Primary Dealers for Government Securities

Today the Government Debt Management on behalf of the Treasury and primary dealers signed agreements regarding Issuance and Market Making in Treasury securities. The objective of the agreements is to maintain the Treasury’s access to financing, to enhance price formation in the secondary market for Treasury securities and promote an active system of benchmark issues in Iceland.

As of 1 April 2024, five financial institutions have been appointed as “primary dealers in Treasury securities”. They are: Arion Banki hf., Fossar Investment Bank hf., Islandsbanki hf., Kvika banki hf. and Landsbankinn hf.

The following bullet points describe the main content of the Agreement:

• Primary dealers have exclusive access to auctions of Treasury securities.
• Primary dealers have exclusive access to special facilities such as repurchase agreements offered by the Government Debt Management on behalf of the Treasury.
• Primary dealers are obliged to submit bids at each auction for a minimum of 100 m.kr. nominal value.
• Primary dealers are Market Makers in the secondary market for government bond series. They are obliged to submit bid and ask offers on the stock exchange for at least 60 to 100 m.kr. nominal value in each benchmark series (as laid out in the agreements).
• 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. The primary dealer is entitled to depart from the maximum spread requirement if certain conditions are fulfilled.
• The agreement is valid from 1 April 2024 to 31 March 2025.

Further information can be obtained from Björgvin Sighvatsson, head of the Government Debt Management at +354 569 9600.

The Minister of Finance and Economic Affairs tasks the Central Bank of Iceland’s Government Debt Management department with concluding primary dealer agreements on issuance of Treasury securities and market making in the secondary market.

Resident entities that have an operating licence in accordance with Article 4, Paragraph 1 of the Act on Financial Undertakings, no. 161/2002, that have the equipment needed to participate in Treasury securities auctions and can demonstrate a secure settlement of transactions through the Central Bank of Iceland, may request to be parties to the agreement.

Primary dealers have the exclusive right to submit bids at auctions where Treasury securities are offered. They also receive access to special facilities such as repurchase agreements for government bonds, in accordance with the relevant rules and the applicable terms and conditions.

Primary dealers act as market makers for government bonds and are obliged to submit bid and ask quotes for a certain minimum amount in each series of government bonds, in accordance with the bid-ask maximum spread specified in the agreement.

Further information can be found in the attached sample primary dealer agreement. Those parties wishing to become primary dealers in Treasury securities are requested to send digitally signed agreements to the Government Debt Management department at the Central Bank of Iceland before 16:00 hrs. Friday 15 March 2024.

Further information can be obtained from Björgvin Sighvatsson, Head of Government Debt Management, at tel +354 569 9600.

Sample of Agreement (pdf)

Today the Government Debt Management on behalf of the Treasury and primary dealers signed agreements regarding Issuance and Market Making in Treasury securities. The objective of the agreements is to maintain the Treasury’s access to financing and to enhance price formation in the secondary market for Treasury securities.

As of 1 April 2023, five financial institutions have been appointed as “primary dealers in Treasury securities”. They are: Arion Banki hf., Fossar Investment Bank hf., Islandsbanki hf., Kvika banki hf. and Landsbankinn hf.

The following bullet points describe the main content of the Agreement:

• Primary dealers have exclusive access to auctions of marketable Treasury securities.
• Primary dealers have exclusive access to special facilities such as repurchase agreements offered by the Government Debt Management on behalf of the Treasury.
• Primary dealers are obliged to submit bids at each auction for a minimum of 100 m.kr. nominal value.
• Primary dealers are Market Makers in the secondary market for Treasury benchmark series. They are obliged to submit bid and ask offers on the stock exchange for at least 60 to 100 m.kr. nominal value in each benchmark series (as laid out in the agreements).
• 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. The primary dealer is entitled to depart from the maximum spread requirement if certain conditions are fulfilled.
• The agreement is valid from 1 April 2023 to 31 March 2024.

 Further information can be obtained from Björgvin Sighvatsson, head of the Government Debt Management at +354 569 9600.

The Minister of Finance and Economic Affairs tasks the Central Bank of Iceland’s Government Debt Management department with concluding agreements on issuance of Treasury securities and market making in the secondary market.

Resident entities that have an operating licence in accordance with Article 4, Paragraph 1 of the Act on Financial Undertakings, no. 161/2002, that have the equipment needed to participate in Treasury securities auctions and can demonstrate a secure settlement of transactions through the Central Bank of Iceland, may request to be parties to the agreement.

Primary dealers have the exclusive right to submit bids at auctions where benchmark Treasury securities are offered for purchase or sale. They also receive access to special facilities such as repurchase agreements for Treasury securities, in accordance with the relevant rules and the applicable terms and conditions.

Primary dealers act as market makers for benchmark Treasury securities. They are obliged to submit bid and ask quotes for a certain minimum amount in each benchmark series of Treasury securities, in accordance with the bid-ask maximum spread specified in the agreement.

Further information can be found in the sample agreement on Treasury securities issuance and market making in the secondary market. Those parties wishing to become primary dealers in Treasury securities are requested to send digitally signed agreements to the Government Debt Management department at the Central Bank of Iceland before 16:00 hrs. Friday 17 March 2023.

Further information can be obtained from Björgvin Sighvatsson, Head of Government Debt Management, at tel +354 569 9600.

Sample of Agreement (pdf)

An agreement has been signed between the Government Debt Management on behalf of the Treasury and Fossar Investment Bank hf. regarding Issuance and Market Making in Treasury securities.

The agreement takes effect on 13 October 2022 and from that day five financial institutions will be acting as primary dealers in Treasury securities. They are Arion Banki hf., Fossar Investment Bank hf., Islandsbanki hf., Kvika banki hf. and Landsbankinn hf.

The agreement with Fossar Investment Bank hf. is identical to the agreements concluded with other primary dealers 18 March 2022.

Further information can be obtained from Björgvin Sighvatsson, head of the Government Debt Management at +354 569 9600.