Oslo Børs: VPS Ends Its Agreement With Percival CSD Partners AS (Estonia)

The project involved an investment framework of NOK 120 million (external costs). Within this framework VPS intended to modernise its IT infrastructure and a range of applications that are used to deliver services that are additional to the functionality offered by the core system itself. VPS signed an agreement with an external supplier, Percival CSD Partners AS (‘Percival’), for Percival to deliver a standard CSD core system that would be adapted to meet the market’s and VPS’s requirements.

VPS received a first version of the supplier’s solution in the autumn of 2015. During testing VPS found that the solution did not satisfy the agreed technical requirements necessary to ensure operational stability, reliability and performance. VPS therefore undertook a thorough technical review of the delivery and identified the improvements that needed to be implemented.

Oslo Børs VPS Holding published an announcement on 9 December 2015 stating that the project was experiencing delays that would cause the completion date to change and that further planning work was being carried out with a target for the core system part of the project to be completed in April 2018.

Oslo Børs VPS Holding then announced on 11 February 2016 in its interim report for the fourth quarter of 2015 that due to new findings the complexity of the project, and therefore also the risk associated with it, had increased. It was also announced at this time that the further planning work was expected to take until mid-April.

VPS has unfortunately established that the supplier has not succeeded in rectifying the shortcomings that were identified. The further planning work found that the scope of the work required to achieve a satisfactory technical platform would be unacceptable in terms of the resources and time required. The Board of Directors of VPS has therefore decided to end the agreement with the supplier.

The other parts of VPS’ modernisation project have been high quality and delivered on time and on budget during the project period. Going forward VPS will prioritise continuing to modernise those products and services that are of greatest significance to its customers in their day-to-day operations. VPS will prioritise modernisation and development of end-user solutions, while also continuing to standardise notifications and other functionality, which is important to reducing customers’ costs. In parallel with this development work VPS will simplify the core system itself to ensure that a future project to modernise it will be smaller in scope and involve less risk.

Technical requirements arising from new European regulation (CSDR) will be developed as part of the existing system.

Oslo Børs VPS Holding will make a write-down of approximately NOK 34 million in the first quarter of 2016 as a consequence of ending the agreement. An update on the operating costs estimated for 2016 will be given in the interim report for the first quarter of 2016.