Market supervision

The Financial Supervisory Authority of the Central Bank of Iceland monitors entities in the securities market, such as stock exchanges and central securities depositories. The activities of the aforementioned entities are i.a. intended to ensure that trading in the securities market proceeds swiftly and safely, as well as to ensure the registration of ownership rights. These are important entities and it is therefore necessary to ensure their supervision is strong and effective. Market supervision also includes supervision of the securities operations of financial undertakings and operators of mutual investment funds, since such entities provide various services to clients in the securities market.

The operations of trading venues are inter alia governed by Act No. 115/2021 on the Market for Financial Instruments, but the act defines three different types of trading venues. Entities that have an operating license as market operators (stock exchanges) can only operate a regulated market, but in Iceland one such market is operated by Nasdaq Iceland (the main market of the Exchange). In addition, market operators and Investment Firms may operate a Multilateral Trading Facility (MTF) and an Organised Trading Facility (OTF). In Iceland, one MTF is operated by Nasdaq Iceland but the First North Iceland trading facility has been registered as a growth market for small and medium-sized enterprises. In general, the requirements for issuers in an MTF are fewer than in a regulated market so the registration of such markets as growth markets for small and medium-sized enterprises calls for an even further easing of the requirements placed on issuers and is intended to facilitate listings for smaller issuers. In addition to the traditional supervision of Nasdaq Iceland, the Financial Supervisory Authority is a member of a Nordic supervisory college for the activities of stock exchanges operated by Nasdaq in the Nordic countries.

The operations of central securities depositories are governed by Act no. 7/2020 on Central Securities Depositories and Settlement and the Electronic Registration of Financial Instruments. The Act stipulates, among other things, who has the right to act as an intermediary for registrations in central securities depositories, listing activities, the settlement of securities and the legal effects of listings, etc. Two central securities depositories provide services in Iceland, and these are the Icelandic Central Securities Depository, which operates under the supervision of the Financial Supervisory Authority, and the Nasdaq Central Securities Depository, which is a branch of Nasdaq CSD SE in Latvia.

Supervision of trading in the securities market

The Financial Supervisory Authority monitors trading in the securities market through, among other things, the use of an electronic surveillance system. The system automatically processes data sent by regulated entities for the monitoring of trading and offerings.

There are also obligations on regulated parties that provide services in securities trading and entities in the securities market to monitor market behaviour and notify the Financial Supervisory Authority if there is a suspicion of abnormal behaviour or trading.

Nasdaq Iceland operates an electronic surveillance system for transactions, which is intended to ensure normal price formation in the market and that market participants operate in accordance with laws and regulations. The Financial Supervisory Authority and Nasdaq Iceland work closely together on market supervision. The Financial Supervisory Authority has thus entrusted Nasdaq Iceland with certain supervisory tasks, e.g. monitoring of market abuse (insider trading and market manipulation) and the issuers’ obligation to provide information.


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