Swedish Financial Supervisory Authority clarifies investors buying securities from investment firms under underwriting arrangements do not need underwriting authorization

The Swedish Financial Supervisory Authority has issued a legal position clarifying that an investor does not need authorization for underwriting of financial instruments when it agrees to buy securities from an investment firm if the firm's underwriting commitment is called. The authority draws a distinction between the regulated underwriting service provided to an issuer and a separate risk-transfer arrangement between the investment firm and an investor. The position explains that underwriting of financial instruments is an investment service directed at issuers and depends on the contractual relationship between the issuer and the guarantor. Where an investment firm has entered into an underwriting agreement with an issuer, it may use options or similar agreements with an investor to manage its own risk. In that case, the investor is only committing to purchase the instruments from the investment firm and is not assuming any obligation toward the issuer to guarantee the offering. On that basis, the investor is not carrying out authorization-required underwriting under the Act (2007:528) on the securities market.