

tutions referred to in Article 3 of Directive
2003/41 )EC:
{c) occupational retirement provision businesses of life

insurance undertakings covered by Directive
2002/83/EC, provided that all assets and liabilities
corresponding 10 the business are _ring-fenced,
managed and organised separately from the other
activities of the insurance undertaking, without any
possibility of transfer;

(@) any other authorised and supervised entities, or
arrangements, operating on a national basis, provided
that:

(i) they are recognised under national law; and

(ii) their primary purpose is to provide retirement
benefits;

‘counterparty credit risk’ means the risk that the
counterparty to a transaction defaults before the final
settlement of the transaction’s cash flows;

‘interoperability arrangement’ means an arrangement
between two or more CCPs that involves a cross-system
execution of transactions;

‘competent authority means the competent authority
referred to in the legislation referred to in point (8) of
this Article, thé competent authority referred to in
Article 10(5} or the authotity designated by each
Member State in accordance with Article 22;

‘clearing member’ means an undertaking which participates
in a CCP and which is responsible for discharging the
financial obligations arising from that participation;

‘client’ means an undertaking with a contractual rela-
tionship with a clearing member of a CCP which enables
that undertaking to clear its transactions with that CCP;

‘group’ means the group of undertakings consisting ofa
parent undertaking and its subsidiaries within the meaning
of Articles 1 and 2 of Directive 83/349/EEC or the group
of undertakings referred to in Article 3(1) and Article 80(7)
and (8) of Directive 2006/48/EC:


im

27.7.2012

Official Journal of the European Union

L 201/39

3. In order to ensure consistent application of this Article,
ESMA shall, after consulting EBA, the ESRB and the ESCB,
develop draft regulatory technical standards specifying:

(a) the type of collateral that could be considered highly liquid,
such as cash, gold, government and high-quality corporate
bonds and covered bonds;

(b) the haircuts referred to in paragraph 1; and

(6) the conditions under which commercial bank guarantees
may be accepted as collateral under paragraph 1.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 47
Investment policy

1. ACCP shall invest its financial resources only in cash or
in highly liquid financial instruments with minimal market and
credit risk. A CCP's investments shall be capable of being
liquidated rapidly with minimal adverse price effect.

2. The amount of capital, including retained earnings and
reserves of a CCP which are not invested in accordance with
paragraph 1, shall not be taken into account for the purposes of
Article 16(2) or Article 45(4).

3, Financial instruments posted as margins or as default fund
contributions shall, where available, be deposited with operators
of securities settlement systems that ensure the full protection
of those financial instruments. Alternatively, other highly secure
arrangements with authorised financial institutions may be used.

4, Cash deposits of a CCP shall be performed through highly
secure arrangements with authorised financial institutions or,
alternatively, through the use of the standing deposit facilities
of central banks or other comparable means provided for by
central banks.

5. Where a CCP deposits assets with a third party, it shall
ensure that the assets belonging to the clearing members are
idemtifiable separately from the assets belonging to the CCP and
from assets belonging to that third party by means of differently
titled accounts on the books of the third party or any other
equivalent measures that achieve the same level of protection. A
CCP shall have prompt access to the financial instruments when
required.

6. ACCP shall not invest its capital or the sums arising from
the requirements laid down in Article 41, 42, 43 or 44 in its

own securities or those of its parent undertaking or its
subsidiary.

7. A CCP shall take into account its overall credit risk
exposures to individual obligors in making its investment
decisions and shall ensure that its overall risk exposure to any
individual obligor remains within acceptable concentration
limits.

8. In order to ensure consistent application of this’ Article,
ESMA shall, after consulting EBA and the ESCB, develop draft
regulatory technical standards specifying the _ financial
instruments that can be considered highly liquid, bearing
minimal credit and market risk as referred to in paragraph 1,
the highly secured arrangements referred to in paragraphs 3 and
4 and the concentration limits referred to in paragraph 7.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 48
Default procedures

1. A CCP shall have detailed procedures in place to be
followed where a clearing member does not comply with the
participation requirements of the CCP laid down in Article 37
within the time limit and in accordance with the procedures
established by the CCP. The CCP shail set out in detail the
procedures to be followed in the event the default of a
clearing member is not declared by the CCP. Those procedures
shall be reviewed annually.

2. A CCP shall take prompt action to contain losses and
liquidity pressures resulting from defaults and shall ensure
that the closing out of any clearing member's positions does
not disrupt its operations or expose the non-defaulting clearing
members to losses that they cannot anticipate or control.

3. Where a CCP considers that the clearing member will not
be able to meet its future obligations, it shall promptly inform
the competent authority before the default procedure is declared
or triggered. The competent authority shall promptly
communicate that information to ESMA, to the relevant
members of the ESCB and to the authority responsible for
the supervision of the defaulting clearing member.

4. A CCP shall verify that its default procedures are
enforceable. It shall take all reasonable steps to ensure that it
has the legal powers to liquidate the proprietary positions of the
defaulting clearing member and to transfer or liquidate the
clients’ positions of the defaulting clearing member.


Principle 3: Framework for the comprehensive management of risks

An FMI should have a sound risk-management framework for comprehensively
managing legal, credit, liquidity, operational, and other risks.

The Risk Management department within Nasdaq Clearing is responsible for
managing the day-to-day risk associated with the clearing services and identified by
the Board of Directors. The risks in its clearing activity are measured and managed
via a comprehensive risk management framework made up of policies, mandates,
procedures, standards and different resources, e.g. human, informational and
technological resources. The framework ensures that all risks are recorded, assessed
and controlled, and that the risks and exposures are reported to the Board of
Directors.

The Board of Directors is ultimately responsible for the risk management framework.
The Risk Management department consists of experienced resources with
competence in both quantitative and qualitative risk management. The Risk
Management department is an independent function within Nasdaq Clearing with
the CRO reporting directly to the Board.

All risk policies are subject to annual reviews and re-approval by the Board. The
Clearing Risk Committee is responsible for updating and developing the risk policies
and ensuring that the risk framework, i.e. policies, system and procedures are
updated in relation to changes in market structures, regulations or product portfolio.

Nasdaq Clearing has a Member Risk Committee which is chaired by an independent
board member. The committee also consists of representatives of clearing members
and clients and has the role to exercise oversight, in an advisory role, over Nasdaq
Clearing’s clearing risk management controls, models, policies and procedures.
Nasdaq Clearing is exposed to the following specific risks that relate to the derivative
clearing services it provides:

1. Counterparty/Credit risk: in the event that a participant defaults with the
result that outstanding payment and delivery obligations are not fulfilled,
Nasdaq Clearing guarantees the fulfilment of these obligations resulting in a
potential exposure for Nasdaq Clearing. Nasdaq Clearing also has an indirect
Counterparty risk towards, Collateral Issuers, Settlement- and Custodian
banks.

2. Market/Volatility risk: The risk of financial loss for Nasdaq Clearing that may
be incurred as a result of adverse changes in market factors causing a loss
when closing out a defaulted counterparty’s portfolio.

a. Systemic risk: a participant default resulting in other participants not
being able to fulfil their obligations leading to instability in the wider
financial markets;

b. Concentration Risk: the risk of financial loss that may be incurred as
result of a participant's large exposure in a single instrument that may

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

15


1§

26

2a§

8 "4". OVRIGA UPPGIFTER,

Riksbanken skall ta emot betalningar till och géra
utbetalningar fér staten.

Riksbanken far ta emot inlaning fran staten.

Riksbanken far inte bevilja kredit till eller forvarva
skuldférbindelse direkt fran staten, annat offentligt
organ eller institution inom Europeiska unionen.

Riksbanken far dock enligt 6 kap. 7 § andra stycket
bevilja kredit till staten under dagen. Riksbanken far
ocksa inom ramen fér dvriga bestammelser i denna
lag bevilja kredit till och forvarva skuldférbindelse
fran finansinstitut som ags av staten eller annat of-
fentligt organ.

Inom ramen for Riksbankens uppgifter som cen-
tralbank far Riksbanken fOrvarva aktier, andelar i
ekonomiska foreningar och liknande rattigheter och
ta pA sig de férpliktelser som ar forenade med dessa
rattigheter.

Riksbanken far inte utan riksdagens bemyndigande
gora sdant forvarv eller inga sAdan férpliktelse som
avses i férsta stycket om det sker fdr att fullgéra
andra uppgifter 4n Riksbankens uppgifter som cen-
tralbank.

Riksbanken far besluta om férsaljning av aktier, an-

delar i ekonomiska féreningar och liknande rattighe-
ter.

(28)


Scenarios considered posing a risk to the clearing house’s critical operations and
services are to be identified through the RSA. This is done on at least an annual
basis, but also in connection to major changes or whenever deemed necessary.
Significant risks are added to this process (whenever identified) and are well
documented.

Nasdaq Clearing has implemented a Recovery and Resolution Plan, the RRP. The RRP
describes the Recovery process for the clearing house. This includes stress scenarios
where the “business as usual” procedures are not sufficient to cover losses
encountered by the clearing house. The Recovery procedure also includes early
warnings and triggers, defining when the clearing house should consider enter into
Recovery and the decision making process in these events. Further, the RRP sets out
proposed Recovery tools that can be used to restore Nasdaq Clearing in such a way
that it can continue to perform its responsibilities as a clearing house. Orderly wind-
down of the clearing house is also covered in the final section of the RRP. A separate
Resolution plan is to be maintained by a Resolution Authority (to be appointed). The
RRP will be reviewed on an annual basis or more often if deemed necessary due to,
inter alia, major changes in recommendations and/or regulations or the operations
of Nasdaq Clearing.

Principle 4: Credit risk

An FMI should effectively measure, monitor, and manage its credit exposures to
participants and those arising from its payment, clearing, and settlement processes.
An FMI should maintain sufficient financial resources to cover its credit exposure to
each participant fully with a high degree of confidence. In addition, a CCP that is
involved in activities with a more-complex risk profile or that is systemically
important in multiple jurisdictions should maintain additional financial resources
sufficient to cover a wide range of potential stress scenarios that should include, but
not be limited to, the default of the two participants and their affiliates that would
potentially cause the largest aggregate credit exposure to the CCP in extreme but
plausible market conditions. All other CCPs should maintain additional. financial
resources sufficient to cover a wide range of potential stress scenarios that should
include, but not be limited to, the default of the participant and its affiliates that
would potentially cause the largest aggregate credit exposure to the CCP in extreme
but plausible market conditions.

Nasdaq Clearing has established a robust framework to manage its credit exposures
to its participants and the credit risks arising from its payment, clearing, and
settlement processes. Nasdaq Clearing has efficient processes in place to identify,
monitor and manage the credit risk resulting from its clearing activity, including
robust stress test modeling and a range of tools to control credit risk.

Nasdaq Clearing covers its current and potential future exposures to each participant
fully with a high degree of confidence using margin and other prefunded financial

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

18


Delegated Regulation 153 also sets out requirements in relation to a CCP’s risk management system and
internal control mechanism, including requirements to have documented policies, procedures and systems
to identify, measure, monitor and manage risks, and take an integrated and comprehensive view of all
relevant risks. The board of the CCP must have final responsibility and accountability for managing the
CCP’s risks.

This Delegated Regulation 153 also set out the rules in respect of compliance policy, procedures and
function, including requirements to have adequate policies and procedures designed to detect any risk of
failure by the CCP and its employees to comply with EMIR, and to keep the rules, procedures and
contractual arrangements of the CCP accurate, up-to-date and readily available to the competent authority,
clearing members and, where appropriate, clients. The CCP must have a permanent and effective
compliance function which is independent of the other functions of the CCP and fully resourced. The role
of the CCO is also set out in this Delegated Regulation.

Delegated Regulation 153 requires the CCP to define the composition, role and responsibilities of the
board, senior management and any board committees, and to have at least an audit committee and a
remuneration committee. The board must have the following responsibilities:

* The establishment of clear objectives and strategies for the CCP;

«The effective monitoring of senior management;

© The establishment of appropriate remuneration policies;

¢ The establishment and oversight of the risk management function;

© The oversight of the compliance function and internal control function;

e The oversight of outsourcing arrangements;

The oversight of compliance with EMIR and all other regulatory and supervisory requirements;
and

© The provision of accountability to the shareholders or owners and employees, clearing members
and their customers and other relevant stakeholders.

Senior management must have the following responsibilities:

e ensure consistency of the CCP’s activities with the objectives and strategy of the CCP as
determined by the board;

¢ design and establish compliance and internal control procedures that promote the CCP’s
objectives;

® — subject the internal control procedures to regular review and testing;

e ensure that sufficient resources are devoted to risk management and compliance;

© be actively involved in the risk control process; and

¢ ensure that risks posed to the CCP by its clearing and activities linked to clearing are duly
addressed.

There must be clear and direct reporting lines between the CCP’s board and senior management.

Further, EMIR requires CCPs to have a member risk committee made up of representatives of its clearing
members, independent board members and representatives of its clients, to advise the board on any
arrangement that may impact the risk management of the CCP. Such member risk committee must have a

LONO1_8129630v4


Nasdaq Clearing’s systems are designed to recover and resume business critical
operations within 2 hours of a critical event, including a complete loss of the primary
data center or an evacuation of the Nasdaq Clearing offices.

The clearing house’s BCPs address situations where the operations could become
severely disrupted. Formal incident response procedures have been developed and
are tested on a regular basis and carried out with different scenarios. Scenarios of
large scale disasters, typically complete outage of the primary site, are tested on a
yearly basis. Failover procedures are performed in the production system and
members are offered to test their connectivity to the secondary site and perform
basic business queries. Verification of connectivity from the secondary site to CSDs
and SwiftNet is included in the yearly testing.

The clearing house’s systems are designed and tested to provide full redundancy and
fail-over functionality including maintaining transaction integrity. Failover for
individual components is also available. The access network allows participants to
connect to either or both of the primary and secondary sites, thus being able to
reduce their risk and lessen the impact of a system disturbance affecting one site. In
the event of a serious system disturbance, making the primary site unable to
continue operating, system operation will fail-over to the secondary site, which is
located approximately 20 km from the Nasdaq main office in Stockholm.

There is a back-up site for business operations available at all time. All operational
procedures can be executed from the contingency office, using separate equipment
located there. Procedures for relocating the staff are tested regularly, with a full
scale test every second year, and critical operation every second month.

Backup routines, partly manual, are established for all time critical activities.

The clearing house conducts quarterly reviews of its BCPs, or more often if
necessary. The BCPs are approved by the board. The BCPs are also submitted to an
independent review bi-annually, and the result reported to the board.

In the event that situations arise in which the clearing house could be subjected to
highly significant or serious damage, the Crisis Management Team shall be
summoned without delay. The Crisis Management Team is a virtual “task force”
assigned to manage any type of crisis events. The Crisis Management Team
coordinates activities on a Business Area and Regional level in order to secure a
capacity to maintain critical functions, to minimize any damage and to reduce the
time during which the organization is subjected to the crisis. Subordinated to the
Crisis Management Team, one or several Emergency Response Teams may be
operating to support the Crisis Management Team on the tactical level, aiming at
quickly restoring normal operations. The Crisis Management Team shall maintain a
high degree of readiness to handle internal and external communication. This
supporting role is generally performed by Nasdaq Corporate Communications.
£xternal information shall be elevated to, and managed by, the Crisis Management
Team in order to provide consistent and accurate information.

Operational risks posed by external parties such as key participants, FMls and service

2016, The Nasdaq Group, Inc. All Rights Reserved.

50




78

One or two auditors shall be elected by the annual general meeting.

8§

The financial year of the company is the calendar year.

9§
The general meetings shall be held in Stockholm.

10§
The annual general meeting shall deal with the following matters:
1. election of a chairman for the annual general meeting;
2. preparation and adoption of a register of votes;
3. adoption of an agenda for the meeting;
4, election of one or two persons to check the minutes;
5. confirmation that the meeting has been properly convened;

6. presentation of the annual report and the auditors’ report and, where applicable, the consolidated
annual report and consolidated auditors’ report;

7. resolutions on

a) the approval of the income statement and balance sheet and, where applicable, the
consolidated income statement and consolidated balance sheet,

b) discharge of the members of the board of directors and the managing director from
liability.

c) the use of the profit or loss of the company shown in the approved balance sheet;

8. on the number of board members and, if applicable, the number of auditors and deputy auditors to
be elected by the meeting;

9. on the remuneration payable to the members of the board of directors and, when necessary, the
auditors’ fees;

10. election of the members of the board of directors and, where applicable, an auditor or auditors and
deputy auditors, if any;

LONO1_8129617v4


CHAPTER Q

48142 The Government is responsible for general currency
policy questions. Other provisions concerning,
currency policy shall be laid down in an act of law.

487-43 The Riksbank is the central bank of the Realm and an
authority under the Riksdag. The Riksbank is
responsible for monetary policy. No public authority
may determine how the Riksbank shall decide in
matters of monetary policy.

The Riksbank shall have a General Council com-
prising eleven members, who shall be elected by
the Riksdag. The Riksbank shall be managed by an
Executive Board appointed by the General Council.

The Riksdag considers whether the members of the
General Council and the Executive Board shall be
granted discharge of responsibility. If the Riksdag
refuses a member of the General Council discharge
of responsibility he shall be severed thereby from
his appointment. The General Council may sever a
member of the Executive Board from his appoint-
ment only provided he no longer fulfils the require-
ments laid down for performing his duties or if he
has been guilty of gross negligence.

Rules concerning elections for the General Council
and concerning the management and activities of the
Riksbanks hall be laid down in an act of law.

(39)


if a member fails to procure an emission allowance or electricity certificate transfer
to Nasdaq Clearing with respect to the quantity on the delivery day, and Nasdaq
Clearing is unable to meet its obligation to procure a delivery to the buyer despite its
best efforts, Nasdaq Clearing may decide that the transaction shall be cash settled.
Once the decision is taken, the member can then no longer fulfill the obligation by
delivering the instrument. The different alternatives that Nasdaq Clearing can
choose from in order to procure the cash settlement is stipulated in section 3.4.4
and 4.4.4 of the Nasdaq COM R&R. Delay fees will be debited in connection with the
delayed delivery.

Principle 9: Money settlements

An FMI should conduct its money settlements in central bank money where practical
and available. If central bank money is not used, an FMI should minimise and strictly
control the credit and liquidity risk arising from the use of commercial bank money.

Nasdaq Clearing monitors the levels of settlement amounts in absolute terms paid to
and from the clearing members in the different currencies, and prioritize that central
banks are appointed as concentration banks and that the main currencies are settled
in central bank money. Nasdaq Clearing currently operates money settlement
operations in the Swedish, Finnish, English and Danish Central Bank. For the
currencies USD and NOK where the concentration bank is not a central bank due to
Nasdaq Clearing not being an US registered bank and has low settlement volumes in
NOK, Nasdaq Clearing has parallel bank account arrangements and back-up routines
in place,

Approved settlement banks are used in the settlement process. Nasdaq Clearing
sends payment instructions to approved settlement banks to debit the clearing
members’ account and credit Nasdaq Clearing’s account in the respective settlement
banks. When the settlement banks have confirmed that the payments have been
received, Nasdaq Clearing issues payment instructions for exchange of payments
between the settlement banks in question in the concentration banks.

Nasdaq Clearing has the CMS system which provides system generated payment
instructions, effective monitoring of the accounts and real-time updates on
payments. Nasdaq Clearing follows the principle of first receiving the incoming
payments and then sending out the payments, in order to limit the amount of funds
needed by the clearing house for daily money settlements. If additional funds were
to be needed Nasdaq Clearing’s accounts are equipped with credit facilities, in order
to prevent delays in the payment process.

The money settlement is performed in SEK, DKK, EUR, NOK, USD and GBP. For NOK
and USD, commercial banks are appointed as concentration banks and they comply
with the same terms as the appointed approved settlement banks. According to the
Settlement Bank Agreement the approved settlement banks shall comply with the

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

33


Accounts (5 above), collateral is posted to the participant, rather than directly to the
clearing house, but is held on individually segregated accounts at the clearing house,
with unique customer identifiers, and is never mixed with the collateral of other
customers, the participant, or the clearing house.

For account types 2, 3 and 4 above, Nasdaq Clearing offers the ability to segregate
customer collateral from that of the participant. In practice, this is achieved by
establishing separate collateral accounts for the participant’s house business and for
that of its customer(s). Specifically, in relation to the Omnibus Account and the
Single-client Account the participant posts collateral to Nasdaq Clearing on an
aggregate basis for the Omnibus Account (i.e. net collateral for Omnibus Account
plus net collateral for the respective connected Single-client Accounts). In relation to
the Indirect Pledge Account collateral is provided to the clearing house on a net basis
for all Indirect Pledge Accounts the participant administers. The collateral provided
by the participant with respect to these two account types are held in two separate
collateral custody accounts at the clearing house.

Nasdaq Clearing does not rely on participants’ records in order to ascertain
customer’s interests held by the clearing house. For customers in omnibus accounts,
individual customer interest is only held at participant level and is not known by
Nasdaq Clearing (but is not required by the clearing house either).

For customers with account types 5, 6 or 7, positions and margin requirements are
calculated for each individual customer account. Customer margin is collected on a
gross basis, i.e. customer by customer. Netting is only performed within a customer
account. Collateral may only be used to cover losses associated with the default of
the customer in question, so customer collateral is not exposed to “fellow-customer
risk”. Accordingly, account types 5, 6 and 7 fulfill the segregation requirements in
Article 39.3 of EMIR, i.e. individual client segregation.

For customers with account types 3 and 4 (Single-client Account and Indirect Pledge
Account), each customer has individual accounts and positions and margin
requirements are calculated for each customer account. Customer margin is
collected on a gross basis, i.e. customer by customer. Netting is only performed
within a customer account. The difference compared to account types 5, 6 and 7 is
that Nasdaq Clearing will aggregate the margin figures for all accounts under the
participant (types 2, 3 and 4 above ~ the participant’s house account is not included
in this aggregation) and collateral is held on a single custody account. But again,
netting is only performed within a customer account, not between customer
accounts.

In case of a default of an Indirect Pledging Customer, with account type 4 (Indirect
Pledge Account), Nasdaq Clearing has the right to use any collateral held on the
account for the defaulting customer, the collateral held to cover the positions of the
participant, and also collateral held to cover positions of other Indirect Pledging
Customers of the same clearing member, but no collateral held to cover positions of
any other customer. Customer collateral cannot be used to cover a shortfall resulting
from the participant’s default either. So the customer in an Indirect Pledge Account

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

41


all risks in terms of probability and potential impact, as well as deciding on action
plans to mitigate the risks. The ERM approach covers all types of risks; i.e. strategic-,
commercial-, operational- and financial risks (including counterparty related risks).
The RSA is conducted at least annually on operational and legal entity level and the
result is regularly updated, planned actions followed up, and subsequently reviewed
by management.

The sources of operational risks are the risk events which have been defined by
Nasdaq Global Risk Management in the template document used to create the
clearing house’s BCPs. The risk events are: Ordinary office premises become
inaccessible, Outage in the regular power supply, Technical breakdown of the public
{or internal) telephone network, Disturbance in telecommunication services and
primary telecommunication links are down, Communication over Internet
unavailable or extremely unstable, Business critical system unavailable due to
technical disturbances, and 40% of total staff unable to perform work for 2-3 weeks.

On an annual basis, Nasdaq Clearing identifies a list of positions that are considered
to be risk takers in accordance with Nasdaq Clearing’s Remuneration Policy. These
positions/names are reviewed and approved by the Board. Nasdaq Clearing defers
variable remuneration for these risk takers in accordance with relevant laws and
regulation and the remuneration policy. Nasdaq uses compensation programs like
the Corporate Incentive Program to ensure that merit and equity programs are tied
to performance. The performance appraisal process includes two annual
opportunities where employees and managers meet to evaluate performance
against the corporate goals and personal goals, at mid-year and year-end.

Fraud prevention is embedded in the corporate policy framework, i.e. no specific
fraud prevention policy exists. Fraud prevention is addressed from different angles in
Ethics & Compliance-, Information Security-, Accounting-, Finance-, Legal Review-
and SOX Compliance Policies.

Nasdaq Clearing has implemented a Change Management Policy to ensure control
over the changes that are made in its environments, minimize risks and prevent
errors, and to assure that the right people are informed about the changes and have
formally approved them. Changes are implemented using a Product Development
Life Cycle (PDLC) policy and process.

Nasdaq Clearing applies an ITIL based Incident Management policy and process for
resolving incidents in its IT systems. The clearing house manages the business
implications of Major Incidents through its own incident management organization,
and the Emergency Response Team. The Emergency Response Team is responsible
for taking all business related decisions and works closely together with the technical
Incident Management organization to restore services back to normal operation.

The Board has adopted working procedures to execute oversight and control of
information security related issues. These procedures outline reporting
requirements to support the Board when assessing the risk exposure and when
evaluating the adequacy of and adherence to the Information Security Policy and
related standards. It also establishes critical decision points for the Board during the

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

47


(2) A statement as to whether the regulatory authorities governing the activities of the foreign board of
trade and clearing organization are signatories to the International Organization of Securities
Commissions Multilateral Memorandum of Understanding. If not, describe any substitute
information-sharing arrangements that are in place,

Both Finanstilsynet (primarily supervising the Exchange) and FI (primarily supervising the

Clearinghouse) are signatories to the International Organization of Securities Commissions Multilateral
Memorandum of Understanding.

LONOI_8129635v4


w The Currency Rate
Policy Act (1998:1404)

(UNAUTHORIZED TRANSLATION)

au


ART],

ang,

ant,

The Riksbank may make available systems for sett-
lement of payments and participate in other ways in
the settlement of payments.

In order to promote the function of the payment
system, the Riksbank may grant intraday credit to
participants in the system. Credit may only be gran-
ted against adequate collateral. The State does not
need to provide collateral.

In exceptional circumstances, the Riksbank may,
with the aim of supporting liquidity, grant credits
or provide guarantees on special terms to banking
institutions and Swedish companies subject to the
supervision of the Financial Supervisory Authority.

Upon the request of the Riksbank, a credit institution
‘or another company which is subject to the super-
vision of the Financial Supervisory Authority shall
provide the Riksbank with such information as the
Riksbank considers necessary to

4. follow developments in foreign exchange and
credit markets,
2. oversee the stability of the payments system.

The performer of a currency transaction with a
foreign counterpart or the holder of assets and lia~
bilities with a foreign connection, whether on behalf
of another party or on own account has an obliga-
tion to provide the Riksbank with such information
and to present the Riksbank with such documents
concerning the transaction as are needed as a basis

1591


Exhibit A-2 to Supplement S-1 to Form FBOT

Articles of association, constitution, or other similar organizational documents.

Note: This English language translation of the Swedish language articles of association is an unofficial
translation made solely for information purposes, and does not form a part of the articles of association.

ARTICLES OF ASSOCIATION
(556383-9058)

1§
The company name is Nasdaq Clearing Aktiebolag.

28
The company’s board of directors shall be located in Stockholm.

3§

The aim of the company’s business operations is to engage in clearing operations in accordance with the
laws of Sweden, as well as to engage in other related operations.

4§

The company’s minimum share capital is one hundred and fifty million (150,000,000) Swedish kronor and
the maximum share capital is six hundred million (600,000,000) Swedish kronor.

5§

The minimum number of shares is 1,500,000 and the maximum number of shares is 6,000,000.

6§
The company’s board of directors shall comprise a minimum of five and a maximum of twelve members.

The members of the board of directors are elected annually by the annual general meeting for a term that
expires at the closure of the first annual general meeting following the election.

LONO1_8129617v4




Clearing Appendix 6 — Market Conduct Rules (joint with the Trading Rules): Document
24

Clearing Appendix 7 — Fee List (joint with the Trading Rules): Document 25
Clearing Appendix 8 —- Membership Requirements: Document 29

Clearing Appendix 9 — Default Fund Rules: Document 30

Clearing Appendix10 Collateral List: Document 30a

Clearing Appendix 11. List of Approved Settlement Banks: Document 30b

Clearing Appendix 12. Supplemental default rules - Client Clearing Accounts: Document
30¢

Clearing Appendix 13. Supplemental default rules - Clearing Clients: Document 30d
Clearing Appendix 14. Block Trade, EFP and EFS Clearing Procedures: Document 30e

Clearing Appendix 15. Third Party Exchange Transaction Clearing Procedures:
Document 30f

All participants are required to comply with its respective membership agreement and the COM
Rules. Should any participant be in breach of either the membership agreement or the COM Rules the
participant will be deemed to be in default For a detailed description of the manner in which Nasdaq
Clearing observes each of the Principles for Financial Infrastructure (“PFMIs”) published in February
2012 and developed jointly by the Committee on Payments and Market Infrastructures (“CPMI”) and the
Technical Committee of the International Organization of Securities Commissions (“IOSCO”) RCCPs
please see Nasdaq Clearings Disclosure Framework assessment attached hereto as Document S-4.

LONO1_8129632v5


competence of the Board and its members.

The Board of the CCP retains responsibility for compliance and risk management of
the CCP and has adopted the relevant policies which pertain to this. These include
(but are not limited to) the Clearing Risk Policy, the Risk Mandate and the
Compliance Policy. The risk management framework within Nasdaq Clearing is
substantially provided by way of the establishment of three risk committees:

(i) the Clearing Risk Committee;
(ii) the Default Committee; and
(iii) the Member Risk Committee;

and through the adoption of instructions from the Board for each of these
committees. The instructions define the tasks and duties, composition, decision
making, meeting procedure and reporting for each committee. The instructions are
updated regularly and the framework is assessed in connection with the changes by
the Board. Nasdaq Clearing also has in place a Remuneration Committee and an
Audit Committee.

A well-established enterprise risk management assessment procedure is conducted
at least annually as a key element in the internal control framework. Internal Audit,
having an independent position in relation to Nasdaq Clearing’s management,
carries out regular audits in accordance with the annual plan as well as ad hoc
audits, where appropriate. The external auditors, appointed by the general meeting,
exercise the control from the owner’s point of view. Nasdaq Clearing uses a
framework of policies and guidelines, including, but not limited to, clearing
operations and clearing capital, risk management, information security,
remuneration and outsourcing. The risk management framework is also built upon
the separation of the Risk Management from the clearing business line in terms of
organization and reporting. The Chief Risk Officer, Chief Compliance Officer and
Internal Auditors report directly to the Board of the CCP.

Nasdaq Clearing has a well-established and multi-channel procedure in place in
order to ensure that the legitimate interests of its direct and indirect participants
and other relevant stakeholders will be taken into account in material decisions, for
example pertaining to the strategy, design and R&Rs. Nasdaq Clearing discloses on
its public website a considerable amount of information of its governance
arrangements, including, but not limited to, the Board, clearing operations and
activities, clearing policies, default procedures, stress testing and the audited
balance sheet.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

14


cHaTER 4 OBJECTIVE AND GOVERNANCE

484, The Riksbank (the Swedish central bank), which

ant

pursuant to Chapter 9, Article 13 of the Instrument
of Government is the country’s central bank and

a public authority under the Riksdag (the Swedish
Parliament), may only conduct, or participate in, such
ivities for which it has been authorised by Swedish

Pursuant to Chapter 9, Article 13 of the Instrument
of Government, the Riksbank is responsible for mo-

netary policy.
The objective of the Riksbank’s activities shall be to
maintain price stability.

The Riksbank shall also promote a safe and efficient
payments system.

The Riksbank may issue regulations within the
scope of its responsibility for monetary policy. The
Riksbank may also issue regulations that concern
activities connected with the Riksbank's payment
system or cash-provision mandate.

Pursuant to Chapter 9, Article 13 of the Instrument
of Government, the Riksbank has a General Council
of eleven members, appointed by the Riksdag.

A Chairman and a Vice-Chairman are appointed by
the members among themselves.

147


Exhibit C to Supplement S-1 to Form FBOT

(1) A description of the requirements applicable to membership on the governing board and significant
committees of the clearing organization.

Nasdaq Clearing is headed by the Clearing Board which leads and controls the company.
Formally, the Clearing Board is appointed by its general meeting. Currently, the Clearing Board consists
of three executives from the Nasdaq Group and three external board members. Two external board
members fulfil the independence requirement as defined in EMIR article 2(28). The president is appointed
by the Clearing Board. All board members and the President need to pass FI’s test of fit and proper, under
the Securities Markets Act, Chapter 19, Section 3, sub-Section 4. Chapter 19 of the Securities Market Act
requires that members of the board of directors and senior management of a Clearinghouse shall be
deemed fit and proper. Each individual in this role has to supply its curriculum vitae to FI. Furthermore,
FI checks data from the national police authority, the national tax authority and information on bankruptcy
regarding the management.

FI’s Regulation FFFS 2016:23 and FI’s General Guidelines also set out provisions regarding FI’s
management assessment. FI’s examination includes competence, duties or ownership interests and
conflicts of Interest. In order to facilitate FI’s assessment of whether the operations of the undertaking
may be deemed to fulfill the requirements of sound business operations, information regarding the
managing director, members of the board of directors and other senior executives in the undertaking
should be provided with respect to whether they have duties or ownership interests in other undertakings
within the financial sector. Information regarding ownership interests need, however, be provided only
with respect to undertakings in which the holdings amount to ten per cent or more of the total share capital
or voting capital. In addition, information shall be provided in respect of such persons’ previous
employment and experience in clearing operations, consulting and board appointments and expertise in
general. In addition, the other board appointments and important positions of the members of the board of
directors during at least the most recent five years shall be stated.

It is the Clearing Board who has the power to appoint the members of committees to assist in the
governance of Nasdaq Clearing.

LONO1_8129620v5


Exhibit A-6 to Supplement S-1 to Form FBOT

Evidence of the authorization, licensure or registration of the clearing organization pursuant to the
regulatory regime in its home country jurisdiction(s) and a representation by its regulator(s) that it is in
good regulatory standing in the capacity in which it is authorized, licensed or registered.

Evidence of the authorization of Nasdaq Clearing as a regulated clearing organization is attached

hereto as Document S-2. Please also find enclosed as Document S-3 a representation from FI that the
Clearinghouse is in good regulatory standing,

LONO1_8129617v4


Clearing Board is also responsible for Nasdaq Clearing’s adherence to the regulatory standards for the
Swedish market and the Clearinghouse’s compliance with all regulatory requirements. The articles of
association of Nasdaq Clearing establish the requirement that it shall adhere to such regulatory standards.
In addition, the Clearing Board has issued internal polices and guidelines in order to ensure sufficiency of
Nasdaq Clearings’ operations and compliance with the regulatory requirements imposed on the
Clearinghouse by SFSA and applicable legislation.

The Clearing Board and the President

Nasdaq Clearing is headed by the Clearing Board which leads and controls the company. The
Clearing Board is made up of six board members, three external board members and three executives from
the Nasdaq Group. All board members must pass test of fit and proper, which focuses on three areas: (a)
personal conduct; (b) competence; and (c) conflicts of interest. Please see Exhibit C to Supplement S-1 to
Form FBOT for further details on FI’s requirements in relation to the fit and proper test. The Clearing
Board appoints the President of Nasdaq Clearing.

The duties and areas of responsibility of the Clearing Board are outlined and governed by EMIR
and the Swedish Companies Act, the Securities Market Act, relevant enactments issued by FI and the
articles of association adopted for Nasdaq Clearing.

For the common polices and guidelines issued within the Nasdaq Group, in particular by the board
of directors of Nasdaq, Inc. and by the board of directors of Nasdaq Nordic Ltd, the Clearing Board has
autonomy with respect to operating the Clearinghouse. The Clearing Board has direct legal responsibility
for major and significant decisions related to Nasdaq Clearing, as well as for the legal and regulatory
compliance of Nasdaq Clearing. The President of Nasdaq Clearing has direct responsibility for day-to-day
management and decisions related to Nasdaq Clearing, with reporting obligation to and being supervised
by the Clearing Board. All major decisions of legal or regulatory concern relating to Nasdaq Clearing
need to be taken by the Clearing Board or in accordance with the appropriate delegation under any
existing Power of Attorney.

The Clearing Board shall ensure that Nasdaq Clearing complies with its obligations under EMIR
and other relevant EU regulations and directives, Swedish and Norwegian law and regulatory framework
issued by relevant supervisory authorities, including the obligations of Nasdaq Clearing as an Fl
authorized body. The Clearing Board reviews policies and reports on operational and clearing risk
management, internal control, regulatory capital, compliance and security, as well an internal audit policy.
Further, the Clearing Board adopts an internal audit plan. The Clearing Board has the power to appoint
the members of committees to assist in the governance of Nasdaq Clearing, including the disciplinary and
risk committees. The day-to-day management of Nasdaq Clearing is as stated above, the responsibility of
the President.

The Clearing Board shall also adopt a Regulatory Capital Policy and a Clearing Risk Policy.
Also, the Clearing Board shall adopt Instructions for Clearing Risk Committee and Clearing Default
Committee, to which material issues relating to Nasdaq Clearing’s risk management procedures have been
delegated. Clearing risk related issues are reported to the Clearing Board regularly. Further, operational
incidents, claims and litigation issues and compliance issues as well as capital adequacy assessments are
reported regularly to the Clearing Board. Governance arrangements such as the Rules of Procedure,
Instructions for the President and other applicable policies are updated on a yearly basis or when needed.

LONO1_8129617v4


destabilizing changes in margin requirements in times of market stress. The margin
parameter floors are based on estimations with a ten year sample period or a buffer
of 25% on the normal parameter estimation that is based on a one or two year
lookback period.

Nasdaq Clearing marks participant positions to market and collect variation margin
at least daily to limit the build-up of current exposures.

Nasdaq Clearing has the authority and operational capacity to make intraday margin
calls and payments, both scheduled and unscheduled, to participants. Nasdaq
Clearing has decided on an intra-day margin policy, and immediately calls for more
margin in case pre-defined collateral deficit limits are breached. For some markets,
pre-novation collateral checks are utilized, i.e. trades reported for clearing are only
novated in case there are sufficient collateral in place.

In calculating margin requirements, Nasdaq Clearing allows offsets or reductions in
required margin across products that it clears, if the risk of one product is
significantly and reliably correlated with the risk of the other product. Nasdaq
Clearing uses a highly conservative approach when estimating offset levels taking
into account the established confidence level for its margin system. Margin offset is
only provided in case correlation between products historically has been high and
stable. By choosing a sufficiently long sample period for historical data when
estimating correlation, Nasdaq Clearing accounts for variability of price dependence
with overall market conditions.

Nasdaq Clearing has implemented a comprehensive model validation framework for
its margin models. The framework is governed by a number of policies approved by
the Board of Directors and/or the Clearing Risk Committee and entail governance in
relation to back-testing, sensitivity testing and validation.

Nasdaq Clearing performs daily testing of its margin models by conducting several
back-tests. These are done both on an enterprise level, where actual changes in
portfolios’ market valuation are tested against required margin under applicable
time horizon, and on individual risk parameters (which are monitored against actual
movement to determine that the parameter holds up to the expected levels).

Ona monthly basis, a thorough analysis of all back-testing results on various levels of
portfolios and sub-portfolios are conducted and reviewed. Moreover, model tests
and sensitivity analyses are conducted on the margin models where main risk factors
are stressed in order to detect any weaknesses in the models. In conducting
sensitivity analysis of the models’ coverage, Nasdaq Clearing takes into account a
wide range of parameters and assumptions that reflect possible market conditions,
including the most-volatile periods that have been experienced by the markets it
serves and extreme changes in the correlations between prices. The model behavior
in market scenarios far worse than Nasdaq Clearing has ever experienced, is also
examined. The Clearing Risk Committee reviews the results of the margin model
validation tests, including ex-post margin coverage back-testing of all portfolios and
all cleared products, ex-ante back-testing on margin model level and other model
specific validation tests.

© 2016, The Nasdaq Group, Inc. All Rights Reserved,

26


processing of transactions in securities in more than 50 countries.

The European part of the Nasdaq Group includes the stock exchanges in
Copenhagen, Stockholm, Helsinki, Reykjavik, Tallinn, Riga and Vilnius, as well as the
central securities depositories in Estonia, Latvia and Iceland. The Nasdaq Group also
owns a share of the Lithuanian central securities depository. Derivative operations
are conducted organizationally in the business area Global Trading & Market
Services (“GTMS”), which runs the stock exchanges in Stockholm, Helsinki,
Copenhagen and Reykjavik and the derivatives exchange in Stockholm. Clearing is
conducted via Nasdaq Clearing that operates central counterparty clearing for
derivative instruments.

Nasdaq Clearing handles traditional business risks, as well as specific risks that are
unique to the derivative clearing services it provides. The most noteworthy of these
risks, with respect to the risk of loss, is counterparty default, the risk that one or
several market participants will default on their obligations to the clearing
organization. Nasdaq Clearing’s counterparty risks are professionally managed
within the Risk Management department, through a comprehensive counterparty
risk management framework. This consists of policies, procedures, standards, and
human, informational and technological resources. All together this provides
accurate measurement, reasonable control, and desired level of protection from all
identifiable counterparty risks and all operational risks arising within the operations
of Nasdaq Clearing.

The European Market Infrastructure Regulation (Regulation (EU) No 648/2012 of the
European Parliament and of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories) (“EMIR”) came into force on August 16, 2012.
One of the objectives of EMIR is to reinforce the role of central counterparties in
mitigating certain aspects of market and counterparty risk with the aim to protect
the stability of the financial system.

Nasdaq Clearing has been authorized by and is under supervision by the Swedish
Financial Supervisory Authority, Finansinspektionen, (the “Swedish FSA”) to conduct
clearing operations under EMIR. The operations of Nasdaq Clearing are also
governed by the Swedish Securities Market Act (2007:528) (Sw: lagen (2007:528) om
vardepappersmarknaden). All operations of Nasdaq Clearing are subject to the
supervision of the Swedish FSA and the central clearing party operations are also
overseen by the Swedish Central Bank (“Riksbanken”).

Nasdaq Clearing submitted its application for an EMIR clearing license to the

Swedish FSA on 16 April, 2013, and was approved by the same authority as a
clearing house under EMIR on 18 March 2014.

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


L 201/22

Official Journal of the European Union

27.7.2012

3, _ In calculating the positions referred to in paragraph 1, the
non-financial counterparty shall include all the OTC derivative
contracts entered into by the non-financial counterparty or by
other non-financial entities within the group to which the non-
financial counterparty belongs, which are not objectively
measurable as reducing risks directly relating to the commercial
activity or treasury financing activity of the non-financial
counterparty or of that group.

4. In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards, after
consulting the ESRB and other relevant authorities, specifying:

(a) criteria for establishing which OTC derivative contracts are
objectively measurable as reducing risks directly relating to
the commercial activity or treasury financing activity
referred to in paragraph 3; and

values of the clearing thresholds, which are determined
taking into account the systemic relevance of the sum of
net positions and exposures per counterparty and per class
of OTC derivatives.

S

‘After conducting an open public consultation, ESMA. shall
submit those draft regulatory technical standards to the
Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

After consulting the ESRB and other relevant authorities, ESMA
shall periodically review the thresholds and, where necessary,
propose regulatory technical standards to amend them.

5. Each Member State shall designate an authority
responsible for ensuring that the obligation under paragraph
1 is met.

Article 11

Risk-mitigation techniques for OTC derivative contracts
not cleared by a CCP

1. Financial counterparties and non-financial counterparties
that enter into an OTC derivative contract not cleared by a
CCP, shall ensure, exercising due diligence, that appropriate
procedures and arrangements are in place to measure,
monitor and mitigate operational risk and counterparty credit
risk, including at least:

() the timely confirmation, where available, by electronic
means, of the terms of the relevant OTC derivative contract;

(b) formalised processes which are robust, resilient and
auditable in order to reconcile portfolios, to manage the
associated risk and to identify disputes between parties
early and resolve them, and to monitor the value of
outstanding contracts.

2. Financial counterparties and non-financial counterparties
referred to in Article 10 shall mark-to-market on a daily basis
the value of outstanding contracts. Where market conditions
prevent marking-to-market, reliable and prudent marking-to-
model shall be used.

3. Financial counterparties shall have _risk-management
procedures that require the timely, accurate and appropriately
segregated exchange of collateral with respect to OTC derivative
contracts that are entered into on or after 16 August 2012.
Non-financial counterparties referred to in Article 10 shall have
tisk-management procedures that require the timely, accurate
and appropriately segregated exchange of collateral with
respect to OTC derivative contracts that are entered into on
or after the clearing threshold is exceeded.

4, Financial counterparties shall hold an appropriate and
proportionate amount of capital to manage the risk not
covered by appropriate exchange of collateral.

5. ‘The requirement laid down in paragraph 3 of this Article
shall not apply to an intragroup transaction referred to in
Article 3 that is entered into by counterparties which are estab-
lished in the same Member State provided that there is no
current or foreseen practical or legal impediment to the
prompt transfer of own funds or repayment of liabilities
between counterparties.

6. An intragroup transaction referred to in Article 3(2)(a), (b)
or (c) that is emered into by counterparties which are estab-
lished in different Member States shall be exempt totally or
partially from the requirement laid down in paragraph 3 of
this Article, on the basis of a positive decision of both the
relevant competent authorities, provided that the following
conditions are fulfilled:

(a) the risk-management procedures of the counterparties are
adequately sound, robust and consistent with the level of
complexity of the derivative transaction;

(b) there is no current or foreseen practical or legal impediment
to the prompt transfer of own funds or repayment of
liabilities between the counterparties.


ARTM.14 The Riksbank alone shall have the right to issue coins
and banknotes. Further rules concerning the mone-
tary and payments system shall be laid down in an
act of law.

(401


| il

LONO1_8129629v2


default event has occurred or if a default event is likely to occur. The Clearing
Default Committee shall be the single decision making authority for all decisions
concerning default situations and close-out handling. The Chief Risk Officer of
Nasdaq Clearing is the Chairman of the Clearing Default Committee and has power
of veto along with the CEO of Nasdaq Clearing in all decision making in the Clearing
Default Committee. The mandate and decision making process for the Clearing
Default Committee is outlined by the Board in the policy Instruction to the Clearing
Default Committee. The overall guideline for how the Clearing Default Committee
shall act in case of a default event is documented in the Default Policy, an appendix
to the Instruction to the Default Committee. In addition to the policy documents,
detailed process and strategy documents exists for each asset class on how to
manage the close out process in a default.

Nasdaq Clearing is well prepared to implement its default rules and procedures,
including any appropriate discretionary procedures provided for in its rules. The
default rules in combination with a robust and pre-defined default management
process ensure that Nasdaq Clearing can continue to meet its obligation in the event
of a participant default. Nasdaq Clearing’s default management process is well
documented and includes a transparent default organization with clear mandate and
the involvement of participants to secure efficient handling of a default. Product
specific default fire drills are conducted on a minimum on an annual basis. For fixed
income asset class, default fire drills are conducted semi-annually.

Nasdaq Clearing publicly discloses key aspects of its default rules and procedures.
The key aspects of the default structure are made available through the respective
R&R, the default rules’, and through default fund policy papers and the information
publicly available on the website®, The R&Rs state under which circumstances
actions may be taken, i.e. when a default is declared. The default rules further
stipulate Nasdaq Clearing’s rights to take actions and in what order such actions
should be taken. They also include rights for non-defaulting participants to have
their claim against a defaulting participant assigned to them and rights to exit the
default fund and thereby have a limited exposure towards Nasdaq Clearing. The
General Terms for Custody Account® forms an integral part of the default structure
and discloses Nasdaq Clearing’s right to appropriate contributed assets.

Nasdaq Clearing involves its participants and other stakeholders in the testing and
review of the FMI’s default procedures, including any close-out procedures. Such
testing and review is conducted at least annually or following material changes to
the rules and procedures to ensure that they are practical and effective. The default
management process is tailored for each asset class, driven by the specific market

Nasdaq FIN R&R Appendix 16, Nasdaq COM R&R Appendix 9

®http://www.nasdagomx.com/europeanclearing/nordicclearingtoday/riskanddefaultmanagement/defaultfund/praceduresagreementspoll

cypapers/and_ http://www.nasdaqomx.com/europeanclearing/risk-management/default-management

°http://www.nasdagomx.com/europeanclearing/nordicclearingtoday/riskanddefaultmanagement/defaultfund/proceduresagreementspo!

rs/

cypal

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

37




Exhibit A-4 to Supplement S-1 to Form FBOT

A description of the national statutes, laws and regulations governing the activities of the clearing
organization and its members.

1. General comments

‘As mentioned above, Nasdaq Clearing has been authorized by and is under supervision by the
SFSA to conduct clearing operations under EMIR. All operations of Nasdaq Clearing are subject to the
supervision of the SFSA and the central clearing party operations are also overseen by the Swedish
Central Bank (“Riksbanken”).

Nasdaq Clearing submitted its application for an EMIR clearing license to the SFSA on 16 April,
2013, and was approved by the same authority as a clearing house under EMIR on 18 March 2014, In
addition, Nasdaq Clearing is licensed by the Norwegian Ministry of Finance to carry out clearing activities
in Norway. The commodity clearing operations are supervised by SFSA and Finanstilsynet jointly, with
SFSA being appointed as the principal supervisor pursuant to a memorandum of understanding between
the two supervisors.

Nasdaq Clearing’s competent authority is the SFSA under EMIR. Nasdaq Clearing is also
overseen by college of European regulators, which includes Riksbanken, the central bank in Sweden,
which also has financial stability responsibilities for Nasdaq Clearing. The Swedish securities and
derivatives markets, including clearing organizations, are regulated by laws and regulations (including EU
regulations and directives), governmental ordinances and guidelines. EU regulations and directives are
becoming increasingly important with many new regulations such as EMIR being directly applicable to
Nasdaq Clearing.

The Swedish regulatory system is also based on general parliamentary and subordinate legislation
supported by more detailed self-regulation, together with active supervision by SFSA. Self-regulation
based on the legal framework consists mainly of rules and regulations regarding exchanges, clearinghouse
and central securities depositories which are established by the exchanges, the clearinghouse and the
central securities depositories themselves, as well as the recommendations of industry organizations.

2. National statutes, laws and regulations governing the activities of the clearing
organization

As mentioned above, Nasdaq Clearing is authorized as a central counterparty and is licensed to
conduct clearing operations by the SFSA pursuant to EMIR. The operations of Nasdaq Clearing are also
governed by the Swedish Securities Market Act (Sw. Lag (2007:528) om vardepappersmarknaden).
Nasdaq Clearing submitted its application for an EMIR clearing license to the SFSA on 16 April, 2013,
and was approved by the same authority as a clearing house under EMIR on 18 March 2014.

The SFSA has also approved and designated Nasdaq Clearing as a system for settlement and notified
this to the European Securities and Markets Authority (ESMA) pursuant to the Swedish Act (1999:1309)
concerning Systems for the Settlement of Obligations on the Financial Market (Sw. Lag (1999:1309) om
system for avveckling av forpliktelser pd finansmarknaden) (the Swedish Act implementing the Settlement
Finality Directive (98/26/EC)). Similarly, the Norwegian FSA has approved and registered Nasdaq
Clearing Oslo Branch as a designated settlement system in accordance with the Norwegian Payment
System Act 17 December 1999 No 95. In Sweden, trading and clearing are primarily governed by the
following acts and regulations:

LONOI_8129617v4


certificates are all held on Nasdaq Clearings’ own accounts. The accounts are
reconciled daily and there is no storage cost at the Registries.

The delivery settlement arrangements at Nasdaq Clearing are continuously
evaluated in order to provide the best possible delivery solution for Nasdaq Clearing
and its participants.

Principle 12: Exchange-of-value settlement systems

If an FMI settles transactions that involve the settlement of two linked obligations
{for example, securities or foreign exchange transactions), it should eliminate
principal risk by conditioning the final settlement of one obligation upon the final
settlement of the other.

The following sections describe the delivery versus payment mechanism
implemented for Financial and Commodities respectively. A supporting Physical
Delivery Policy is written, particularly with regard to DvP, to ensure that the delivery
is at all times processed in accordance with EMIR.

For Financial, deliveries in the Nordic CSDs are always affected in accordance with
the principle of DvP (i.e. the settlement obligations payment and delivery are linked
together and finalized simultaneously) and the CSDs guarantee that the DvP
instructions shall be performed accordingly. The DvP mechanism implies that if
deliveries are late no cash is withdrawn, and both the delivering and the paying
counterparty will pay an overdue delivery margin to Nasdaq Clearing until delivery is
finalized.

The quantities delivered are dependent on the netting process. How the trade
registrations are netted depends on the instrument, the account and the contract.

For Commodities, the contracts are registered as DvP transactions in the clearing
system, however due to the market structure for the aforementioned contracts,
most notably how the Registries function, a DvP settlement mechanism is not
technically possible to achieve and instead the cash settlement is performed in the
CMS. In order to limit the principal risk, Nasdaq Clearing issues a margin requirement
(equal to the contract value) on the final trading day and Nasdaq Clearing receives
the collateral on D+1.

The quantities delivered are dependent on the netting process and the derivatives
contracts are always netted.

2016, The Nasdaq Group, Inc. All Rights Reserved.

35


25

a§

4§

Denna bestammelse finns i tillaggsbestammelsen
8.7.1 till riksdagsordningen.

Fullmaktiges ratt att skilja en ledamot av direktionen
fran hans anstallning féljer av 9 kap. 13 § regerings-
formen.

Talan mot beslut om skiljande fran anstallning skall
ske inom tva manader fran delgivning av beslutet.
Riksbankschefen far fora talan vid EG-domstolen.
Ovriga ledaméter far vacka talan i Hogsta dom-
stolen.

Hégsta domstolen far férklara ett beslut om skiljande
fran anstallning ogiltigt.

Vacks inte talan inom den tid som féreskrivs i andra
stycket har parten forlorat sin talan.

Vid fullmaktiges sammantraden skall protokoll féras.

Fullmaktige ar beslutfora nar minst atta av ledamo-
terna ar narvarande. Varje ledamot som deltar i den
slutliga handlaggning ar skyldig att delta aven i avgé-
randet. Ingen ar dock skyldig att résta fér mer an ett
forslag. Ett beslut om att skilja en ledamot av direk-
tionen fran hans anstallning forutsatter att minst atta
av fullmaktiges ledaméter ar ense om beslutet.

Fullmaktige far for Riksbankens rakning lamna re-
missyttranden inom sitt verksamhetsomrade.

ui


c) Encouraging the system to rectify any shortcomings in safety or efficiency.

In addition to these three stages, the oversight function also covers facilitating and promoting
market initiatives which may develop and make the financial infrastructure more efficient. In this regard,
Riksbanken can provide advice and facilitate cooperation between both private players and authorities
acting within the financial infrastructure.

In the cases where Riksbanken’s analysis points to shortcomings in safety or efficiency,
Riksbanken encourages the system to rectify these. However, Riksbanken is unable to issue regulations or
introduce sanctions in order to demand that the systems take measures if shortcomings are discovered.
Instead, Riksbanken uses what is known as “moral suasion” 5 which means that Riksbanken
communicates its view publicly and directly to the systems, gives reasons for this, and expects the system
to adapt to it. This work includes public statements, speeches and publications, as well as dialogue and
meetings with the systems. Riksbanken can also issue recommendations in its Financial Stability Report
aimed at the system and/or its participants if a shortcoming has been identified and needs to be remedied.
Such a recommendation is decided by the Executive Board of Riksbanken. A further means of
communicating an identified shortcoming in a system is to bring it up for further discussion in the
temporary council for cooperation on macro-prudential policy.

There are parts of the financial infrastructure that are included in both Riksbanken’s and FI’s
oversight and supervision, which means that the two authorities’ areas of responsibility in some cases and
to some extent overlap. In these cases, the two authorities endeavour to develop efficient forms for
contacts and cooperation.®

The stability of the financial infrastructure in Sweden may partially be dependent upon the safety
and efficiency of foreign systems. Riksbanken therefore participates in oversight cooperation concerning
these overseas systems. The oversight work is headed up by the domestic country's responsible authority
(or authorities) and follows the guidelines for cooperation in the international principles drawn up by the
CPSS and the IOSCO.

Riksbanken also participate in international working groups within the Bank for International
Settlements (“BIS”) and the European System of Central Banks (“ESCB”), which aim to reinforce the
financial infrastructure in various ways.

® In May 2009, Riksbanken, FI, the Swedish Ministry of Finance and the Swedish National Debt Office entered into
an agreement covering cooperation in issues of financial stability.

LONO1_8129630v4


svinices
RIRSIAWK

Riksbankslagen

riksbank



1§

258

skyndsamt beslut far dock avgdras av tva ledaméter,

om de ar ense om beslutet. Varje ledamot som deltar
iden slutliga handlaggningen av ett arende ar skyldig
att delta aven i avgdrandet. Ingen ar dock skyldig att
résta for mer an ett forslag.

Ordféranden och vice ordféranden i fullmaktige har
ratt att narvara vid direktionens sammantraden med
yttranderatt men utan férslags- och rdstratt.

4 "4. GEMENSAMMA BESTAMMELSER
FOR FULLMAKTIGE OCH DIREKTIONEN

Uppkommer i Riksbankens verksamhet anledning att
vacka en fraga om férfattningsandring eller nagon
annan atgard fran statens sida, far fullmaktige eller
direktionen inom sitt respektive ansvarsomrade gora
framstallning i amnet till riksdagen enligt tillaggs-
bestammelsen 3.8.3 till riksdagsordningen eller till
regeringen.

innan en framstallning till riksdagen eller regeringen
gors skall fullmaktige och direktionen samrada med
varandra.

| skrivelser som fullmaktige eller direktionen avger
till riksdagen eller regeringen skall det anges vilka
ledambter som deltagit i beslutet och vem som
varit foredragande. Har skiljaktig mening anmalts i
&rendet, skall den anges i skrivelsen eller framga av
bifogat protokollsutdrag.

119)


27.7.2012

Official Journal of the European Union

L 201/51

8. A trade repository shall publicly disclose the prices and
fees associated with services provided under this Regulation. It
shall disclose the prices and fees of each service provided separ-
ately, including discounts and rebates and the conditions to
benefit from those reductions. It shall allow reporting entities
to access specific services separately. The prices and fees charged
by a trade repository shall be cost-related.

Article 79
Operational reliability

1, A trade repository shall idemify sources of operational risk
and minimise them through the development of appropriate
systems, controls and procedures. Such systems shall be
reliable and secure and have adequate capacity to handle the
information received.

2. A trade repository shall establish, implement and maintain
an adequate business continuity policy and disaster recovery
plan aiming at ensuring the maintenance of its functions, the
timely recovery of operations and the fulfilment of the trade
repository’s obligations. Such a plan shall at least provide for
the establishment of backup facilities.

3. A trade repository from which registration has been
withdrawn shall ensure orderly substitution including the
transfer of data to other trade repositories and the redirection
of reporting flows to other trade repositories.

Article 80
Safeguarding and recording

1. A trade repository shall ensure the confidentiality,
integrity and protection of the information received under
Article 9.

2. A trade repository may only use the data it receives under
this Regulation for commercial purposes if the relevant counter-
parties have provided their consent.

3. A trade repository shall promptly record the information
received under Article 9 and shall maintain it for at least 10
yeats following the termination of the relevant contracts. It shall
employ timely and efficient record keeping procedures to
document changes to recorded information.

4, A trade repository shall calculate the positions by class of
derivatives and by reporting entity based on the details of the
derivative contracts reported in accordance with Article 9.

5. A trade repository shall allow the parties to a contract to
access and correct the information on that contract in a timely
manner.

6. A trade repository shall take all reasonable steps to
prevent any misuse of the information maintained in its
systems.

A natural person who has a close link with a trade repository or
a legal person that has a parent undertaking or a subsidiary
relationship with the trade repository shall not use confidential
information recorded in a trade tepository for commercial
purposes.

Article 81
Transparency and data availability

1. A trade repository shall regularly, and in an easily
accessible way, publish aggregate positions by class of
derivatives on the contracts reported to it.

2. A trade repository shall collect and maintain data and
shall ensure that the entities referred to in paragraph 3 have
direct and immediate access to the details of derivatives
contracts they need to fulfil their respective responsibilities
and mandates.

3. A trade repository shall make the necessary information
available to the following entities to enable them to fulfil their
respective responsibilities and mandates:

(a) ESMA;
(b) the ESRB;

(0) the competent authority supervising CCPs accessing the
trade repository;

(@ the competent authority supervising the trading venues of
the reported contracts;

(e) the relevant members of the ESCB;

() the relevant authorities of a third country that has entered
into an international agreement with the Union as referred
to in Article 75;

(g) supervisory authorities appointed under Article 4 of
Directive 2004]25/EC of the European Parliament and of
the Council of 21 April 2004 on takeover bids (');

(h) the relevant Union securities and market authorities;

() the relevant authorities of a third country that have entered
into a cooperation arrangement with ESMA as referred to in
Article 76;

(i) the Agency for the Cooperation of Energy Regulators.

()) OJ L 142, 30.4.2004, p. 12.


technical requirements (Swift, lead times etc.), the support requirement, the credit
rating requirements and the operational requirements related to the respective
markets. Before being approved, the settlement bank shall participate in tests in
order to verify that their payment flows operate in accordance with the Settlement
Bank Agreement. When the tests are successfully passed and the Settlement Bank
Agreement is signed by the parties, the settlement bank may participate in the daily
money settlement process and be appointed as a settlement bank by clearing
members.

Nasdaq Clearing uses concentration banks and settlement banks with a minimum
rating level, A- (S&P) or A3 (Moody's), in order to ensure the banks’
creditworthiness. All banks appointed by Nasdaq Clearing are reviewed and
evaluated in accordance with the Credit Risk Policy. Nasdaq Clearing’s appointed
banks are also subject to the Treasury departments Finance policy (including
monitoring of the rating requirements of the settlement banks). The management of
the liquidity risks and the mitigations taken by Nasdaq Clearing are described in
Nasdaq Clearing’s Liquidity Policy and also in more detail in Principle 7.

Nasdaq Clearing has appointed a large number of banks to participate in the
settlement, in order to spread the concentration exposure and to ensure that
Nasdaq Clearing has parallel arrangements in case of a disruption.

Principle 10: Physical deliveries

An FMI should clearly state its obligations with respect to the delivery of physical
instruments or commodities and should identify, monitor, and manage the risks
associated with such physical deliveries.

The carbon emission contracts and the electricity certificates contracts have physical
delivery. The delivery information needed for a member to fulfill its physical delivery
obligation is clearly stated in Nasdaq COM R&R section 6 and appendix 2 part B
sections 3 and 4. The physical delivery obligations are further clarified in the guide,
“Nasdaq Clearing as a Counterparty”.®

Before being accepted to trade the participants receive information in relation to
delivery and must assure Nasdaq Clearing that they understand the information, are
able to comply with physical delivery obligations and have the necessary set up to
fulfill the delivery obligation.

The delivery instructions are monitored on a daily basis with intraday updates by
Nasdaq Clearing’s personnel, to assure that the deliveries are completed on the
correct day. A participant can request to pre-deliver a contract and in return receive
decreased margin requirement. The pre-delivered allowances or electricity

* http://www.nasdagomx.com/digitalAssets/98/98491_nasdaq-clearing-as-a-counterparty-april-2015.pdf

2016, The Nasdaq Group, Inc. All Rights Reserved.

34


L 201/44

Official Journal of the European Union

27.7.2012

(a) set a time limit within which the information is to be
provided;

(©) indicate the periodic penalty payments provided for in
Article 66 where the production of the required information
is incomplete;

(f) indicate the fine provided for in Article 65 in conjunction
with point (a) of Section IV of Annex 1, where the answers
to questions asked are incorrect or misleading; and

(g) indicate the right to appeal the decision before ESMA's
Board of Appeal and to have the decision reviewed by the
Court of Justice of the European Union (Court of justice) in
accordance with Articles 60 and 61 of Regulation (EU)
No 1095/2010.

4, ‘The persons referred to in paragraph 1 or their represen-
tatives and, in the case of legal persons or associations having
no legal personality, the persons authorised to represent them
by law or by their constitution shall supply the information
requested, Lawyers duly authorised to act may supply the
information on behalf of their clients. The latter shall remain
fully responsible if the information supplied is incomplete,
incorrect or misleading.

5. ESMA shall, without delay, send a copy of the simple
request or of its decision to the competent authority of the
Member State where the persons referred to in paragraph 1
concerned by the request for information are domiciled or
established.

Article 62
General investigations

1. In order to carry out its duties under this Regulation,
ESMA may conduct necessary investigations of persons
referred to in Article 61(1). To that end, the officials and
other persons authorised by ESMA shall be empowered to:

(a) examine any records, data, procedures and any other
material relevant to the execution of its tasks irrespective
of the medium on which they are stored;

take or obtain certified copies of or extracts from such
records, data, procedures and other material;

S

summon and ask any person referred to in Article 61(1) or
their representatives or staff for oral or written explanations
on facts or documents relating to the subject matter and
purpose of the inspection and to record the answers;

©)

@)

interview any other natural or legal person who consents to
be interviewed for the purpose of collecting information
relating to the subject matter of an investigation;

(©) request records of telephone and data traffic.

2. The officials and other persons authorised by ESMA for
the purposes of the investigations referred to in paragraph 1
shall exercise their powers upon production of a written auth-
orisation specifying the subject matter and purpose of the inves-
tigation. That authorisation shall also indicate the periodic
penalty payments provided for in Article 6¢ where the
production of the required records, data, procedures or any
other material, or the answers to questions asked to persons
referred to in Article 61(1) are not provided or are incomplete,
and the fines provided for in Article 65 in conjunction with
point (b) of Section IV of Annex I, where the answers to
questions asked to persons referred to in Article 61(1) are
incorrect or misleading.

3. The persons referred to in Article 61(1) are required to
submit to investigations launched on the basis of a decision of
ESMA. The decision shall specify the subject matter and purpose
of the investigation, the periodic penalty payments provided for
in Anticle 66, the legal remedies available under Regulation (EU)
No 1095/2010 and the right to have the decision reviewed by
the Court of Justice.

4. In good time before the investigation, ESMA shall inform
the competent authority of the Member State where the inves-
tigation is to be carried out of the investigation and of the
identity of the authorised persons. Officials of the competent
authority concerned shall, upon the request of ESMA, assist
those authorised persons in carrying out their duties. Officials
of the competent authority concerned may also attend the
investigations upon request.

5. If a request for records of telephone or data traffic referred
to in point (¢) of paragraph 1 requires authorisation from a
judicial authority according to national rules, such authorisation
shall be applied for. Such authorisation may also be applied for
as a precautionary measure.

6. Where authorisation as referred to in paragraph 5 is
applied for, the national judicial authority shall control that
the decision of ESMA is authentic and that the coercive
measures envisaged are neither arbitrary nor excessive having
regard to the subject matter of the investigations. In its control
of the proportionality of the coercive measures, the national
judicial authority may ask ESMA for detailed explanations, in
particular relating to the grounds ESMA has for suspecting that
an infringement of this Regulation has taken place and the
seriousness of the suspected infringement and the nature of
the involvement of the person subject to the coercive
measures. However, the national judicial authority shall not
review the necessity for the investigation or demand that it
be provided with the information on ESMA's file. The
lawfulness of ESMA's decision shall be subject to review only
by the Court of Justice following the procedure set out in
Regulation (EU) No 1095/2010.


The Chairman and Vice-Chairman of the General
Council have the right to be present at the Executive
Board's meetings with the right to speak, but without
the right to make proposals and vote.

curren 4 COMMON PROVISIONS FOR THE GENERAL
COUNCIL AND THE EXECUTIVE BOARD

aan, If the Riksbank's activities give rise to a question of

statutory amendment or any other governmental
measure, the General Council or the Executive Board
may within their respective area of competence make
a proposal concerning the matter to the Riksdag, in
accordance with the supplementary rule 3.8.3 in the
Riksdag Act or to the Government.

Before making a proposal to the Riksdag or the
Government, the General Council and the Executive
Board shall consult one another.

**".2. Communications issued by the General Council or

the Executive Board to the Riksdag or the Governm-
ent must include information detailing the members
who have taken part in the decision and the person
who has submitted the facts of the matter. If a
dissenting vote is given in the matter, this shall be in-
dicated in the communication or be evident from an
appended extract from the minutes of the meeting.

akt-3, In matters of major importance connected with the

stability of the payments system or involving the su-
pervisory activities of the Financial Supervisory Aut-

152]


7" VALUTAPOLITIK

1§  Riksbanken skall besluta om tillampningen av det
vaxelkurssystem som regeringen beslutat om.

2§ Det ankommer pa Riksbanken att i valutapolitiskt
syfte halla tillgangar i utlandsk valuta, utlandska
fordringar och guld.

3§ | valutapolitiskt syfte far Riksbanken

1. képa, salja och formedia utlandsk valuta,
utlandska statspapper, andra latt omsattnings-
bara skuldebrev i utlandsk valuta och guld samt
rattigheter och skyldigheter som anknyter till
namnda tillgangar,

2. ge ut egna skuldebrev i utlandsk valuta for de
andamél som avses i 1 § andra stycket lagen
(1988:1387) om statens upplaning och skuldfor-
valtning.

4§ | valutapolitiskt syfte far Riksbanken ta upp utlandsk
kredit och kredit i utlandsk valuta, bevilja kredit till
annan centralbank, bevilja kredit inom ramen fér
verksamheten i Banken for internationell betalnings-

utjamning samt bevilja kredit for Europeiska unionens

system fér medelfristigt finansiellt stéd.

Efter medgivande av riksdagen far Riksbanken i valu-
tapolitiskt syfte bevilja kredit till andra internationella
finansorgan som Sverige ar medlem i och sluta avtal
med annan 4n centralbank om langsiktiga internatio-
nella lanedtaganden.

[26]


EMIR

Securities Market Act (2007:528)

Systems for the Settlement of Obligations on the Financial Market Act (1999:1309)
Financial Instruments Trading Act (1991:980)

Rights of Priority Act (1970:979)

Swedish Bankruptcy Act (1987:672)

Financial Instruments Accounts Act (1998:1479)

VVVVVVV

The Swedish Financial Instruments Trading Act (Sw. Lag (1991:980) om handel med finansiella
instrument) stipulates that the settlement of obligations between two or more participants in a notified
settlement system applies to bankrupt parties and their creditors if settlement has been made in accordance
with the rules of the system. This provision also applies to the settlements that take place during the
clearing process in Nasdaq Clearing’s system.

Moreover, provisions exist in Swedish law concerning the pledging of collateral and liquidation of
securities in a bankruptcy. The Swedish Rights of Priority Act (Sw. Formdnsrdttslagen (1970:979))
stipulates that a pledgee, in this case Nasdaq Clearing, has a “special right of priority” to pledged assets in
cases of bankruptcy. This entitlement means that where payment of a pledge is involved, Nasdaq Clearing
does not necessarily rank behind any other creditor. The Swedish Bankruptcy Act (Sw. Konkurslagen
(1987:672)) enables Nasdaq Clearing to sell without delay any financial instruments it holds as collateral,
as long as this is done in accordance with reasonable commercial principles.

In addition to the laws and regulations mentioned above, Nasdaq Clearing’s activities are
governed by other EU directives (as implemented in local law) and regulations, including the Directive
2002/47/EC on Financial Collateral Arrangements.

Nasdaq Clearing has also issued rules and regulations applicable to its clearing activities. The
rules and regulations together with the membership agreements constitute the contractual framework
governing the relationship between Nasdaq Clearing and its participants. The rules and regulations
become binding for participants through the execution of the membership agreement. The contractual
relationships between Nasdaq Clearing and the respective participants are governed by Swedish law (for
Nasdaq Financial) and Norwegian law (for Nasdaq Commodities).Supervision of FI and Riksbanken

As previously mentioned Nasdaq Clearing is subject to the supervision of FI. As a consequence
of such supervision Nasdaq Clearing is at all times obligated to furnish FI with such information as FI
may require about matters related to its business and activities. FI may also, on its own initiative and
without notification, undertake on-site inspections. FI also periodically performs reviews of Nasdaq
Clearing to ensure that Nasdaq Clearing meets the legal requirements under its license and applicable laws
and regulations.

More details of the supervision activities are described in Supplement 1 -Exhibit E The regulatory
regime covering the clearing organization in its home country or countries.

3. National statues, laws and regulations governing the clearing organization’s members

Please see Exhibit A-5, Section 3, to the Form FBOT for details on national statutes, laws and
regulations governing the Clearinghouse’s members.

LONO1_8129617v4


Gs

L 201/50

Official Journal of the European Union

27.7.2012

4, ESMA shall apply Regulation (EC) No 45/2001 with
regard to the transfer of personal data to a third country.

Article 76
Cooperation arrangements

Relevant authorities of third countries that do not have any
trade repository established in their jurisdiction may contact
ESMA with a view to establishing cooperation arrangements
to access information on derivatives contracts held in Union
trade repositories.

ESMA may establish cooperation arrangements with those
relevant authorities regarding access to information on
derivatives contracts held in Union trade repositories that
these authorities need to fulfil their respective responsibilities
and mandates, provided that guarantees of professional
secrecy exist, including the protection of business secrets
shared by the authorities with third parties.

Article 77
Recognition of trade repositories

1. A trade repository established in a third country may
provide its services and activities to entities established in the
Union for the purposes of Article 9 only after its recognition by
ESMA in accordance with paragraph 2.

2. A trade repository referred to in paragraph 1 shall submit
to ESMA its application for recognition together with all
necessary information, including at least the information
necessary to verify that the trade repository is authorised and
subject to effective supervision in a third country which:

(a) has been recognised by the Commission, by means of an
implementing act pursuant to Article 75(1), as having an
equivalent and enforceable regulatory and supervisory
framework;

(b) has entered into an international agreement with the Union
pursuant to Article 75(2); and

(c) has entered into cooperation arrangements pursuant to
Article 75(3) to ensure that Union authorities, including
ESMA, have immediate and continuous access to all the
necessary information.

Within 30 working days of receipt of the application, ESMA
shall assess whether the application is complete. If the appli-
cation is not complete, ESMA shall set a deadline by which the
applicant trade repository has to provide additional information.

Within 180 working days of the submission of a complete
application, ESMA shall inform the applicant trade repository
in writing with a fully reasoned explanation whether the recog-
nition has been granted or refused,

ESMA shall publish on its website a list of the trade repositories
recognised in accordance with this Regulation.

TITLE VII
REQUIREMENTS FOR TRADE REPOSITORIES
Article 78
General requirements

1. A trade repository shall have robust governance arrange-
ments, which include a clear organisational structure with well
defined, transparent and consistent lines of responsibility and
adequate internal control mechanisms, including sound admin-
istrative and accounting procedures, which prevent any
disclosure of confidential information.

2. A trade repository shall maintain and operate effective
written organisational and administrative arrangements to
identify and manage any potential conflicts of interest
concerning its managers, employees, or any person directly or
indirectly linked to them by close links.

3. A trade repository shall establish adequate policies and
procedures sufficient to ensure its compliance, including of its
managers and employees, with all the provisions of this Regu-
lation.

4, A trade repository shall maintain and operate an adequate
organisational structure to ensure continuity and orderly func-
tioning of the trade repository in the performance of its services
and activities. It shall employ appropriate and proportionate
systems, resources and procedures.

5. Where a trade repository offers ancillary services such as
trade confirmation, trade matching, credit event servicing,
portfolio reconciliation or portfolio compression services, the
trade repository shall maintain those ancillary services oper-
ationally separate from the trade repository’s function of
centrally collecting and maintaining records of derivatives.

6. The senior management and members of the board of a
trade repository shall be of sufficiently good repute and
experience so as to ensure the sound and prudent management
of the trade repository.

7. A trade repository shall have objective, non-discriminatory
and publicly disclosed requirements for access by undertakings
subject to the reporting obligation under Article 9. A trade
repository shall grant service providers non-discriminatory
access to information maintained by the trade repository, on
condition that the relevant counterparties have provided their
consent. Criteria that restrict access shall only be permitted to
the extent that their objective is to control the risk to the data
maintained by a trade repository.


36

4s

| viktigare fragor som har samband med betalnings-
systemets stabilitet eller berér Finansinspektionens
tillsynsverksamhet skall Riksbanken samrada med
inspektionen. Vid ett sAdant samrad skall Riksbanken
lamna Finansinspektionen de uppgifter som beh6vs.

Ordféranden och vice ordfdranden i fullmaktige samt
ledamoterna i direktionen skall till riksdagen skriftli-
gen anmala

. innehav av finansiella instrument som anges i

1 kap. 1 § lagen (1991:980) om handel med
finansiella instrument,

innehav av andel i ett handelsbolag eller en ekon-
misk férening utom bostadsrattsférening samt
andel i en motsvarande utlandsk juridlsk person,

. agande, helt eller delvis, av naringsfastighet enligt
2 kap. 14 § inkomstskattelagen (1999:1229),
avtal av ekonomisk karaktar med tidigare arbets-
givare, sasom avtal om ldne- eller pensionsférman
som lamnas under den tid som omfattas av upp-
draget | fullmaktige eller anstallningen i direktio-
nen, och

krediter eller andra skulder samt villkoren for
dessa.

Anmalan av tillgangar och avtal enligt férsta stycket
2-4 behéver inte gdras om dessa tillsammans under-
stiger ett marknadsvarde pa 500 000 kronor. Det-
samma giller krediter och andra skulder enligt forsta
stycket 5 om dessa tillsammans understiger 500 000
kronor.

N

w

ca

Anmialan enligt forsta stycket skall géras nar upp-
draget eller anstallningen pabérjas. Behéver enligt

120]


G4

27.7.2012

Official Journal of the European Union

L 201/55

2. For the purposes of points (b), (c) and (d) of paragraph 1,
competent authorities shall maintain websites, which shall be
linked to the ESMA website.

3. All websites referred to in this Article shall be publicly
accessible and regularly updated, and shall provide information
in a clear format.

Article 89
Transitional provisions

1, For three years after the entry into force of this Regu-
lation, the clearing obligation set out in Article 4 shall not
apply to OTC derivative contracts that are objectively
measurable as reducing investment risks directly relating to
the financial solvency of pension scheme arrangements as
defined in Article 2(10). The transitional period shall also
apply to entities established for the purpose of providing
compensation to members of pension scheme arrangements
in case of a default.

The OTC derivative contracts, which would otherwise be subject
to the clearing obligation under Article 4, entered into by those
entities during this period shall be subject to the requirements
laid down in Article 11.

2. In relation to pension scheme arrangements referred to in
Article 2(10)(c) and (d) the exemption referred to in paragraph
1 of this Article shall be granted by the relevant competent
authority for types of entities or types of arrangements. After
receiving the request, the competent authority shall notify
ESMA and EIOPA. Within 30 calendar days of receipt of the
notification ESMA, after consulting EIOPA, shall issue an
opinion assessing compliance of the type of entities or the
type of arrangements with Article 2(10){c) or {d) as well as
the reasons why an exemption is justified due to difficulties
in meeting the variation margin requirements. The competent
authority shall only grant an exemption where it is fully
satisfied that the type of entities or the type of arrangements
complies with Article 2(10){c) or (d} and that they encounter
difficulties in meeting the variation margin requirements. The
competent authority shal! adopt a decision within ten working
days of receipt of ESMA's opinion, taking due account of that
opinion. If the competent authority does not agree with ESMA's
opinion, it shall give full reasons in its decision and shail
explain any significant deviation therefrom.

ESMA shall publish on its website a list of types of entities and
types of arrangements referred to in Article 2(10)(c) and (4)
which has been granted an exemption in accordance with the
first subparagraph. To further strengthen consistency in super-
visory outcomes, ESMA shall conduct a peer review of the
entities included on the list every year in accordance with
Article 30 of Regulation (EU) No 1095/2010.

3. A CCP that has been authorised in its Member State of
establishment to provide clearing services in accordance with
the national law of that Member State before all the regulatory
technical standards under Articles 4, 5, 8 to 11, 16, 18, 25, 26,
29, 34, 41, 42, 44, 45, 46, 47, 49, 56 and 81 are adopted by
the Commission, shall apply for authorisation under Article 14
for the purposes of this Regulation within six months of the
date of entry into force of all the regulatory technical standards
under Articles 16, 25, 26, 29, 34, 41, 42, 44, 45, 47 and 49.

A CCP established in a third country, which has been
recognised to provide clearing services in a Member State in
accordance with the national law of that Member State before
all the regulatory technical standards under Articles 16, 26, 29,
34, 41, 42, 44, 45, 47 and 49 are adopted by the Commission,
shall apply for recognition under Article 25 for the purposes of
this Regulation within six months of the date of entry into force
of all the regulatory technical standards under Articles 16, 26,
29, 34, 41, 42, 44, 45, 47 and 49.

4, Until a decision is made under this Regulation on the
authorisation or recognition of a CCP, the respective national
rules on authorisation and recognition of CCPs shall continue to
apply and the CCP shall continue to be supervised by the
competent authority of its Member State of establishment or
recognition.

5, Where a competent authority authorised a CCP to clear a
given class of derivatives in accordance with the national law of
its Member State before all the regulatory technical standards
under Articles 16, 26, 29, 34, 41, 42, 45, 47 and 49 are
adopted by the Commission, the competent authority of that
Member State shall notify ESMA of that authorisation within
one month of the date of entry into force of the regulatory
technical standards under Article 5(1).

Where a competent authority recognised a CCP established in a
third country to provide clearing services in accordance with the
national law of its Member State before all the regulatory
technical standards under Articles 16, 26, 29, 34, 41, 42, 45,
47 and 49 are adopted by the Commission, the competent
authority of that Member State shall notify ESMA of that recog-
nition within one month of the date of entry into force of the
regulatory technical standards under Article 5(1).

6. A trade repository that has been authorised or registered
in its Member State of establishment to collect and maintain the
records of derivatives in accordance with the national law of
that Member State before all the regulatory and implementing
technical standards under Articles 9, 56 and 81 are adopted by
the Commission, shall apply for registration under Article 55
within six months of the date of entry into force of those
regulatory and implementing technical standards.


ang,

The Riksbank may conduct the operations referred to
in Article 1 together with another party.

For the purpose of improving efficiency in cash
management, the Riksbank may provide remunera-
tion or interest-free credit to companies that have
separated and stored banknotes and coins according
to the Riksbank's instructions.

Banknotes and coins that are damaged or worn may
be redeemed by the Riksbank. The Riksbank may
pay compensation for banknotes that are completely
spoiled.

in special circumstances, the Riksbank may redeem
banknotes and coins that have ceased to be legal
tender.

Banknotes and coins that have been altered or mani-
pulated must not be circulated.

‘CHAPTER G MONETARY POLICY AND
THE PAYMENT SYSTEM.

Banking institutions, as referred to in this Act, are
commercial banks, savings banks, co-operative
banks, and foreign banking companies which, pursu-
ant to Chapter 4, Article 1 or 4 of the act on banking
and financing business (lagen (2004:297) om bank-
och finansieringsrérelse), conduct banking activities
from a branch registered in Sweden.

156)


1§

25

2a§

miskt ansvar mot en ledamot av fullmaktige eller
direktionen eller om ledamoten bér atalas for brotts-
ligt forfarande i samband med sitt uppdrag eller sin
anstallning.

Riksbanken skall arligen redovisa fér riksdagen vilka
Atgarder banken har vidtagit med anledning av Riks-
revisionens iakttagelser.

11 “4? AVGIFTER, VITE M.M.

Ett finansinstitut som inte uppfyller uppstallda kas-
sakrav skall betala sarskild avgift till staten.

Fragan om sarskild avgift prévas av Riksbanken.

Den sarskilda avgiften enligt 1 § skall svara mot en
ranta pA underskottet fér varje dag som uppgar till
tva ganger den utlaningsranta som Riksbanken til-
lampar vid beviljande av kredit enligt 6 kap. 5 §.

Om det finns sArskilda skal, far avgiften sattas ned
helt eller delvis.

Riksbanken far meddela férelaggande eller forbud
som behévs fér att bestammelsen i 5 kap. 5 § eller
foreskrifter som meddelats enligt 1 kap. 2 § eller 6
kap. 9 § skall efterlevas. | beslut om férelaggande

eller forbud far Riksbanken utsatta vite.

| fall som avses i 5 kap. 5 § far forbudet meddelas
var och en som vasentligt har bidragit till spridningen

[3a]


78

9§

Riksbanken far tillhandahilla system for avveckling
av betalningar och pa annat satt medverka i betal-
ningsavveckling.

Fér att framja betalningssystemets funktion far
Riksbanken bevilja deltagarna i systemet kredit under
dagen. Kredit far endast beviljas mot betryggande
sakerhet. Staten behéver inte stalla sékerhet.

Om det finns synnerliga skal far Riksbanken i
likviditetsstédjande syfte pa sArskilda vilikor bevilja
kredit eller lamna garanti till sadana bankinstitut och
svenska féretag som star under tillsyn av Finansin-
spektionen.

Efter anmodan av Riksbanken skall ett finansinstitut

eiier annat féretag som star under tillsyn av Finans-

inspektionen till Riksbanken lamna de uppgifter som

Riksbanken anser nddvandiga for att

1. félja utvecklingen pa valuta- och kreditmark-
naderna,

2. dvervaka betalningssystemets stabilitet.

Den som fér egen eller annans rakning har ut-

fort transaktioner med utlandsk motpart eller hallit
tillgangar och skulder med utlandsanknytning ar
skyldig att till Riksbanken lamna de uppgifter som
behdvs som underlag for Riksbankens betalningsba-
lansstatistik och for statistik dver utlandsstillningen.

Riksbanken far utfarda narmare freskrifter om upp-
giftsskyldigheten enligt forsta och andra stycket.

(251


relevant activities or arrangements under its rules and procedures to be
unenforceable.

Principle 2: Governance

An FMI should have governance arrangements that are clear and transparent,
promote the safety and efficiency of the FMI, and support the stability of the
broader financial system, other relevant public interest considerations, and the
objectives of relevant stakeholders.

Nasdaq Clearing’s overall objectives are to provide clearing services honestly, fairly
and professionally and in a manner so that public confidence is maintained. Nasdaq
Clearing also ensures that any safety requirements associated with the clearing
business are met. The main principles guiding Nasdaq Clearing’s services are 1) free
access for participants that meet the requirements stipulated in law and Nasdaq
Clearing’s own requirements, and 2) neutrality such that the R&Rs are applied
uniformly on the participants.

These objectives and principles are clearly identified in the management report in
the annual report, in the R&Rs and also in the various policies and instructions used
to govern the activities of the CCP. Nasdaq Clearing has well-established,
documented and sound objectives and governance arrangements in place. The
Swedish Companies Act, EMIR, the Swedish Securities Market Act and the Articles of
Association provide the legal prerequisite for the arrangements. The governance
arrangements are complemented by a framework of governance documentation
defining the responsibilities of the Board, the President and the different
committees, as well as the division of work, accountability and reporting lines
between these organs.

The prerequisites for safety, efficiency and financial stability are reflected in the
overall governance arrangements of Nasdaq Clearing and in its framework of
committees and policies, as well as in the organization and reporting lines of the
clearing risk management.

In addition to the above, Nasdaq Clearing has identified the following other public
interest considerations:

*® providing an efficient CCP solution to lower the risks for parties on the
relevant derivatives market; and

© providing support for financial stability and ensure an efficient, safe and
sound derivatives market.

These are reflected in the objectives by, inter alia, efficient collateral and risk
management system, proper governance structure and a robust capital structure.

The governance arrangements enabling identification and mitigation of possible
conflicts of interests pertain to the separation of clearing risk management

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

12


L 201/18 (Ty

Official Journal of the European Union

27.7.2012

(i) on or after notification as referred to in Article 5(1) but
before the date from which the clearing obligation takes
effect if the contracts have a remaining maturity higher
than the minimum remaining maturity determined by
the Commission in accordance with Article 5(2)(c).

2. Without prejudice to risk-mitigation techniques under
Article 11, OTC derivative contracts that are intragroup trans-
actions as described in Article 3 shall not be subject to the
clearing obligation.

The exemption set out in the first subparagraph shall apply
only:

(a) where two counterparties established in the Union
belonging to the same group have first notified their
respective competent authorities in writing that they
intend to make use of the exemption for the OTC derivative
contracts concluded between each other. The notification
shall be made not less than 30 calendar days before the
use of the exemption. Within 30 calendar days after receipt
of that notification, the competent authorities may object to
the use of this exemption if the transactions between the
counterparties do not meet the conditions laid down in
Article 3, without prejudice to the right of the competent
authorities to object after that period of 30 calendar days
has expired where those conditions are no longer met. If
there is disagreement between the competent authorities,
ESMA may assist those authorities in reaching an
agreement in accordance with its powers under Article 19
of Regulation (EU} No 1095/2010;

(b) to OTC derivative contracts between two counterparties
belonging ta the same group which are established in a
Member State and in a third country, where the
counterparty established in the Union has been authorised
to apply the exemption by its competent authority within
30 calendar days after it has been notified by the
counterparty established in the Union, provided that the
conditions laid down in Article 3 are met. The competent
authority shall notify ESMA of that decision.

3. The OTC derivative contracts that are subject to the
clearing obligation pursuant to paragraph 1 shall be cleared
in a CCP authorised under Article 14 or recognised under
Article 25 to clear that class of OTC derivatives and listed in
the register in accordance with Article 6(2)(b).

For that purpose a counterparty shall become a clearing
member, a client, or shall establish indirect clearing
arrangements with a clearing member, provided that those
artangements do not increase counterparty risk and ensure
that the assets and positions of the counterparty benefit from
protection with equivalent effect 10 that referred to in Articles
39 and 48,

4, In order to ensure consistent application of this Article,
ESMA shall develop draft regulatory technical standards spec-
ifying the contracts that are considered to have a direct,
substantial and foreseeable effect within the Union or the
cases where it is necessary or appropriate to prevent the
evasion of any provision of this Regulation as referred to in
paragraph 1(a)(v), and the types of indirect comtractual
arrangements that meet the conditions referred to in the
second subparagraph of paragraph 3.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 5
Clearing obligation procedure

1, Where a competent authority authorises a CCP to clear a
class of OTC derivatives under Article 14 or 15, it shall
immediately notify ESMA of that authorisation.

In order to ensure consistent application of this Article, ESMA
shall develop draft regulatory technical standards specifying the
details to be included in the notifications referred to in the first
subparagraph,

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the second subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

2. Within six months of receiving notification in accordance
with paragraph 1 or accomplishing a procedure for recognition
set out in Article 25, ESMA shall, after conducting a public
consultation and after consulting the ESRB and, where appro-
priate, the competent authorities of third countries, develop and
submit to the Commission for endorsement draft regulatory
technical standards specifying the following:

(a) the class of OTC derivatives that should be subject to the
clearing obligation referred to in Article 4;

(b) the date or dates from which the clearing obligation takes
effect, including any phase in and the categories of counter-
parties to which the obligation applies; and

(©) the minimum remaining maturity of the OTC derivative
contracts referred to in Article 4(1)(b)(i).


L 201/24

Official Journal of the European Union

27.7.2012

14. In order to ensure consistent application of this Article,
ESMA shall draft regulatory technical standards specifying:

(a) the procedures and arrangements referred to in paragraph 1;

(b) the market conditions that prevent marking-to-market and
the criteria for using marking-to-model referred to in
paragraph 2;

(©) the details of the exempted intragroup transactions to be
included in the notification referred to in paragraphs 7, 9
and 10;

(d) the details of the information on exempted intragroup
transactions referred to in paragraph 11;

the contracts that are considered to have a direct, substantial
and foreseeable effect within the Union or the cases where it
is necessary or appropriate to prevent the evasion of any
provision of this Regulation as referred to in paragraph 12;

@)

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

15. In order to ensure consistent application of this Article,
the ESAs shall develop common draft regulatory technical
standards specifying:

(a) the risk-management procedures, including the levels and
type of collateral and segregation arrangements, required
for compliance with paragraph 3;

(b) the level of capital required for compliance with
paragraph 4;

(c) the procedures for the counterparties and the relevant
competent authorities to be followed when applying
exemptions under paragraphs 6 to 10;

(@ the applicable criteria referred to in paragraphs 5 to 10
including in particular what should be considered as
practical or legal impediment to the prompt transfer of
own funds and repayment of liabilities between the counter-
parties.

The ESAs shall submit those common draft regulatory technical
standards to the Commission by 30 September 2012.

Depending on the legal nature of the counterparty, power
is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in

accordance with either Articles 10 to 14 of Regulations (EU)
No 1093/2010, (EU) No 1094/2010 or (EU) No 1095/2010.

Article 12

Penalties
1. Member States shall lay down the rules on penalties
applicable 10 infringements of the rules under this Title and
shall take all measures necessary to ensure that they are imple-
mented. Those penalties shall include at least administrative

fines. The penalties provided for shall be effective, proportionate
and dissuasive.

2. Member States shall ensure that the competent authorities
responsible for the supervision of financial, and, where appro-
priate, non-financial counterparties disclose every penalty that
has been imposed for infringements of Articles 4, 5 and 7 to 11
to the public, unless such disclosure would seriously jeopardise
the financial markets or cause disproportionate damage to the
parties involved. Member States shall, at regular intervals,
publish assessment reports on the effectiveness of the penalty
rules being applied. Such disclosure and publication. shall not
contain personal data within the meaning of Article 2(@) of
Directive 95/46/EC.

By 17 February 2013, the Member States shall notify the rules
referred to in paragraph 1 to the Commission, They shall notify
the Commission of any subsequent amendment thereto without
delay.

3. Am infringement of the rules under this Title shall not
affect the validity of an OTC derivative contract or the possi-
bility for the parties to enforce the provisions of an OTC
derivative contract. An infringement of the rules under this
Title shall not give rise to any right to compensation from a
party to an OTC derivative contract.

Article 13
Mechanism to avoid duplicative or conflicting rules

1. The Commission shall be assisted by ESMA in monitoring
and preparing reports to the European Parliament and to the
Council on the international application of principles laid down
in Articles 4, 9, 10 and 11, in particular with regard to
potential duplicative or conflicting requirements on market
participants, and recommend possible action.

2, The Commission may adopt implementing acts declaring
that the legal, supervisory and enforcement arrangements of a
third country:

(a) are equivalent to the requirements laid down in this Regu-
lation under Articles 4, 9, 10 and 11;

(b) ensure protection of professional secrecy that is equivalent
to that set out in this Regulation; and


3§

4g

valtningsverksamhet under det féljande rakenskaps-
ret. Direktionen skall lamna budgeten till riksdagens
finansutskott, Riksrevisionen och fullmaktige for
kannedom.

Riksbanken ar bokfdringsskyldig. Bokféringsskyl-
digheten skall fullgdras i enlighet med god redovis-
ningssed.Darvid skall i tillimpliga delar Europeiska
centralbankens riktlinje om den rattsliga ramen for
redovisning och finansiell rapportering inom Europe-
iska centralbankssystemet tillampas.

Varje ar fore den 15 februari skall direktionen till riks-
dagen, Riksrevisionen och fullmaktige avge redovis-
ning fdr det foregdende rakenskapséret. Fullmaktige
skall till riksdagen och Riksrevisionen lamna férslag
till disposition av Riksbankens vinst. Redovisningen
skall omfatta resultatrakning, balansrakning, férvalt-
ningsberattelse och en redogérelse f6r penning- och
valutapolitiken samt for hur Riksbanken har framjat
ett skert och effektivt betalningsvasende.

Riksbankens resultatrakning och balansrakning fast-
stalls av riksdagen, som ocksa beslutar hur bankens
vinst skall disponeras. Har reservfonden gatt ned un-
der femhundra miljoner kronor skall minst tio procent
av arets vinst avsattas till reservfonden tills denna
ater natt upp till detta belopp.

Riksdagen beslutar om ansvarsfrihet for fullmaktige
for dess verksamhet och for direktionen fdr for-
valtningen av Riksbanken. Ansvarsfrihet far vagras
endast om det finns skal att fora talan om ekono-

[33]


Exhibit A-8 to Supplement S-1 to Form FBOT

An undertaking by the chief executive officer(s) (or functional equivalent{s]) of the clearing
organization to notify Commission staff promptly if any of the representations made in connection with
this supplement cease to be true or correct, or become incomplete or misleading.

I hereby, in my capacity as President of Nasdaq Clearing, undertake to notify the Commission
staff promptly if any of the representations made in connection with or related to this supplement to
Nasdaq Oslo’s application for registration as a Foreign Board of Trade cease to be true or correct, or
become incomplete or misleading.

Stockholm, 2017

President

LONOI_8129617v4


the clearing system. Nasdaq Clearing manages and mitigates the tiered counterparty
risk by:

e calculating margins on individual account level (including sub accounts),
e define concentration limits on individual account level, and
e issue extraordinary/intraday margin calls on an individual account level.

In respect of the tiered settlement risk, Nasdaq Clearing has sufficient arrangement
in place, such as liquidity resources and security lending, to mitigate the impact ifa
failure by an indirect participant would lead to disturbance for the direct
participants.

Nasdaq Clearing has identified the following tiered participation arrangements on
Nasdaq Commodities and Nasdaq Financial; (i) Non Clearing Members (NCM), (ii)
Omnibus clients, (iii) Individual Client Segregated Account (ICA) clients, and (iv)
Indirect Pledging Customers (IDP). In terms of NCM, ICA and IDP, the identities of
these clients are known to Nasdaq Clearing. For Omnibus clients, the identities are
unknown. Information regarding anonymity of clients can be found in the R&Rs of
Nasdaq Clearing. Nasdaq Clearing does not request or gather credit information on
a regular basis in respect of these participants, but has, according to the R&R, the
right to require different information from the clearing members regarding the
indirect participants.

Market information such as positions and exposures are generated and reviewed in
real time through Nasdaq Clearing’s systems. Hence, Nasdaq Clearing has the full
capacity to analyze the market risk in real time for these indirect participants and the
impact that may have on the direct participant. Limits can be set on indirect
participants’ portion of the exposures of direct participants and in case there is a
limit breach, the indirect participants can be scrutinized in terms of their credit
worthiness and the direct clearing member can be asked for its risk management
procedures with regards to the relevant indirect participant.

In offering both agency and member clearing, Nasdaq Clearing has implemented an
IT structure and operational procedure that provides Nasdaq Clearing and its direct
participants with information and tools to manage the risk of the indirect
participants. Nasdaq Clearing continuously monitors the positions and exposure of
indirect participants and the tiered participants through its proprietary risk systems.

Principle 20: FMI links

An FMI that establishes a link with one or more FMIs should identify, monitor, and
manage link-related risks.

Nasdaq Clearing has processes in place to evaluate both the risks associated with
prospective FMI links as well as already established FMI links. Nasdaq Clearing
performs a thorough analysis of a prospective linked FMI before any link is

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

54


ART-2a. The activities of the Audit Unit shall concern indepen-

ant

ART,

a5,

dent examination of the Riksbank’s internal gover-
nance and control and how the Riksbank meets its
financial accounting obligations. The audit shall follow
generally accepted principles for internal auditing.

The Riksbank shall adopt an audit plan for its activi-
ties following consultation with the Swedish National
Audit Office.

Pursuant to the conditions contained in Article 6 (2)
and (3) of the Public Employment Act (1994:260),
the Riksbank may, in special circumstances, decide
that only Swedish nationals may be employed by the
Riksbank.

The General Council decides the Rules of Procedure
for the Riksbank.

In addition, the Riksbank makes decisions on an
individual basis in matters concerning personnel and
persons appointed for specific assignments at the
Riksbank, to the extent that such matters are not
governed by legislation or decisions of the Riksdag or
the Riksdag Administration.

The members of the General Council and such per-
sonnel and persons appointed for specific assign-
ments at the Riksbank as determined by the Riks-
bank shall submit to the Riksbank a written report of
their holdings of financial instruments and of changes
in such holdings as stipulated in Chapter 1, Article 1,
of the Financial Instruments Trading Act (1991:980).

(65)


CaN]

L 201/52

Official Journal of the European Union

27.7.2012

4, ESMA shall share the information necessary for the
exercise of their duties with other relevant Union authorities.

5. In order to ensure consistent application of this Article,
ESMA shall, after consulting the members of the ESCB, develop
draft regulatory technical standards specifying the frequency and
the details of the information referred to in paragraphs 1 and 3
as well as operational standards required in order to aggregate
and compare data across repositories and for the entitles
referred to in paragraph 3 to have access to information as
necessary. Those draft regulatory technical standards shall aim
to ensure that the information published under paragraph 1 is
not capable of identifying a party to any contract.

ESMA shall submit those draft regulatory technical standards to
the Commission by 30 September 2012.

Power is delegated to the Commission to adopt the regulatory
technical standards referred to in the first subparagraph in
accordance with Articles 10 to 14 of Regulation (EU)
No 1095/2010.

Article 82
Exercise of the delegation

1, The power to adopt delegated acts is conferred to the
Commission subject to the conditions laid down in this Article.

2. The delegation of power referred to in Article 1(6),
Article 64(7), Article 70, Article 72(3) and Article 85(2) shall
be conferred to the Commission for an indeterminate period of
time.

3, Before adopting a delegated act, the Commission shall
endeavour to consult ESMA.

4, A delegation of power referred to in Article 1(6),
Article 64(7), Article 70, Article 72(3) and Article 85(2) may
be revoked at any time by the European Parliament or by the
Council. A decision to revoke shal] put an end to the delegation
of power specified in that decision. The decision to revoke shall
take effect on the day following that of its publication in the
Official journal of the European Union or on a later date specified
therein. It shall not affect the validity of any delegated acts
already in force.

5. As soon as it adopts a delegated act, the Commission shall
notify it simultaneously to the European Parliament and to the
Council.

6. A delegated act adopted pursuant to Article 1(6),
Article 64{7}, Article 70, Article 72(3) and Article 85(2) shall
enter into force only if no objection has been expressed by
either the European Parliament or the Council within a period
of three months of notification of the act to the European
Parliament and the Council or if, before the expiry of that
period, the European Parliament or the Council have both
informed the Commission that they will not object. That

period shall be extended by three months at the initiative of
the European Parliament or of the Council.

TITLE Vill
COMMON PROVISIONS
Article 83
Professional secrecy

1. The obligation of professional secrecy shall apply to all
persons who work or have worked for the competent auth-
orities designated in accordance with Article 22 and the auth-
orities referred to in Article $1(3), for ESMA, or for auditors
and experts instructed by the competent authorities or ESMA.
No confidential information that those persons receive in the
course of their duties shall be divulged to any person or auth
ority, except in summary or aggregate form such that an indi-
vidual CCP, trade repository or any other person cannot be
identified, without prejudice to cases covered by criminal or
tax law or to this Regulation.

2. Where a CCP has been declared bankrupt or is being
compulsorily wound up, confidential information which does
not concern third parties may be divulged in civil or
commercial proceedings where necessary for carrying out the
proceeding.

3. Without prejudice to cases covered by criminal or tax law,
the competent authorities, ESMA, bodies or natural or legal
persons other than competent authorities which receive
confidential information pursuant to this Regulation may use
it only in the performance of their duties and for the exercise of
their functions, in the case of the competent authorities, within
the scope of this Regulation or, in the case of other authorities,
bodies or natural or legal persons, for the purpose for which
such information was provided to them or in the context of
administrative or judicial proceedings specifically relating to the
exercise of those functions, or both. Where ESMA, the
competent authority or another authority, body or person
communicating information consents thereto, the authority
receiving the information may use it for other non-commercial
purposes.

4. Any confidential information received, exchanged or
transmitted pursuant to this Regulation shall be subject to the
conditions of professional secrecy laid down in paragraphs 1, 2
and 3. However, those conditions shall not prevent ESMA, the
competent authorities or the relevant central banks from
exchanging or transmitting confidential information in
accordance with this Regulation and with other legislation
applicable to investment firms, credit institutions, pension
funds, UCITS, AIFMs, insurance and reinsurance intermediaries,
insurance undertakings, regulated markets or market operators
or otherwise with the consent of the competent authority or
other authority or body or natural or legal person that
communicated the information.


(3) A description of the clearing organization’s provisions to minimize and resolve conflicts of interest
with respect to membership on the governing board and significant committees of the clearing
organization.

The Clearing Board has autonomy with respect to operating the Clearinghouse.

Nasdaq Clearing complies with EMIR requirements article 33
Depending on the nature
of a conflict, it should be reported in accordance with the policies. In addition, as stated in EMIR certain
functions needs to be independent from the business line with a direct reporting line to the Board; this
includes the Chief Compliance Officer, the Chief Risk Officer and Internal Audit.

Furthermore, the Chief Compliance Officer has a compliance policy defining the tasks of the
compliance function, including the reporting procedure, as well as the general requirements set forth in
respect of the compliance organization: independence, responsibility, relationship to the management and
relationship to the closely related functions (i.e. risk management and internal audit).

LONO1_8129620v5


27.7.2012

Gn]

Official Journal of the European Union

L 201/3

(12)

(13)

(14)

(15)

(16)

to the responsibilities of the European Central Bank
(ECB) and the national central banks (NCBs) to ensure
efficient and sound clearing and payment systems within
the Union and with other countries. Consequently, and
in order to prevent the possible creation of parallel sets
of rules, ESMA and the ESCB should cooperate closely
when preparing the relevant draft technical standards.
Further, the access to information by the ECB and the
NCBs is crucial when fulfilling their tasks relating to the
oversight of clearing and payment systems as well as to
the functions of a central bank of issue.

Uniform rules are required for derivative contracts set out
in Annex I, Section C, points (4) to (10) of Directive
2004/39/EC of the European Parliament and of the
Council of 21 April 2004 on markets in financial instru-
ments ('),

Incentives to promote the use of CCPs have not proven
to be sufficient to ensure that standardised OTC
derivative contracts are in fact cleared centrally.
Mandatory CCP clearing requirements for those OTC
derivative contracts that can be cleared centrally are
therefore necessary.

It is likely that Member States will adopt divergent
national measures which could create obstacles to the
smooth functioning of the internal market and be to
the detriment of market participants and financial
stability. A uniform application of the clearing obligation
in the Union is also necessary to ensure a high level of
investor protection and to create a level playing field
between market participants.

Ensuring that the clearing obligation reduces systemic
tisk requires a process of identification of classes of
derivatives that should be subject to that obligation.
That process should take into account the fact that not
all CCP-cleared OTC derivative contracts can be
considered suitable for mandatory CCP clearing.

This Regulation sets out the criteria for determining
whether or not different classes of OTC derivative
contracts should be subject to a clearing obligation. On
the basis of draft regulatory technical standards
developed by ESMA, the Commission should decide
whether a class of OTC derivative contract is to be
subject to a clearing obligation, and from when the
clearing obligation takes effect including, where appro-
priate, phased-in implementation and the minimum
remaining maturity of contracts entered into or
novated before the date on which the clearing obligation

(!) OJ L 145, 30.4.2004, p. 1,

(17)

(18)

(19)

(20)

takes effect, in accordance with this Regulation. A
phased-in implementation of the clearing obligation
could be in terms of the types of market participants
that must comply with the clearing obligation. In deter-
mining which classes of OTC derivative contracts are to
be subject to the clearing obligation, ESMA should take
into account the specific nature of OTC derivative
contracts which are concluded with covered bond
issuers or with cover pools for covered bonds.

When determining which classes of OTC derivative
contracts are to be subject to the clearing obligation,
ESMA should also pay due regard to other relevant
considerations, most importantly the interconnectedness
between counterparties using the relevant classes of OTC
derivative contracts and the impact on the levels of
counterparty credit risk as well as promote equal
conditions of competition within the internal market as
referred to in Article 1(5)(d) of Regulation (EU)
No 1095/2010.

Where ESMA has identified that an OTC derivative
product is standardised and suitable for clearing but no
CCP is willing to clear that product, ESMA should inves-
tigate the reason for this.

In determining which classes of OTC derivative contracts
are to be subject to the clearing obligation, due account
should be taken of the specific nature of the relevant
classes of OTC derivative contracts. The predominant
risk for transactions in some classes of OTC derivative
contracts may relate to settlement risk, which is
addressed through separate infrastructure arrangements,
and may distinguish certain classes of OTC derivative
contracts {such as foreign exchange) from other classes,
CCP clearing specifically addresses counterparty credit
risk, and may not be the optimal solution for dealing
with settlement risk. The regime for such contracts
should rely, in particular, on preliminary international
convergence and mutual recognition of the relevant
infrastructure,

In order to ensure a uniform and coherent application of
this Regulation and a level playing field for market
participants when a class of OTC derivative contract is
declared subject to the clearing obligation, this obligation
should also apply to all contracts pertaining to that class
of OTC derivative contract entered into on or after the
date of notification of a CCP authorisation for the
purpose of the clearing obligation received by ESMA
but before the date from which the clearing obligation
takes effect, provided that those contracts have a
remaining maturity above the minimum determined by
the Commission.


G4

L 201/48

Official Journal of the European Union

27.7.2012

When those formalities have been completed on application by
the party concerned, the latter may proceed to enforcement in
accordance with the national law, by bringing the matter
directly before the competent body.

Enforcement may be suspended only by a decision of the Court
of Justice. However, the courts of the Member State concerned
shall have jurisdiction over complaints that enforcement is
being carried out in an irregular manner.

5. The amounts of the fines and periodic penalty payments
shall be allocated to the general budget of the European Union.

Article 69
Review by the Court of Justice

The Court of Justice shall have unlimited jurisdiction to review
decisions whereby ESMA has imposed a fine or a periodic
penalty payment. It may annul, reduce or increase the fine or
periodic penalty payment imposed.

Article 70
Amendments to Annex II

In order to take account of developments on financial markets
the Commission shall be empowered to adopt delegated acts in
accordance with Article 82 concerning measures to amend
Annex II.

Article 71
Withdrawal of registration

1. Without prejudice to Article 73, ESMA shall withdraw the
registration of a trade repository where the trade repository:

(a) expressly renounces the registration or has provided no
services for the preceding six months;

(b) obtained the registration by making false statements or by
any other irregular means;

(9 no longer meets the conditions under which it was regis-
tered.

2. ESMA shall, without undue delay, notify the relevant
competent authority referred to in Article 57(1) of a decision
to withdraw the registration of a trade repository.

3. The competent authority of a Member State in which the
trade repository performs its services and activities and which
considers that one of the conditions referred to in paragraph 1
has been met, may request ESMA to examine whether the
conditions for the withdrawal of registration of the trade
repository concerned are met. Where ESMA decides not to
withdraw the registration of the trade repository concerned, it
shall provide full reasons.

4, The competent authority referred to in paragraph 3 shall
be the authority designated under Article 22.

Article 72
Supervisory fees

1. ESMA shall charge fees to the trade repositories in
accordance with this Regulation and in accordance with the
delegated acts adopted pursuant to paragraph 3. Those fees
shall fully cover ESMA’s necessary expenditure relating to the
registration and supervision of trade repositories and the
reimbursement of any costs that the competent authorities
may incur carrying out work pursuant to this Regulation in
particular as a result of any delegation of tasks in accordance
with Article 74.

2. The amount of a fee charged to a trade repository shall
cover all administrative costs incurred by ESMA for its regis-
tration and supervision activities and be proportionate to the
turnover of the trade repository concerned.

3. The Commission shall adopt a delegated act in accordance
with Article 82 to specify further the type of fees, the matters
for which fees are due, the amount of the fees and the manner
in which they are to be paid.

Article 73
Supervisory measures by ESMA

1, Where, in accordance with Article 64(5), ESMA finds that
a trade repository has committed one of the infringements listed
in Annex I, it shall take one or more of the following decisions:

{a) requiring the trade repository to bring the infringement to
an end;

S

imposing fines under Article 65;

Ss

issuing public notices;

(@ as a last resort, withdrawing the registration of the trade
repository.

2. When taking the decisions referred to in paragraph 1,
ESMA shall take into account the nature and seriousness of
the infringement, having regard to the following criteria:

(a) the duration and frequency of the infringement;

(b) whether the infringement has revealed serious or systemic
weaknesses in the undertaking's procedures or in its
management systems or internal controls;

(©) whether financial crime has been occasioned, facilitated or
otherwise attributable to the infringement;


AR’5, The procedure for appealing against a decision by

the General Council to sever a member of the Execu-
tive Board from his or her appointment is regulated
in Chapter 2, Article 2.

Decisions made by the Riksbank in accordance with
Article 2a can be appealed to the county administra-
tive court.

Other decisions made by the Riksbank in accordance
with this Act may only be appealed to the extent and
in the order stipulated in the act concerning appeals
against administrative decisions made by the Riksdag
Administration and the Riksdag’s agencies (lagen
(1989:186) om éverklagande av administrativa beslut
av riksdagsférvaltningen och riksdagens myndighe-
ter).

(Note: Where the Swedish name of an act is given
in brackets, no English translation is available at pre-
sent.)

711


With respect to each relevant regulatory regime or authority governing the clearing organization,
attach:

(3) A description of and, where applicable, copies of the laws, rules, regulations and policies applicable
to:

(i) The authorization, licensure or registration of the clearing organization.

(ii) The financial resource requirements applicable to the authorization, licensure or
registration of the clearing organization and the continued operations thereof.

(iii) The regulatory regime/authority’s program for the ongoing supervision and oversight of
the clearing organization and the enforcement of its clearing rules.

(iv) The extent to which the current RCCPs are used or applied by the regulatory
regime/authority in its supervision and oversight of the clearing organization or are
incorporated into its rules and regulations and the extent to which the regulatory
regime/authority reviews the clearing systems for compliance therewith.

(v) The extent to which the regulatory regime/authority reviews and/or approves the rules of the
clearing organization prior to their implementation.

(vi) The regulatory regime/authority’s inspection, investigation and surveillance powers; and
the program pursuant to which the regulatory regime/authority uses those powers to inspect,
investigate, sanction, and enforce rules applicable to the clearing organization.

(vii) The financial protection afforded customer funds.

(i) The authorization, licensure or registration of the clearing organization.

As mentioned above, the Clearinghouse is authorized as a clearing organization by FI pursuant to
EMIR and by the Norwegian Ministry of Finance pursuant to the STA 2007, Chapter 13-1, Section 5.
Please see attached a copy of EMIR and an English translation of the STA 2007 as Document S-1 and
Document 16, respectively.

According to Chapter 13-1, Section 5 of the STA 2007, the Norwegian Ministry of Finance may
give a foreign clearing house that has been authorized to conduct clearing operations and is subject to
satisfactory supervision in its home state authorization to conduct clearing operations in Norway. It is on
this ground Nasdaq Clearing has been authorized to conduct clearing operations in Norway through its
Norwegian branch.

(ii) The financial resource requirements applicable to the authorization, licensure or
registration of the clearing organization and the continued operations thereof.

When assessing whether a company fulfills all necessary requirements to be authorized as a
clearing organization FI will, in addition to the conditions described above, also assess the clearing
organization financial resources. EMIR requires CCPs to have capital of at least EUR 7.5 million. EMIR
also establishes prudential requirements for CCPs to ensure that they are safe and sound and comply at all

LONO1_8129630v4


Riksbankslagen
Lagen (1988:1385) om Sveriges riksbank
1 DESS LYDELSE DEN 1 JUL! 2008

The Sveriges Riksbank Act
Lagen (1988:1385) om Sveriges riksbank
AS FROM 1 JULY 2008

SVERIGES
RUIGEANK.



Results on the back-testing are presented to the Member Risk Committee and the
Board in the ongoing risk reporting. Moreover, back-testing results are also made
publically available on the website of Nasdaq Clearing.

On an annual basis Nasdaq Clearing performs a thorough review and validation of its
margin system. The review is initiated and governed by the Clearing Risk Committee
in accordance with the Model Validation Policy. The review of the margin
methodology ensures that the applicable valuation and margin models, fit their
purpose and market conditions. The review is based on the results of the back-
testing and sensitivity analysis performed by Nasdaq Clearing. The review further
aims to identify if new models have been developed within the industry, and, if so,
consider if these could be more appropriate for Nasdaq Clearing than the existing
models, An independent validation of the theoretical and empirical properties of the
margin model is included in the annual review.

The models used are well documented and the documentation is available on the
website’.

Principle 7: Liquidity risk

An FMI should effectively measure, monitor, and manage its liquidity risk. An FMI
should maintain sufficient liquid resources in all relevant currencies to effect same-
day and, where appropriate, intraday and multiday settlement of payment
obligations with a high degree of confidence under a wide range of potential stress
scenarios that should include, but not be limited to, the default of the participant
and its affiliates that would generate the largest aggregate liquidity obligation for
the FMI in extreme but plausible market conditions.

Nasdaq Clearing has developed a robust framework to identify measure and manage
its liquidity risks. The framework is primarily focused on the potential stressed
liquidity needs in conjunction with its clearing operations and its role as
clearinghouse.

The various sources of liquidity risk that arise in Nasdaq Clearing are 1) default of a
member (including its affiliates and all its customer positions); 2) operational
problems in a settlement bank; 3) liquidity need due to delivery failures; and 4)
outflows in terms of cash call backs. These liquidity risks can occur in the currencies
in which Nasdaq Clearing’s cleared contracts are denominated. The framework
identifies the maximum total need for liquidity across all currencies as well as
maximum liquidity need in each applicable currency. Generally, the liquidity need in
SEK is significantly larger than other currencies since the majority of Nasdaq
Clearing’s contracts are denominated in SEK and daily cash settled products with

* http://www.nasdagomx.com/europeanclearing/risk-management

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

27


Exhibit B to Supplement S-1 to Form FBOT

(1) A description of the categories of membership and participation in the clearing organization and
the access and clearing privileges provided to each by the clearing organization.

We refer to the information provided in Exhibit B to Form FBOT.


L 201/14 EN

Official Journal of the European Union

27.7.2012

(97) In view of the rules regarding interoperable systems, it
was deemed appropriate to amend Directive 98/26/EC to
protect the rights of a system operator that provides
collateral security to a receiving system operator in the
event of insolvency proceedings against that receiving
system operator.

(98) In order to facilitate efficient clearing, recording,
settlement and payment, CCPs and trade repositories
should accommodate in their communication procedures
with participants and with the market infrastructures they
interface with, the relevant international communication
procedures and standards for messaging and reference
data.

(99) Since the objectives of this Regulation, namely to lay
down uniform requirements for OTC derivative
contracts and for the performance of activities of CCPs
and trade repositories, cannot be sufficiently achieved by
the Member States and can therefore, by reason of the
scale of the action, be better achieved at Union level, the
Union may adopt measures, in accordance with the
principle of subsidiarity as set out in Article 5 of the
Treaty on European Union. In accordance with the
principle of proportionality, as set out in that Article,
this Regulation does not go beyond what is necessary
in order to achieve those objectives,

HAVE ADOPTED THIS REGULATION:

TITLE |
SUBJECT MATTER, SCOPE AND DEFINITIONS
Article 1
Subject matter and scope

1. This Regulation lays down clearing and bilateral risk-
management requirements for over-the-counter (‘OTC’)
derivative contracts, reporting requirements for derivative
contracts and uniform requirements for the performance of
activities of central counterparties (‘CPs’) and trade repositories.

2. This Regulation shall apply to CCPs and their clearing
members, to financial counterparties and to trade repositories.
It shall apply to non-financial counterparties and trading venues
where so provided.

3. Title V of this Regulation shall apply only to transferable
securities and money-market instruments, as defined in point
(18)(a) and (b) and point (19) of Article 4(1) of Directive
2004/39/EC.

4, — This Regulation shall not apply to:

(a) the members of the ESCB and other Member States’ bodies
performing similar functions and other Union public bodies
charged with or intervening in the management of the
public debt;

(b) the Bank for International Settlements.

5. With the exception of the reporting obligation under
Article 9, this Regulation shall not apply to the following
entities:

(a) multilateral development banks, as listed under Section 4.2
of Part 1 of Annex VI to Directive 2006/48/EC;

(b) public sector entities within the meaning of point (18) of
Article 4 of Directive 2006/48/EC where they are owned by
central governments and have explicit guarantee

arrangements provided by central governments;

(c) the European Financial Stability Facility and the European
Stability Mechanism.

6. The Commission shall be empowered to adopt delegated
acts in accordance with Article 82 to amend the list set out in
paragraph 4 of this Article.

To that end, by 17 November 2012 the Commission shall
present to the European Parliament and the Council a report
assessing the international treatment of public bodies charged
with or intervening in the management of the public debt and
central banks.

The report shall include a comparative analysis of the treatment
of those bodies and of central banks within the legal framework
of a significant number of third countries, including at least the
three most important jurisdictions as regards volumes of
comtracts traded, and the risk-management standards applicable
to the derivative transactions entered into by those bodies and
by central banks in those jurisdictions. If the report concludes,
in particular in regard to the comparative analysis, that the
exemption of the monetary responsibilities of those third-
country central banks from the clearing and reporting
obligation is necessary, the Commission shall add them to the
list set out in paragraph 4.

Article 2
Definitions

For the purposes of this Regulation, the following definitions
shall apply:

(1) ‘CCP’ means a legal person that interposes itself between
the counterparties to the contracts traded on one or more
financial markets, becoming the buyer to every seller and
the seller to every buyer;


A,

ang,

ARTA

Minutes shall be taken at meetings of the General
Council.

The General Council has a quorum when not less
than eight members are present. Each member who
takes part in the final handling of a matter is obliged
to also take part in the decision. However, no mem-
ber is obliged to vote for more than one proposal.
In decisions on severing a member of the Executive
Board from his employment, at least eight of the
members of the General Council shall agree on the
decision.

The General Council may submit consultation
opinions on behalf of the Riksbank within its area of
competence.

CHAPTER 3 THE EXECUTIVE BOARD

A member of the Executive Board may not

4, be a member of the Riksdag,

2. be a Cabinet minister,

3. be employed at the Government Offices,

4. be employed by the central administration of a
political party,

5, be a member or deputy member of a board of
directors of a bank or any other company subject
to supervision by the Financial Supervisory
Authority, or,

6. hold any other employment or assignment which
makes him unsuitable as member of the Executive
Board.

[501


Principle 6: Margin

ACCP should cover its credit exposures to its participants for all products through an
effective margin system that is risk-based and regularly reviewed.

Nasdaq Clearing has a margin system that establishes margin levels commensurate
with the risks and particular attributes of each product, portfolio, and market it
serves. Currently, Nasdaq Clearing runs three different margin models, SPAN® 3 for
commodities, OMS2 for equities and CFM for interest rates. Each margin model is
tailored for its respective market. All three margin models are parametric, i.e.
margins are established through structured simulation of significant risk factors.
SPAN is implemented for commodities due to its robustness, its wide acceptance in
the market and its capacity to cater for the price dependencies manifested in the
commodities markets. OMS2 is chosen for equities primarily due to its capacity to
handle options and its robustness. CFM is implemented for interest rates primarily
due to its capacity to handle yield curves, and as such capture the natural price
dependency between different interest rate products.

Nasdaq Clearing covers its credit exposures to its participants for all products it
clears through an effective margin system that is risk-based and with individual risk
models per asset class. The margin system calculates accurate and timely risk-based
margin requirements for all cleared products on an hourly basis throughout the day
as well as end of day.

All open positions in various markets are margined with regards to the specific
nature of the risks involved. Nasdaq Clearing calculates margin requirements based
on price volatility, price dependence between products in a market as well as price
dependence between markets and market liquidity for determination of close-out
periods. Individual product characteristics (settlement/delivery cycle, physical
delivery/financial settlement) are reflected in the margining parameters and margin
models structure. In addition, when evaluating credit exposures, Nasdaq Clearing
also takes into account the size and concentration of positions a participant holds.
For portfolios of significant size and concentration Nasdaq Clearing applies
concentration risk charges.

Nasdaq Clearing has reliable sources of timely price data for its margin system.
Nasdaq Clearing primarily uses prices from the markets it clears products from as the
main sources for price data in its margining system. For the vast majority of the
products cleared by Nasdaq Clearing prices are electronically fed into the margin
system. The design and implementation of the system secure that the prices used
are appropriate for margin calculations.

Nasdaq Clearing uses either industry standard price models, and/or price models
that are agreed with the market participants. Such models are included in the scope

3
SPAN is a registered trademark of Chicago Mercantile Exchange Inc., used herein under license. Chicago Mercantile Exchange Inc.

assumes no liability in connection with the use of SPAN by any person or entity.

2016, The Nasdaq Group, Inc. All Rights Reserved.


Legal and regulatory framework

As mentioned above, Nasdaq Clearing is authorized as a central counterparty and is
licensed to conduct clearing operations by the Swedish FSA pursuant to EMIR. The
operations of Nasdaq Clearing are also governed by the Swedish Securities Market
Act. Nasdaq Clearing submitted its application for an EMIR clearing license to the
Swedish FSA on 16 April, 2013, and was approved by the same authority as a clearing
house under EMIR on 18 March 2014.The Swedish FSA has also approved and
designated Nasdaq Clearing as a system for settlement and notified this to the
European Securities and Markets Authority (ESMA) pursuant to the Swedish Act
(1999:1309) concerning Systems for the Settlement of Obligations on the Financial
Market (Sw: lagen (1999:1309) om system fér aweckling av forpliktelser pa
finansmarknaden) (the Swedish Act implementing the Settlement Finality Directive
(98/26/EC)). Similarly, the Norwegian FSA has approved and registered Nasdaq
Clearing Oslo Branch as a designated settlement system in accordance with
Norwegian Payment System Act 17 December 1999 No 95.

All operations of Nasdaq Clearing are subject to the supervision of the Swedish FSA
and the central clearing party operations are also overseen by the Swedish Central
Bank, Riksbanken. In Sweden, trading and clearing are primarily governed by the
following acts and regulations:

. EMIR

° Securities Market Act (2007:528)

* Systems for the Settlement of Obligations on the Financial Market

Act (1999:1309)

° Financial Instruments Trading Act (1991:980)

° Rights of Priority Act (1970:979)

. Swedish Bankruptcy Act (1987:672)

. Financial Instruments Accounts Act (1998:1479)

In addition to the laws and regulations mentioned above, Nasdaq Clearing’s
activities are also governed by other EU Directives (as implemented in local law) and
Regulations, including the Directive 98/26/EC on Settlement Finality in Payment and
Securities Settlement Systems (the “Settlement Finality Directive”) and the
Directive 2002/47/EC on Financial Collateral Arrangements (the “Collateral
Directive”).

Nasdaq Clearing has also issued rules and regulations applicable to its clearing
activities. The rules and regulations together with the membership agreements
constitute the contractual framework governing the relationship between Nasdaq
Clearing and its participants. The rules and regulations become binding for
participants through the execution of the membership agreement. The contractual
relationships between Nasdaq Clearing and the respective participants are governed

© 2016, The Nasdaq Group, Inc. All Rights Reserved.


IV. Principle-by-principle summary narrative disclosure

Principle 1: Legal Basis

An FMI should have a well-founded, clear, transparent, and enforceable legal basis
for each material aspect of its activities in aii relevant jurisdictions.

Swedish and Norwegian law, together with EU legislation and the rules and
regulations of Nasdaq Financial and Nasdaq Commodities (referred to as “Nasdaq
FIN R&R” and “Nasdaq COM R&R” respectively and jointly as the “R&Rs”), provide a
well-founded, clear, transparent and enforceable legal basis for Nasdaq Clearing’s
central counterparty clearing.

The material aspects in relation to Nasdaq Clearing operation includes settlement
finality, netting arrangements and collateral arrangements, including rights and
interest in financial instruments, custody activity and default management
procedures.

The legal basis provides a high degree of certainty for each material aspect of
Nasdaq Clearing’s activities in all relevant jurisdictions and is primarily monitored by
its legal department. One of the key objectives of the legal department is to identify
and mitigate the legal risks associated with the clearing operations. However, the
Board of Directors of Nasdaq Clearing, Risk Management and/or the head of the
respective business unit, as well as independent law firms and the Swedish Securities
Dealers Association also play an important role in the monitoring of the legal basis as
they are involved in the process of reviewing and updating the rules, procedures and
contracts, By having this process in place, Nasdaq Clearing ensures the consistency
of its rules, procedures and contracts with relevant laws and regulations.

The cross-border nature of the clearing infrastructure gives rise to specific risks. The
cross-border implications arise where the seller, the buyer and/or the assets are
located in different jurisdictions. Further, agents through which the parties act
and/or intermediaries through which the assets are held may be located in different
jurisdictions. This cross-border component of clearing necessitates that potential
conflict of law issues are addressed and analyzed.

By the implementation of the Settlement Finality Directive and Collateral Directive
into Swedish and Norwegian legislation, many of the cross-border implications and
tisks have been reduced by providing legal certainty as to settlement, netting and
collateral risk. However, Nasdaq Clearing is aware that the Settlement Finality
Directive and Collateral Directive may have been implemented differently in
different member jurisdictions.

Nasdaq Clearing has a legal opinion structure in order to further enhance
predictability and certainty as regards the enforceability of the material aspects of
Nasdaq Clearing’s operations in the relevant jurisdictions, including that any actions
taken by Nasdaq Clearing will not be voided, reversed or subject to stays. Nasdaq
Clearing has also obtained external legal analysis in relation to the CCP operations

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

10


Furthermore, and as described above, the Clearing Board has delegated certain powers to the President by
way of issuing Instructions for the President. The President shall among other things make decisions
regarding amendments to the Clearing Rules, provided that the amendments are not of principle
significance or major importance (in such case the decision to incorporate such significant changes, it
shall be made by the Clearing Board in accordance with applicable law). It shall be noted that due to
practical reasons, the President may delegate decisions on inter alia changes to the Clearing Rules
(provided however not being of major importance and/or principle significance) to senior management
within the Nasdaq Clearing organization.

Compliance organization

The board of directors of Nasdaq Nordic Ltd. (currently, the parent company of Nasdaq Clearing),
continuously steers each Nasdaq Nordic subsidiary in order to develop a common view and common
practices with respect to rules, regulations and market practices. In addition, the board of Nasdaq Nordic
Ltd, has a supervisory role to ensure that Nasdaq Clearing is acting in compliance with the relevant
financial market regulations in its clearing functions. The board of Nasdaq Nordic Ltd. is currently
comprised of 10 members, the majority of which are independent members. However, as mentioned
above, it is the Clearing Board which has the ultimate responsibility to ensure that Nasdaq Clearing
complies with all regulatory requirements and regulations.

The compliance organization of Nasdaq Nordic Ltd. covers all subsidiaries with a license to
operate regulated markets or clearing and settlement functions, including Nasdaq Clearing. The
compliance organization, as part of the Office of General Counsel department (“OGC”), is currently
comprised of the Head of OGC in Nordic/Baltic and compliance liaison officers in each licensed Nasdaq
Nordic subsidiary, including Nasdaq Clearing. Generally, the compliance organization undertakes to
oversee compliance by Nasdaq Clearing with applicable laws and regulations, as well as internal
guidelines and obligations related to the compliance policy. At each regular meeting the board of Nasdaq
Nordic Ltd., as well as the Clearing Board, are provided with specific risk reports covering financial
position, disputes and litigations, operational incidents, compliance issues and clearing operations.

On a day-to-day basis, Nasdaq Clearing has a dedicated Chief Compliance Officer and dedicated
legal advisors at OGC in the Stockholm and Oslo office as responsible for ensuring compliance with
requirements under applicable legislation. The Nasdaq European Legal department

It features a dedicated Nordic/Baltic legal and compliance team
which responsibility includes compliance for Nasdaq’s authorised entities in the
Nordic and Baltic area. The legal and compliance department supports the operative management on a

daily basis in ensuring compliance with Nasdaq Clearing’s requirements in particular with respect to
EMIR and governance issues.

Furthermore, Nasdaq Clearing has a dedicated Chief Technology Officer and Chief Risk Officer,
that together with the role of Chief Compliance Officer are defined in EMIR. These people are exclusive
to Nasdaq Clearing and have clear reporting lines to the Board and/or senior management as appropriate.

These roles are also subject to the fit and = — = at the Swedish FSA.

LONO1_8129617v4


CaN]

L 201/46

Official Journal of the European Union

27.7.2012

3. Upon completion of his investigation and before
submitting the file with his findings to ESMA. the investigation
officer shall give the persons subject to the investigations the
opportunity to be heard on the matters being investigated. The
investigation officer shall base his findings only on facts on
which the persons concerned have had the opportunity 10
comment.

‘The rights of the defence of the persons concerned shall be fully
respected during investigations under this Article.

4. When submitting the file with his findings to ESMA, the
investigation officer shall notify that fact to the persons who are
subject to the investigations. The persons subject to the inves-
tigations shall be emtitled to have access to the file, subject to
the legitimate interest of other persons in the protection of their
business secrets. The right of access to the file shall not extend
to confidential information affecting third parties.

5. On the basis of the file containing the investigation
officer's findings and, when requested by the persons concerned,
after having heard the persons subject to the investigations in
accordance with Article 67, ESMA shall decide if one or more
cof the infringements listed in Annex I has been commited by
the persons who have been subject to the investigations and, in
such a case, shall take a supervisory measure in accordance with
Article 73 and impose a fine in accordance with Article 65.

6. The investigation officer shall not participate in ESMA’s
deliberations or in any other way intervene in ESMA’s decision-
making process.

7. The Commission shall adopt further rules of procedure for
the exercise of the power to impose fines or periodic penalty
payments, including provisions on the rights of the defence,
temporal provisions, and the collection of fines or periodic
penalty payments, and shall adopt detailed rules on the limi-
tation periods for the imposition and enforcement of penalties.

The rules referred to in the first subparagraph shall be adopted
by means of delegated acts in accordance with Article 82.

8. ESMA shall refer matters for criminal prosecution to the
relevant national authorities where, in carrying out its duties
under this Regulation, it finds that there are serious indications
of the possible existence of facts liable to constitute criminal
offences, In addition, ESMA shall refrain from imposing fines or
periodic penalty payments where a prior acquittal or conviction
arising from identical fact or facts which are substantially the
same has already acquired the force of res judicata as the result
of criminal proceedings under national law.

Anicle 65
Fines

1. Where, in accordance with Article 64(5), ESMA finds that
a trade repository has, intentionally or negligently, committed
‘one of the infringements listed in Annex !, it shall adopt a
decision imposing a fine in accordance with paragraph 2 of
this Article.

‘An infringement by a trade repository shall be considered to
have been committed intentionally if ESMA finds objective
factors which demonstrate that the trade repository or its
senior management acted deliberately to commit the
infringement.

2. The basic amounts of the fines referred to in paragraph 1
shall be included within the following limits:

for the infringements referred to in point (c} of Section | of
Annex f and in points (c) to (g) of Section Il of Annex I, and.
in points (a) and (b) of Section IN of Annex I the amounts
of the fines shall be at least EUR 10000 and shall not
exceed EUR 20 000;

=

(b) for the infringements referred to in points (a), (b) and (d) to
(h) of Section I of Annex I, and in points (a), (b) and (h) of
Section II of Annex I, the amounts of the fines shall be at
least EUR 5 000 and shall not exceed EUR 10 000.

In order to decide whether the basic amount of the fines should
be at the lower, the middle or the higher end of the limits set
out in the first subparagraph, ESMA shall have regard to the
annual turnover of the preceding business year of the trade
repository concerned. The basic amount shall be at the lower
end of the limit for trade repositories whose annual turnover is
below EUR 1 million, the middle of the limit for the trade
repository whose turnover is between EUR 1 and 5 million
and the higher end of the Simit for the trade repository
whose annual turnover is higher than EUR 5 million.

3. The basic amounts set out in paragraph 2 shall be
adjusted, if need be, by taking into account aggravating or
mitigating factors in accordance with the relevant coeflicients
set out in Annex II.

The relevant aggravating coefficients shall be applied one by one
to the basic amount. If more than one aggravating coefficient is
applicable, the difference between the basic amount and the
amount resulting from the application of each individual aggra-
vating coefficient shall be added to the basic amount.

The relevant mitigating coefficients shall be applied one by one
to the basic amount. If more than one mitigating coefficient is
applicable, the difference between the basic amount and the
amount resulting from the application of each individual miti-
gating coefficient shail be subtracted from the basic amount.


Exhibit F-1 to Supplement S-1 to Form FBOT

A description of the clearing organization’s regulatory or compliance department, including its size,
experience level, competencies, duties and responsibilities of staff.

The board of directors of Nasdaq Nordic Ltd. (the parent company of Nasdaq Clearing),
continuously steers each Nasdaq Nordic subsidiary in order to develop a common view and common
practices with respect to rules, regulations and market practices. In addition, the board of Nasdaq Nordic
Ltd. has a supervisory role to ensure that Nasdaq Clearing is acting in compliance with the relevant
financial market regulations in its clearing functions. However, it is the Clearing Board who has the
ultimate responsibility for the Clearinghouse’s compliance with regulatory standards and applicable laws
and regulations.

The compliance organization of Nasdaq Nordic Ltd. covers all subsidiaries with a license to
operate regulated markets or clearing and settlement functions, including Nasdaq Clearing. The
compliance organization, as part of the Office of General Counsel department (“OGC”), is currently
comprised of the Head of OGC in Nordic/Baltic and compliance liaison officers in each licensed Nasdaq
Nordic subsidiary, including Nasdaq Clearing. Generally, the compliance organization undertakes to
oversee compliance by Nasdaq Clearing with applicable laws and regulations, as well as internal
guidelines and obligations related to the compliance policy. At each regular meeting the board of Nasdaq
Nordic Ltd., as well as the board of Nasdaq Clearing, are provided with specific risk reports covering
financial position, disputes and litigations, operational incidents, compliance issues and clearing
operations.

On a day-to-day basis, Nasdaq Clearing has a dedicated Chief Compliance Officer and dedicated
legal advisors at OGC in the Stockholm and Oslo office as responsible for ensuring compliance with
requirements under applicable legislation. The Nasdaq European legal department is headed b

It features a dedicated Nordic/Baltic legal team headed by
which responsibility includes compliance for Nasdaq’s authorised entities in the Nordic and Baltic area.
The legal and compliance department supports the operative management on a daily basis in ensuring
compliance with Nasdaq Clearing’s requirements in particular with respect to EMIR and governance
Issues.

Each employee of the legal department holds a LLM and has several years of experience of
Swedish and Norwegian securities market legislation.

LONO1_8129632v5


Principle 18: Access and participation requirements

An FMI should have objective, risk-based, and publicly disclosed criteria for
participation, which permit fair and open access.

Nasdaq Clearing has an objective, risk-based, and publicly disclosed criteria for
participation, and provides fair and open access to its services. All participants are
subject to the same access criteria, which are set out to maintain acceptable risk
controls while ensuring that they have the least restrictive access that circumstances
permit.

Nasdaq Clearing publicly discloses all rules, procedures, and criteria for participation,
on its websites. Members and potential members and other participants can thereby
access information about the risk, cost and requirements to participate in clearing
through Nasdaq Clearing. The detailed and publically available rules in relation to
membership requirements ensure non- discriminatory enforcement of the rules.

To the extent there are any participation requirements stipulated in applicable law,
such requirements have been incorporated in the R&Rs and procedures. Examples of
such statutory participation requirements relate to e.g. capital requirements, risk
management routines and that the participant is considered as appropriate to
participate in the clearing. The participation requirements included in the R&Rs are
regularly reviewed and updated if deemed necessary.

Nasdaq Clearing offers the following direct participation types:

Clearing Members:

a) Direct clearing member (“DCM”), who may participate in clearing activities of
Nasdaq Clearing on its own behalf and on behalf of clients.

b) General clearing member (“GCM”), who may participate in the clearing
activities of Nasdaq Clearing on its own behalf, on behalf of clients and on
behalf of Non Clearing Members (“NCM"s.

Direct client clearing:

a) Direct Pledging Customers (“DP”) (only Nasdaq Clearing Financial) who trades
through one or several trading administrator(s) and clears through a clearing
administrator. The counterparty risk of Nasdaq Clearing is towards the DP
customer with some joint liability with the clearing and trading administrator(s}
respectively.

b) Clearing clients (“CC”) (only Nasdaq Clearing Commodities) who may register
clearing transactions in their own name and account, but only through a client
representative (“CR”) (only a clearing member can act as client representative
if approved by Nasdaq Clearing).

The requirements for Nasdaq Clearing Financial participants can be found in the
Nasdaq FIN R&R (GCM 2.2.1, DCM 2.2.2, and DP Customers 1.3.12).

The requirements for Nasdaq Clearing Commodities participants can be found in the

Nasdaq COM R&R (3.1).

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

52


resources. Nasdaq Clearing has identified all relevant sources of credit risk. Nasdaq
Clearing monitors and manages on a daily and intra-day basis changes in
counterparty/credit risk exposures against a range of risk limits and well-established
margining methodologies which are validated regularly by automated model and
parameter back testing and sensitivity testing. It also monitors the credit risk relating
to the participants of Nasdaq Clearing and that the applicable membership
requirements are complied with continuously, including provision of collateral in
accordance with the R&Rs.

Nasdaq Clearing also controls and mitigates the credit risk by utilizing central bank
money, where possible, and only uses DvP instructions in the delivery processes of
financial securities.

Adequate prefunded financial resources are in place to cover the simultaneous
defaults of the largest credit exposures (Cover 2) in extreme but plausible market
conditions. Nasdaq Clearing has implemented a multilayer protection system in its
risk framework where different sources of prefunded resources ensure the
fulfilment of the clearing house’s obligations. The multilayer system, the Waterfall,
includes (in order of utilization):

a) Margin of defaulting member

b) Default fund contribution of defaulting member

c) Dedicated capital by Nasdaq Clearing (“the Junior Capital”) for the
applicable clearing service

d) Default fund contribution by other members for the applicable clearing)
service Dedicated capital by Nasdaq Clearing (“the Senior Capital”)

e) Default fund contribution by other members to the “Mutualized
Default Fund”

In addition to these prefunded resources, members have a guarantee commitment
towards Nasdaq Clearing, the so called Assessment Power, amounting to 100% of
the prefunded resources in each default fund. The structure of the financial waterfall
is specified and publicly available on the Nasdaq Clearing’s website” and in the R&Rs.

Nasdaq Clearing documents the supporting rationale for, and has appropriate
governance arrangements relating to, the amount of total financial resources it
maintains. The Clearing Risk Committee (one of Nasdaq Clearing’s Board
committees) is responsible for the governance and decisions concerning financial
resources. All meeting minutes from the Clearing Risk Committee are made available
to the Swedish FSA.

Nasdaq Clearing determines the amount and regularly test the sufficiency of its total
financial resources available in the event of a default or multiple defaults in extreme
but plausible market conditions through rigorous stress testing.

In more detail, the stress tests are performed and monitored on a daily basis by
Nasdaq Clearing and used to size the appropriate level of financial resources and

2 http://www.nasdagomx.com/europeanclearing/risk-management/default-fund

© 2016, The Nasdaq Group, Inc. All Rights Reserved.

19


27.7.2012 EN |

Official Journal of the European Union

L 201/53

5. Paragraphs I, 2 and 3 shall not prevent the competent
authorities from exchanging or transmitting confidential
information, in accordance with national Jaw, that has not
been received from a competent authority of another Member
State.

Article 84
Exchange of information

1. Competent authorities, ESMA, and other relevant auth-
orities shall, without undue delay, provide one another with
the information required for the purposes of carrying out
their duties.

2. Competent authorities, ESMA, other relevant authorities
and other bodies or natural and legal persons receiving
confidential information in the exercise of their duties under
this Regulation shall use it only in the course of their duties.

3. Competent authorities shall communicate information to
the relevant members of the ESCB where such information is
relevant for the exercise of their duties.

TITLE 1X
TRANSITIONAL AND FINAL PROVISIONS
Artide 85
Reports and review

1. By 17 August 2015, the Commission shall review and
prepare a general report on this Regulation. The Commission
shall submit the report to the European Parliament and the
Council, together with any appropriate proposals.

The Commission shall in particular:

{a) assess, in cooperation with the members of the ESCB, the
need for any measure to facilitate the access of CCPs to
central bank liquidity facilities;

assess, in coordination with ESMA and the relevant sectoral
authorities, the systemic importance of the transactions of
non-financial firms in OTC derivatives and, in particular, the
impact of this Regulation on the use of OTC derivatives by
non-financial firms;

o

assess, in the light of experience, the functioning of the
supervisory framework for CPs, including the effectiveness
of supervisory colleges, the respective voting modalities laid
down in Article 19(3), and the role of ESMA, in particular
during the authorisation process for CPs;

Ss

() assess, in cooperation with ESMA and ESRB, the efficiency
of margining requirements to limit procyclicality and the
need to define additional intervention capacity in this area;

assess in cooperation with ESMA the evolution of CCP's
policies on collateral margining and securing requirements
and their adaptation to the specific activities and risk
profiles of their users.

s

The assessment referred to in point (a) of the first subparagraph
shall take into account any result of ongoing work between
central banks at Union and international level. The assessment
shall also take into account the principle of independence of
central banks and their right to provide access to liquidity
facilities at their own discretion as well as the potential
unintended effect on the behaviour of the CCPs or the
internal market. Any accompanying proposals shall not, either
directly or indirectly, discriminate against any Member State or
group of Member States as a venue for clearing services.

2. By 17 August 2014, the Commission shall prepare 2
report, after consulting ESMA and EIOPA, assessing the
progress and efforr made by CCPs in developing technical
solutions for the transfer by pension scheme arrangements of
non-cash collateral as variation margins, as well as the need for
any measures to facilitate such solution. If the Commission
considers that the necessary effort to develop appropriate
technical solutions has not been made and that the adverse
effect of centrally clearing derivative contracts on the retirement
benefits of future pensioners remain unchanged, it shall be
empowered to adopt delegated acts in accordance with
Article 82 to extend the three-year period referred to in
‘Article 89(1) once by two years and once by one year.

3. ESMA shall submit to the Commission reports:

(a) on the application of the clearing obligation under Title II
and in particular the absence of clearing obligation for OTC
derivative contracts entered into before the date of entry
into force of this Regulation;

S

on the application of the identification procedure under
Article 5(3);

on the application of the segregation requirements laid
down in Article 39;

S

(d) on the extension of the scope of interoperability
arrangements under Title V to transactions in classes of
financial instruments other than transferable securities and
money-market instruments;


Exhibit F-3 to Supplement S-1 to Form FBOT

A description of the clearing organization’s disciplinary rules, including but not limited to rules that
address the following:

(1) Disciplinary authority and procedures that empower staff to recommend and prosecute disciplinary
actions for suspected rule violations and that provide the authority to fine, suspend, or expel any
clearing participant pursuant to fair and clear standards.

(2) The issuance of warning letters and/or summary fines for specified rule violations.

(3) The review of investigation reports by a disciplinary panel or other authority for issuance of
charges or instructions to investigate further, or findings that an insufficient basis exists to issue
charges.

(4) Disciplinary committees of the clearing organization that take disciplinary action via formal
disciplinary processes.

(5) Whether and how the clearing organization articulates its rationale for disciplinary decisions.

(6) The sanctions for particular violations and a discussion of the adequacy of sanctions with respect to
the violations committed and their effectiveness as deterrents to future violations.

All clearing participants are under a contractual obligation to comply with the Market Conduct
Rules (joint rules for both the Exchange and the Clearinghouse) as to their trading and reporting practices.
The Market Surveillance continuously monitors the market conduct of both trading and clearing
participants, and investigates possible breaches of the Trading and Clearing Rules or applicable laws. If
the Market Surveillance suspects a breach of the Market Conduct Rules and its investigation supports this
suspicion, then the Market Surveillance may recommend disciplinary sanctions against the member. Any
recommendation for disciplinary sanctions shall be in writing and be filed with the Disciplinary
Committee with copies to the relevant member(s), and to the Board as further described in Exhibit G.

Furthermore, if a Clearing Member does not fulfill its obligations in relation to settlement or
margins or otherwise will be deemed to be in default according to the Clearing Rules, the Clearinghouse
may suspend such member until the default event has been remedied or otherwise ceased. During
suspension, clearing of new transaction will only be accepted if they are preapproved by the
Clearinghouse. If a material default event has occurred the Clearinghouse may take any one or more of
the following steps:

e declare any or all claims of or against the defaulting account holder due on that date;

© enter into hedge transactions in other series in order to reduce the market risk in open
positions registered on the clearing accounts of the account holder;

e take such action as it considers necessary or expedient to close-out open interest by
entering into close-out transactions for the account holder’s account and risk or otherwise
discharge and/or net the rights, obligations and positions of the account holder;

e withhold any cash settlement amount owed to the account holder;

LONO1_8129632vS