Arion Bank hf. - Other information disclosed according to the rules of the Exchange

Arion Bank enters a market making agreement with Íslandsbanki, Kvika and Landsbankinn

Arion Bank has entered into a market making agreement with Íslandsbanki, Kvika and Landsbankinn on covered bonds issued by Arion Bank on Nasdaq OMX Iceland hf.

The purpose of the agreement is to stimulate trading with the bonds covered by the agreement in order to generate normal market prices and to foster effective and transparent price formation.

The market makers will submit bids and asks for the bonds every day. The minimum amount at nominal value for benchmark series shall be ISK 80 million and the minimum amount for other series shall be ISK 20 million. In the case of benchmark series, if the outstanding nominal value is less than ISK 10 billion, the total amount shall be ISK 60 million. If the series is more than ISK 10 billion, the total amount shall be ISK 80 million. The bond series ARION CBI 21, ARION CBI 25, ARION CBI 29, ARION CB 19 and ARION CB 22 are benchmark series. Other series are ARION CBI 19 and ARION CBI 34.

The maximum bid-ask spread depends on the number of years to maturity at any given time, cf. table below.

Years to maturity	Maximum spread
0-6 months	No maximum
6 months - 2 years	0.20%
2-4 years	0.30%
4-6 years	0.35%
6-9 years	0.60%
9-12 years	0.70%
12-18 years	1.00%
18 years or more	1.15%

 

An exemption is made from the maximum bid-ask spread requirement in the table above for inflation-linked series with less than 5 years to final maturity. Bond series ARION CBI 19 and ARION CBI 21 are exempted in accordance with the above. Market makers are nonetheless required to submit bids and asks for these series, but the maximum bid-ask spread requirement is not applicable.

The total amount of trades that a market maker is required to make for all bond series that fall under this agreement each day that a market maker is required to submit bids and asks according to this agreement shall be ISK 500 million at nominal value for all series.  

Arion Bank will provide the market makers with bond lending facilities. The maximum loan in each series of covered bonds shall be ISK 320 million at nominal value for benchmark series and ISK 80 million at nominal value for other series.