NASDAQ OMX has operated a regulated market for bonds and bills in Iceland since 1986. Throughout this period it has endeavoured to increase the efficiency of this market by steadily improving both the technical framework and trading options.

The transparency of the Icelandic market is probably among the best on any international fixed income market, since on-exchange trading comprises around half of aggregate bond and bill trading. In the first quarter of 2012, for instance, the share of on-exchange trading was 60%. The high proportion of on-exchange trading can very likely be attributed to the active market making for benchmark classes, which keeps their liquidity high.
 
The majority of listed classes are indexed: 86% of the total number, but only 58% of the total market value. Trading in the benchmark classes, which are primarily Treasury notes (RIKB) and Housing Financing Fund bonds (HFF), comprised the lion’s share (approx. 98%) of total bond market trading in the first quarter of 2012, or the equivalent of ISK 882 billion (bn). Average daily turnover in the first quarter of 2012 was ISK 13,9 bn, compared to a daily average of ISK 10,3 bn for the year 2011.

The interest rate level in Iceland in the first quarter of 2012 can still be regarded as high by international comparison, since the 3M nominal rate averaged 3,9 %, the 1Y rate averaged 3,9%, 5Y rate 6,0% and the 10Y rate 7,2%. The 5Y real interest rate averaged 1.1% and the 10Y rate 2.2%.

More information on the Icelandic economy and the bond market is available on the website www.bonds.is.

The NASDAQ OMX Fixed Income Market in Iceland

The Icelandic fixed income market consists of two sub-markets:

OMX ICE CP Fixed Income
OMX ICE DP Fixed Income

The NASDAQ OMX Fixed Income Indexes in Iceland

In order to facilitate comparison of interest rate levels and market value, OMX Nordic Exchange in Iceland calculates six fixed income market indexes for benchmark classes. All of them are total return with a fixed duration.

Non-indexed:
3M OMXI3MNI
1Y OMXI1YNI
5Y OMXI5YNI
10Y OMXI10NI

CPI-Indexed:
5Y OMXI5YNI
10Y OMXI10YI



Listing of bonds on NASDAQ OMX in Iceland

At the beginning of April 2012, there were 143 bonds and bills listed on NASDAQ OMX Iceland, with a total market value of over ISK 1,868 bn. In addition to Treasury notes and HFF bonds, there are listed bonds and notes of commercial banks, corporations, credit institutions, municipalities and foreign parties.