Common use of COLLATERAL SECURITIES Clause in Contracts

COLLATERAL SECURITIES. Eligible collateral securities are all the electronically registered bond classes issued by HFF and the Government Debt Management with regard to market making. Securities used as collateral must be the property of the primary dealer and must be free of liens and encumbrances upon delivery. HFF shall hold a lien on the collateral securities during the term of the agreement. Cash Securities may also be in the form of cash guarantees. The interest on the collateral shall be 0.5% less than the interest rate at the Central Bank of Iceland. The interest is paid at the end of the year. If cash is used as collateral for one day or less, no interest will be calculated. Beginning of transaction The primary dealer may request to borrow bonds from HFF until 15 minutes after the end of trading at the Exchange on all trading days. The request must be e-mailed in time and immediately followed by a phone call in order to confirm receipt of the request. If HFF approves the request, the primary dealer shall submit collateral no later than 30 minutes after the end of trading at the Exchange. If securities are not submitted in time, the transaction will be cancelled HFF delivers the borrowed bonds no later than 45 minutes after the end of trading at the Exchange on the day of the agreement, provided the securities have been turned in. The transaction Securities If the primary dealer submits collateral securities, they must be delivered into HFF’s account at the Icelandic Securities Depository, specified in the parties’ agreement. HFF then deposits the borrowed bonds into the primary dealer’s account at the Icelandic Securities Depository.