As of June 1, 2002, five financial institutions have been appointed as"Primary Dealers in Government bonds". They are: Bunadarbanki Islands, Icebank, Islandsbanki, Kaupthing Bank and National Bank of Iceland.
The main obligations and rights included in the agreements are:
- Primary Dealers will have exclusive rights to submit bids at NDMA's auctions. This includes new issuance as well as buy-backs.
- Primary Dealers have exclusive access to NDMA's security lending.
- Primary Dealers are obliged to submit bids for at least 20 m.kr. at market value at each auction where Government Bonds are on offer.
- Primary Dealers are Market Makers in the secondary market for Government Bonds. The Primary Dealers are obliged to quote on Iceland Stock Exchange's electronic trading system bid and ask offers for at least 60 m.kr. in each of the five benchmark series.
- Primary Dealers are in their bid and offer 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 until total transacted volume of for a Primary Dealer reaches 360 m.kr. at market value in each series.
The agreement is in place from 1 June 2002 to 31 May 2003. Total remuneration paid to Primary Dealers is 120 m.kr. for the duration of the agreement. The remuneration will be distributed to the Primary Dealers according to their market share in the Primary and the Secondary Market for Government Bonds