Finanstilsynet introduced expanded disclosure rules on September 1, 2022, in line with changes in the EU's Transparency Directive. The update means that lending, borrowing, return, and receipt of borrowed shares will be considered as purchases and sales and can thus trigger disclosure requirements.
The new rules result in more frequent disclosures, despite the investment strategies remaining unchanged. The reason is that we are the largest institutional investor on the Oslo Stock Exchange and among the three largest shareholders in 47 Norwegian companies.
"For an investor of our size, the new rules have led to more frequent triggering of disclosure requirements in Norwegian companies, thus communicating more frequently to the market. We must consider lending and return transactions, in addition to purchases and sales, when assessing whether a disclosure threshold has been met," says Director of Compliance and Legal at Folketrygdfondet, Christina Stray.
Before the changes came into effect, lending and return transactions were not considered as disclosure-triggering transactions. With the new rules, approximately 60 percent of all disclosure notifications from Folketrygdfondet are now related to such transactions.
"For a long-term and responsible owner like Folketrygdfondet, it is important that we ensure consistent information to the market and adhere to the rules in force at all times.
"We see that the new changes have increased attention around our lending activities. On the other hand, we acknowledge that the increased frequency may be perceived as noise by some investors," Stray adds.
About Folketrygdfondet's securities lending:
As part of derivative strategies, we lend out stocks and other securities.
Lending is a regular part of our business and is a source of excess returns, in addition to contributing to more efficient price formation and well-functioning capital markets.
In 2023, income from derivative strategies amounted to 91 million Norwegian kroner, equivalent to 0.03 percentage points. At the end of the year, Folketrygdfondet had lent out stocks for 8.8 billion kroner and bonds for 3.2 billion kroner. In addition, bonds worth 2 billion kroner were lent out in connection with repurchase agreements. In total, this means that securities with a total value of 14 billion kroner were lent out by the end of 2023.
To exercise our shareholder rights, we typically recall shares and bonds ahead of general meetings.