On June 15, the Housing Financing Fund signed agreements regarding Issuance and
Market Making in HFF Bonds. The objective of the agreements is to enhance the
HFF access to borrowed money and strengthen price formation in the secondary
market.
As of July 1st, 2007, six financial institutions have been appointed as
“Primary Dealers in HFF bonds”. They are: Glitnir Bank, Kaupthing Bank,
National Bank of Iceland, MP Investment Bank Saga Capital Investment Bank and
Straumur - Burðarás Investment Bank.
The following bullet points describe the content of the Agreement:
• Primary Dealers have exclusive rights to submit bids at HFF auctions
• Primary Dealers have exclusive access to HFF Securities Lending Facility.
• Primary Dealers are obliged to submit bids at each auction for 2.000 m.kr.
nominal value.
• Primary Dealers are Market Makers in the secondary market for HFF bonds
• Primary Dealers are obliged to quote on OMX Nordic Exchange in Iceland bid
and ask offers for at least 100 m.kr. nominal value in each HFF bonds.
• Primary Dealers are in their bid and ask quotes governed by maximum
spreads as laid out in the agreements.
• Primary Dealers are obliged to renew their offers within ten minutes
after execution of transaction. If the Primary Dealer's total transaction
in one series during that day equals 1.000 m.kr. at nominal value, the
Primary Dealer is permitted to withdraw from the maximum spread
requirement for that particular series for the remainder of that day.
• The agreement is valid from July 1st, 2007 to June 30, 2008
• Total remuneration paid to all Primary Dealers is 50 m.kr. for the
duration of the agreement for the Market making part and 0,15% fee is
determined from the market markets share of accepted auction bids.
A sample agreement is attached that provides comprehensive information on the
Primary dealer's rights and obligations
