Lánamál ríkisins - Company Announcement

- Signing of Agreements Regarding Issuance and Market Making in Government securities

This morning the Central Bank of Iceland on behalf of the Treasury signed
agreements regarding Issuance and Market Making in Government securities. The
objective of the agreements is to maintain the Treasury's access to loan
financing and to enhance price formation in the secondary market for Government
securities. 

As of June 1, 2008, seven financial institutions have been appointed as
“Primary Dealers in Government securities”. They are: Glitnir, Icebank,
Kaupthing, Landsbanki, MP Investment Bank, Saga Capital Investment Bank and
Straumur Burdaras Investment Bank. 

The following bullet points describe the content of the Agreement:

•Primary dealers have exclusive access to auctions of Government securities. 

•Primary dealers have exclusive access to securities lending facility offered
by the Central Bank on behalf of the Treasury. 

•Primary dealers are obliged to submit bids at each auction for a minimum of
100 m.kr. at 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 OMX
Nordic Exchange Iceland for at least 100 m.kr. at nominal value in each
benchmark series. 
 
•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 transactions in one
series during single day equal 600 m.kr. nominal value, the primary dealer is
entitled to depart from the maximum spread requirement for that particular
series for the remainder of that day. 

•The agreement is valid from June 1, 2008 to May 31, 2009

•Total commission paid to all primary dealers is 160 m.kr. for the duration of
the agreements. 

A sample agreement is attached that provides comprehensive information on the
Primary Dealers rights and obligations.

Liitteet:

agreementen08.pdf