Íbúðalánasjóður - Company Announcement

SIGNING OF AGREEMENTS REGARDING HFF BOND ISSUANCE AND MARKET MAKING IN THE SECONDARY MARKET

On June 21st, the Housing Financing Fund (HFF) signed agreements regarding HFF
bond issuance and market making in the secondary market. 

The objective of the agreements is to enhance HFF´s access to funding and
strengthen price formation in the secondary market. 



The following topics describe the content of the agreement:

  -- Primary Dealers have exclusive rights to submit bids at HFF auctions. 
  -- Primary Dealers have exclusive access to HFF´s Securities Lending
     Facilities.
  -- Primary Dealers are obligated to submit bids at each auction for ISK 600
     million at nominal value.
  -- A Primary Dealer is a market maker in the secondary market for all HFF
     bonds and submits a minimum bid of ISK 100 million at nominal value for
     each bond series at Nasdaq OMX in Iceland.
  -- A Primary Dealer is obligated to keep the maximum spread between bid and
     ask quotes as specified in the agreements.
  -- A Primary Dealer is required to renew his/her offers within ten minutes
     after they have been accepted. If the Primary Dealer's total transaction in
     one series during that day equals ISK 500 million at nominal value, the
     Primary Dealer is entitled to diverge from the maximum spread requirement
     for that particular series for the remainder of that day.
  -- The agreement is valid from July 1st, 2011 to June 30th, 2012. Total
     compensation paid to all Primary Dealers is ISK 80 million during the term
     of the agreement for market making in the secondary market and receive a
     0,175% commission for accepted bids in HHF bond auctions.

A sample agreement is attached, providing comprehensive information on the
Primary dealer's rights and obligations.

Attachments:

ÍLS Primary Dealer agreement 2011-2012.pdf

ÍLS Rules on HFFs Services Primary dealers 2011-2012.pdf