Counterparties

Within its work on monetary policy and liquidity supply in Swedish kronor, the Riksbank has four different categories of counterparties:

• RIX participants are participants in the RIX settlement system and can settle payments in Swedish kronor in central bank money and obtain intraday credit.
• Monetary policy counterparties are RIX participants who also take part in the monetary policy operational framework for the implementation of monetary policy framework. They have access to the Riksbank’s standing facilities and may participate in the Riksbank’s market operations.
• Counterparties in FX transactions may enter into foreign exchange transactions and foreign exchange swaps with the Riksbank. Such transactions may be carried out both within and outside the monetary policy framework.
• Counterparties with Access to Special Facilities for Central Counterparties are RIX participants who have access to a special borrowing and lending facility.

Only the monetary policy counterparties have access to the monetary policy operational framework and its instruments – standing facilities and market operations. If the Riksbank implements market operations in the form of purchase or sale of government bonds through a bidding process on the secondary market, the Swedish National Debt Office’s primary dealers can also participate.

Requirements for counterparties

According to the Sveriges Riksbank Act, the Riksbank may conduct transactions with financial companies. The Riksbank’s Riksbank’s Terms and Conditions for RIX and Monetary Policy Instruments specify that only RIX participants that are credit institutions under EU law and have a registered office or branch in Sweden can apply to become monetary policy counterparties. The requirement to participate in RIX stems from the fact that, otherwise, a monetary policy counterparty would have to act via a correspondent bank, which would create operational uncertainty in monetary policy transactions.

The Riksbank sets requirements that potential counterparties must fulfil at the time of application, as well as ongoing requirements for all counterparties. These include both general requirements for all types of counterparty and special requirements for monetary policy counterparties. Failure to comply with the requirements can lead to an application being rejected or an existing counterparty being temporarily or permanently suspended.

The general requirements for the Riksbank’s counterparties include the requirement that they shall be subject to adequate supervision and shall comply with the regulations applicable in the country where the counterparty is domiciled. Counterparties must also have the operational capacity required to participate in RIX and to carry out transactions on RIX efficiently. The Riksbank also expects each RIX participant to have secure technical systems and to comply with its obligations pursuant to legislation covering the prevention of money laundering and funding of terrorism.

A monetary policy counterparty must also have the operational capacity required to participate in the monetary policy framework. Among other things, this means that the counterparty shall have the capacity to act on relevant markets and enter into transactions with the Riksbank and other monetary policy counterparties. The counterparty shall also have access to the systems support required and be able to manage the risks entailed by its operations.

The monetary policy counterparties must also act in a manner that promotes the Riksbank’s ability to steer market rates. They are also expected to participate actively in the daily balancing of liquidity on the overnight market and to contribute towards increasing the Riksbank’s knowledge of how the financial markets are functioning. Among other things, monetary policy counterparties shall report information to the Riksbank on their transactions in the money market.