AGEEMENTS REGARDING ISSUANCE AND MARKET MAKING OF HFF BONDS IN THE SECONDARY MARKET

On December 16th 2008, the Housing Financing Fund (HFF) signed agreements
regarding the issuance and market making of HFF bonds in the secondary market.
The objective was to increase HFF´s access to borrowed capital and to enhance
price formation and liquidity in the secondary market. 
 
As of December 17th 2008, five financial undertakings were authorized to refer
to themselves as “Primary Dealers for HFF bonds”, i.e. Nyi Glitnir Bank hf.,
Nyi Kaupthing Bank hf., MP Investment Bank hf., NBI hf., and Straumur -
Burðarás Investment Bank hf. 

A new agreement replaces the Agreement on a Primary Dealership System for HFF
Bond Auctions and Market Making of HFF Bonds in the Secondary Market, dated on
June 18th, 2008. 

The main issues of the agreement are as follows:
•         Primary Dealers/Market Makers have exclusive rights to participate in
HFF 
          auctions. 
•         Primary Dealers/Market Makers have exclusive access to securities
lending 
          provided by HFF.
•         Primary Dealers/Market Makers are obligated to submit bids at HFF
bond 
          auctions with the intent of enhancing price formation and liquidity
in the 
          secondary market. The minimum submitted bid must be ISK 300 million
at 
          nominal value.
•         Primary Dealers/Market Makers act as market makers in the secondary
market 
          for all HFF bond classes and must submit bid and ask quotes for a
minimum of 
          ISK 50 million for each bond class at the OMX Nordic Exchange in
Iceland. 
•         Primary Dealers/Market Makers must maintain a bid and ask spread as 
          specified in the agreement.
•         Primary Dealers/Market Makers must renew their bids within ten
minutes after 
          the acceptance of the bid.  If, in one business day, the market
maker´s 
          transactions in a specific bond class equal ISK 300 million at
nominal 
          value, the market maker is entitled to diverge from the maximum
bid/ask 
          spread requirements in a specific bond class that day.
•         This agreement is valid from December 17th 2008 to June 30th 2009.  
All 
          primary dealers/market makers for market making in the secondary
market 
          receive a quarterly commission of ISK 12,5 million throughout the
term of 
          the agreement and a commission of 0,15% of the market value of all
accepted 
          bids at HFF bond auctions.

A sample agreement is attached, providing comprehensive information on the
rights and obligations of signatories.