Approval of financial instruments, markets and bond issuers

The Ministry of Finance’s Management Mandate for the Government Pension Fund Global requires Norges Bank to approve all financial instruments, markets and government bond issuers. Approval is to be based on an assessment of all relevant investment risks and operational risks.

Norges Bank has developed a framework for the systematic assessment of investment risks and operational risks associated with investments in different financial instruments, markets and government bonds from different issuers. Information on relevant risks is obtained from a variety of recognised international organisations and data providers. Investment risks are assessed along the following dimensions:

Government bond issuers

  • Stability - assessment of political stability, risk of war/terrorism, abuse and misuse of public authority, the rule of law, and protection of private property rights.
  • Sustainability – assessment of environmental, social and governance factors, such as exposure to climate change, emissions intensity, water and waste management, protection of natural resources, biodiversity, living standards, labour rights and social standards, corporate governance and corruption risks
  • Serviceability – assessment of the issuer’s expected ability to service its debt, and government finances’ resilience to financial crises

Markets

  • Stability – assessment of political stability, risk of war/terrorism, abuse and misuse of public authority, the rule of law, and protection of private property rights
  • Sustainability – assessment of environmental, social and governance factors, such as exposure to climate change, emissions intensity, water and waste management, protection of natural resources, biodiversity, living standards, labour rights and social standards, corporate governance and corruption risks
  • Market regulation and infrastructure – assessment of sovereign immunity, investment treaties, capital mobility and securities market regulation
  • Functioning of the marketplace – assessment of investor protection and of monitoring and enforcement in the securities market
  • Ownership – assessment of minority shareholder rights and restrictions on foreign ownership

Financial instruments

  • Legal documentation – assessment of requirements for instrument-specific legal documentation
  • Tax – assessment of withholding taxes, transaction taxes and capital gains taxes
  • Investment risks – assessment of credit, counterparty and market risks

Operational risks are assessed along the following dimensions:

Government bond issuers

Operational risk is assessed at the financial instrument (bond) level only

Markets

  • Stock exchange – considers stock exchange regulation and responsibilities.
  • Settlement and safekeeping – considers settlement risks, default protection and custody.
  • Market infrastructure and trade processing – considers settlement cycles, account structures and trade flows
  • Restrictions and disclosure – considers requirements related to licenses and investment restrictions.
  • Stock exchange – considers stock exchange regulation and responsibilities.
  • Settlement and safekeeping – considers settlement risks, default protection and custody.
  • Market infrastructure and trade processing – considers settlement cycles, account structures and trade flows
  • Restrictions and disclosure – considers requirements related to licenses and investment restrictions.

Financial instruments

  • Ownership and operational factors – assessment of valuations and corporate actions
  • Risk measurement – assessment of measurement of credit, counterparty and market risks and measurement of returns
  • Data and systems – assessment of underlying data and system configuration
  • Compliance – assessment of mandate, regulations and other aspects of compliance
  • Tax – assessment of instrument-specific operational tax issues

Information is obtained from both internal and external sources with local knowledge from the specific market. Our assessment of operational risks also takes account of any ongoing work on controls, procedures and improvements that could help reduce these risks.

Approved financial instruments

INSTRUMENT CATEGORY INSTRUMENT GROUP INSTRUMENT SUBGROUP
Cash & FX
INSTRUMENT CATEGORYCashINSTRUMENT GROUPCashINSTRUMENT SUBGROUPCash
INSTRUMENT CATEGORYFXINSTRUMENT GROUPFX forwardINSTRUMENT SUBGROUPFX forward
INSTRUMENT CATEGORYFXINSTRUMENT GROUPFX NDFINSTRUMENT SUBGROUPFX NDF
INSTRUMENT CATEGORYFXINSTRUMENT GROUPFX spotINSTRUMENT SUBGROUPFX spot
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPBuysellbackINSTRUMENT SUBGROUPBuysellback
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPCross-currency repoINSTRUMENT SUBGROUPCross-currency repo
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPCross-currency reverse repoINSTRUMENT SUBGROUPCross-currency reverse repo
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPRepoINSTRUMENT SUBGROUPRepo
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPReverse repoINSTRUMENT SUBGROUPReverse repo
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPSellbuybackINSTRUMENT SUBGROUPSellbuyback
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPTime depositsINSTRUMENT SUBGROUPTime deposits
INSTRUMENT CATEGORYMoney marketINSTRUMENT GROUPTriparty repoINSTRUMENT SUBGROUPTriparty repo
Equity
INSTRUMENT CATEGORYCommon stockINSTRUMENT GROUPCommon stockINSTRUMENT SUBGROUPCommon stock
INSTRUMENT CATEGORYCommon stockINSTRUMENT GROUPPre-IPOINSTRUMENT SUBGROUPPre-IPO
INSTRUMENT CATEGORYCommon stockINSTRUMENT GROUPWhen-issued sharesINSTRUMENT SUBGROUPWhen-issued shares
INSTRUMENT CATEGORYConvertible preference sharesINSTRUMENT GROUPConvertible preference sharesINSTRUMENT SUBGROUPConvertible preference shares
INSTRUMENT CATEGORYDepositary receiptsINSTRUMENT GROUPDepositary receiptsINSTRUMENT SUBGROUPDepositary receipts
INSTRUMENT CATEGORYDepositary receiptsINSTRUMENT GROUPSingle listed depositary receiptsINSTRUMENT SUBGROUPSingle listed depositary receipts
INSTRUMENT CATEGORYExchange traded derivativesINSTRUMENT GROUPExchange traded futuresINSTRUMENT SUBGROUPExchange traded futures
INSTRUMENT CATEGORYListed funds/trustsINSTRUMENT GROUPOther listed funds/trustsINSTRUMENT SUBGROUPREIT
INSTRUMENT CATEGORYListed funds/trustsINSTRUMENT GROUPOther listed funds/trustsINSTRUMENT SUBGROUPUnit
INSTRUMENT CATEGORYOTC derivativesINSTRUMENT GROUPCFDsINSTRUMENT SUBGROUPEquity CFDs SecLending
INSTRUMENT CATEGORYPreference sharesINSTRUMENT GROUPPreference sharesINSTRUMENT SUBGROUPPreference shares
INSTRUMENT CATEGORYRightsINSTRUMENT GROUPRightsINSTRUMENT SUBGROUPRights
INSTRUMENT CATEGORYStapled securitiesINSTRUMENT GROUPStapled securitiesINSTRUMENT SUBGROUPStapled securities
INSTRUMENT CATEGORYSubscription receiptsINSTRUMENT GROUPSubscription receiptsINSTRUMENT SUBGROUPSubscription receipts
INSTRUMENT CATEGORYTracking stockINSTRUMENT GROUPTracking stockINSTRUMENT SUBGROUPTracking stock
INSTRUMENT CATEGORYWarrantINSTRUMENT GROUPWarrantINSTRUMENT SUBGROUPWarrant
Fixed income
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPCorporate bondsINSTRUMENT SUBGROUPCorporate bonds
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPGovernment related bondsINSTRUMENT SUBGROUPAgencies
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPGovernment related bondsINSTRUMENT SUBGROUPLocal authority
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPGovernment related bondsINSTRUMENT SUBGROUPSovereign
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPGovernment related bondsINSTRUMENT SUBGROUPSupranational
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPIndex linked bondsINSTRUMENT SUBGROUPIndex linked corporate
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPIndex linked bondsINSTRUMENT SUBGROUPIndex linked government
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPSecuritized bondsINSTRUMENT SUBGROUPCovered
INSTRUMENT CATEGORYBondsINSTRUMENT GROUPTreasuriesINSTRUMENT SUBGROUPTreasuries
INSTRUMENT CATEGORYConvertible bondsINSTRUMENT GROUPConvertible bondsINSTRUMENT SUBGROUPConvertible bonds
INSTRUMENT CATEGORYExchange traded derivativesINSTRUMENT GROUPExchange traded futuresINSTRUMENT SUBGROUPFinancial futures
INSTRUMENT CATEGORYOTC derivativesINSTRUMENT GROUPSwapsINSTRUMENT SUBGROUPInflation swaps
INSTRUMENT CATEGORYOTC derivativesINSTRUMENT GROUPSwapsINSTRUMENT SUBGROUPInterest rate swaps
INSTRUMENT CATEGORYOTC derivativesINSTRUMENT GROUPSwapsINSTRUMENT SUBGROUPCredit default swap index

 

Approved markets for equity investments

Markets
MarketsAustraliaHungaryPoland
MarketsAustriaIcelandPortugal
MarketsBangladeshIndiaQatar
MarketsBelgiumIndonesiaRumania
MarketsBrazilIrelandRussia
MarketsCanadaIsraelSingapore
MarketsChileItalySlovakia
MarketsChinaJapanSlovenia
MarketsColombiaKenyaSouth Africa
MarketsCroatiaKuwaitSouth Korea
MarketsCyprusLatviaSpain
MarketsCzech RepublicLithuaniaSri Lanka
MarketsDenmarkLuxembourgSweden
MarketsEgyptMalaysiaSwitzerland
MarketsEstoniaMexicoTaiwan
MarketsFinlandMoroccoThailand
MarketsFranceNetherlandsTurkey
MarketsGermanyNew ZealandUnited Arab Emirates
MarketsGreat BritainNigeriaUSA
MarketsGreecePeruVietnam
MarketsHong KongPhilippines

Approved issuers of government bonds

Issuers
IssuersAustraliaGreeceNew Zealand
IssuersAustriaHong KongPeru
IssuersBelgiumHungaryPoland
IssuersBrazilIcelandPortugal
IssuersBulgariaIndiaRumania
IssuersCanadaIndonesiaSingapore
IssuersChileIrelandSlovakia
IssuersColombiaIsraelSlovenia
IssuersCroatiaItalySouth Africa
IssuersCyprusJapanSouth Korea
IssuersCzech RepublicLatviaSpain
IssuersDenmarkLithuaniaSweden
IssuersEstoniaLuxembourgSwitzerland
IssuersFinlandMalaysiaTaiwan
IssuersFranceMaltaThailand
IssuersGermanyMexicoUSA
IssuersGreat BritainNetherlands