AGREEMENT AUTHORISED DEALER OF SWEDISH GOVERNMENT BONDS. Our ref. /01. with

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1 Our ref. /01 The following is a translation of the Agreement with Authorised Dealer of Swedish Government Bonds in the Swedish language. In the case of any inconsistency between the following English translation and the Swedish language version, the Swedish language version shall prevail. AGREEMENT with AUTHORISED DEALER OF SWEDISH GOVERNMENT BONDS The following agreement has been entered into by and between the Kingdom of Sweden, represented by Riksgäldskontoret (the Swedish National Debt Office ), and, which is appointed as an authorised dealer of Swedish Government Bonds (the Authorised Dealer ) by virtue of this agreement. 1

2 1 Introduction The object of this agreement is to regulate the relationship between the Swedish National Debt Office and the Authorised Dealer regarding trading in Government Bonds on the Swedish bond market. In handling its debt management, liquidity management and repurchase agreements, as such relates to Swedish kronor, the Swedish National Debt Office intends to primarily engage authorised dealers as its counterparts. The following definitions shall apply to this agreement: The Electronic Trading System A computerised system for trading in Government bonds in the Secondary Market, established in the market and specifically designated by the Swedish National Debt Office. "Sales Terms and Conditions" The Swedish National Debt Office's Terms and Conditions for the Sale of Government Bonds, in force at any given time. "The Information System" A computerised system for the receipt and distribution of information on the Swedish money and bonds market, established in the market and specifically designated by the Swedish National Debt Office. "Client Market" Trading which does not take place between Authorised Dealers. OM OM Räntebörsen AB 2

3 General Auction Sale The Swedish National Debt Office s sales of Government Bonds in accordance with a timetable announced in advance. "Primary Market" In connection with General Auction Sales, the initial sale of Government Bonds by the Swedish National Debt Office to Authorised Dealers, as well as buy-backs and exchanges of Government Bonds towards Authorised Dealers under a bidding procedure. Reference loans Government bond loans for which the Authorised Dealer is to quote buying and selling interest rates, binding on the dealer (see 4.4). "Secondary Market" The trading in Government Bonds which takes place after the initial sale by the Swedish National Debt Office, with the exception of any exchanges of Government Bonds. "Government Bonds" Nominal bonds denominated in Swedish kronor issued by the Kingdom of Sweden, represented by the Swedish National Debt Office. "VPC" VPC AB. 3

4 "Authorised Dealers" Authorised dealers of Government Bonds appointed by agreement with the Swedish National Debt Office. 2 Authorised Dealer s Standing The Authorised Dealer represents and warrants that it is entitled to conduct securities business in Sweden and that it has obtained permission from OM to participate in trading on OM Räntebörsen. The Authorised Dealer shall upon request provide the Swedish National Debt Office with copies of licences, extracts from minutes or other documentation that supports such entitlement. The Authorised Dealer undertakes to immediately inform the Swedish National Debt Office if any changes occur in relation to the Authorised Dealer's right to conduct securities business in Sweden or its right to participate in trading on OM Räntebörsen. The Swedish National Debt Office reserves the right to conduct customary credit assessment of the Authorised Dealer prior to each transaction. 3 Primary Market 3.1 Sales Terms and Conditions The Swedish National Debt Office's sales of Government Bonds on the Primary Market takes place through a bidding procedure in accordance with the terms and conditions which are specified in detail in the Sales Terms and Conditions. Where applicable, what is stated below also holds for exchanges and buy-backs of such bonds under a bidding procedure. 4

5 In conjunction with auction sales, the Swedish National Debt Office intends to apply for the registration of the debt instruments in the accounts designated by VPC as penningmarknadskonton (Money Market Accounts). The Swedish National Debt Office also intends to apply for the registration of all new government bond loans on OM Stockholmsbörsen and OM Räntebörsen, with the exception of loans with an original tenor of less than 90 days. 3.2 Participation in the bidding procedure The Authorised Dealer undertakes, on its own behalf or on behalf of its clients, to submit bids in respect of all Government bond loans at each General Auction Sale and every exchange or buy-back of Government Bonds where the Swedish National Debt Office employs a bidding procedure. The bids shall be reasonable taking into consideration the prevailing market interest rates at the time of each sale. The Authorised Dealer undertakes to comply with the Swedish National Debt Office's Sales Terms and Conditions in force at any given time. Amendments to the Sales Terms and Conditions, changes made in the group of Authorised Dealers excepted, will be communicated to the Authorised Dealer not later than two weeks prior to the entry into effect of the amendment. In addition to the Sales Terms and Conditions, the terms and conditions specified below shall apply to the bidding procedure Bids as a principal The Authorised Dealer shall make all bids as a principal. 5

6 3.2.2 Submission of bids Bids shall be made via the Information System Bids All bids made are binding on the Authorised Dealer from the time announced by the Swedish National Debt Office, via the Information System or in another manner, as the final time for the submission of bids. This means that the Authorised Dealer: a) is bound by a bid made, irrespective of the person at the Authorised Dealer by whom the bid was submitted; b) after the aforementioned time, may not withdraw or amend the bid made; and c) is obliged to acquire the allocated volume even where such is less than the volume requested in the bid. However, if the result of the sale has not been reported by the Swedish National Debt Office within a period of 30 minutes from the final time for the submission of bids, the Authorised Dealer is no longer bound by any bids made Bidding errors The Authorised Dealer shall verify for itself that any bids made do not contain any errors. However, if the contents of a bid are not as intended as a result of a writing error, the Authorised Dealer shall be entitled, within a period of five minutes following the final time for the submission of bids, to request the 6

7 withdrawal of the bid from the official responsible for the issue at the Swedish National Debt Office. If the Swedish National Debt Office finds that the error is patent, such a request will be granted. However, if the Swedish National Debt Office finds that the error is not patent and provided that the bid has been accepted in full or in part and that the Authorised Dealer within a period of five days is able to show that: a) the contents of the bid differs from what was intended ; and b) the Authorised Dealer has suffered direct loss as a result of the error; the Swedish National Debt Office will provide reasonable compensation to the Authorised Dealer for such loss. 3.3 Reporting of the sales results The Swedish National Debt Office shall report the sales results to all Authorised Dealers on one and the same occasion. 3.4 Market share The Authorised Dealer shall make all reasonable efforts to maintain on the Primary Market, for each calendar quarter, a market share of not less than 2.5 per cent. of total turnover on this market. 3.5 Marketing 7

8 The Authorised Dealer shall actively work toward creating client interest in making bids in conjunction with the Swedish National Debt Office's sales of Government Bonds. 4 Secondary Market 4.1 Contributing to good liquidity The Authorised Dealer shall actively, and in accordance with sound and customary trading principles, contribute to liquidity in Government Bonds on the Secondary Market, both through trading on the spot market as well as by entering into transactions on the derivatives markets. 4.2 Market maker in the Electronic Trading System The Authorised Dealer undertakes to act as a market maker in the Electronic Trading System. In that context, the Authorised Dealer shall undertake to comply with the relevant rules for the Electronic Trading System that are applicable at any given time. 4.3 Interbank trading in the Electronic Trading System The Authorised Dealer shall actively contribute to that the interbank trading in Government Bonds takes place in the Electronic Trading System. 4.4 Reference Loans and binding buying and selling interest rates In consultation with leading participants in the Swedish bond market, the Swedish National Debt Office will select the three Government bond loans, which at each time shall be Reference Loans. The Reference Loans shall have a remaining tenor which as close as possible corresponds to two, five and ten years, respectively. If two Government bond loans are equally close to such remaining tenor, the loan with the longer remaining 8

9 tenor should be selected as Reference Loan. A Reference Loan must also have an outstanding amount of at least SEK 20,000,000,000. The Authorised Dealer shall quote buying and selling interest rates, binding on the Dealer, in the Reference Loans. The spread between buying and selling interest rates shall amount to at most 0.02 percentage point. The binding buying and selling interest rates shall apply to trading lots amounting to SEK 100,000,000 for the Reference Loan corresponding to two years remaining tenor, SEK 50,000,000 for the Reference Loan corresponding to five years remaining tenor and SEK 25,000,000 for the Reference Loan corresponding to ten years remaining tenor. The Swedish National Debt Office shall together with the Authorised Dealers lay down guiding principles for determining when exceptional market conditions should be considered as prevailing. In case the Authorised Dealers, in accordance with those guiding principles, jointly find that exceptional market conditions prevail, the Authorised Dealer need not quote binding buying and selling interest rates in the Reference Loans. 4.5 Market share The Authorised Dealer shall make every reasonable effort to maintain in both the Electronic Trading System and the Client Market, for each calendar quarter, a market share of not less than 2.5 per cent. of total turnover. 5 Commissions 5.1 Prerequisites for earning a commission In order to earn a commission as stipulated in , the Authorised Dealer must have met the following requirements, i.e. (a) have acted as a market maker in accordance with 4.2; 9

10 (b) have actively contributed to that the interbank trade takes place in the Electronic Trading System in accordance with 4.3; (c) have quoted binding buying and selling interest rates in accordance with 4.4; and (d) have achieved the market shares indicated in 3.4 and Basic commission For each half-year, the Authorised Dealer receives a basic commission of SEK 400, Commission related to the Primary Market A total commission amount of SEK 2,500,000 per half-year is distributed among all Authorised Dealers in Government Bonds in relation to the volume sold during the past period in connection with General Auction Sales of the Swedish National Debt Office and in connection with exchanges and buy-backs under a bidding procedure. The calculation of the commission shall be based on 100 per cent. of the volume sold in connection with General Auction Sales, 50 per cent. of the volume sold in connection with exchanges and 25 per cent. of the volume bought in connection with buy-backs. 5.4 Commission related to the Secondary Market A total commission amount per half-year of SEK 600,000, multiplied by the number of Authorised Dealers at the end of the commission-entitling period, is distributed among all Dealers in proportion to their share during the past half-year of the total turnover in the Electronic Trading System. The calculation of the commission shall be based on 100 per cent. of the turnover in the Reference Loan with about ten years remaining tenor, 50 per cent. of the turnover in the Reference Loan with about five years remaining tenor and 25 per cent. of the turnover in the Reference Loan with about two years remaining tenor. Turnover in other Government 10

11 bond loans than Reference Loans does not confer a right to a commission. 5.5 Calculation and payment of Commission The half-yearly periods on which commissions are based are 1 January 30 June and 1 July 31 December, respectively. In case the agreement would enter inte force or expire at some other time than the beginning or end of a calendar half-year, the compensation shall be reduced in proportion to the number of days in the period. The commission is paid during the month following the period on which the commission is based. 6 Information 6.1 Information from the Authorised Dealer At least once per year, the Authorised Dealer shall submit a report to the Swedish National Debt Office concerning actions it has taken and is planning to take in order to promote the sale of Government Bonds in the Client Market. In this connection, the Authorised Dealer shall report in particular on measures taken and planned with a view to reaching new categories of customers. In addition, the Authorised Dealer should submit proposals regarding measures that could be taken by the Swedish National Debt Office in order to improve the functioning of the Client Market. The Authorised Dealer shall regularly and without delay provide the Swedish National Debt Office with: a) its annual reports; and 11

12 b) with regard to trading in Government Bonds, information concerning changes in the form of its business activities and the staffing of senior management positions. The Authorised Dealer shall daily report its purchase and sale of Government Bonds both to the Swedish Central Bank, in accordance with the forms the Central Bank supplies for this reporting, and to OM Räntebörsen. In addition, the Authorised Dealer shall provide a half-yearly report to the Swedish National Debt Office concerning the sale of Government Bonds distributed by investor category and geographical area in accordance with a form, see Appendix. 6.2 Other information The Authorised Dealer consents to the Swedish National Debt Office obtaining information regarding reports on turnover in Government Bonds directly from the Swedish Central Bank and OM Räntebörsen. 7 Foreign investors The Authorised Dealer undertakes to comply with all relevant foreign laws, regulations and ordinances in conjunction with sales or sales efforts towards investors domiciled in foreign countries. In relation to the U.S.A., the following shall apply where the term "Securities" includes Government Bonds, and the "Distributor" is the Authorised Dealer. "The Securities have not been and will not be registered under the U.S. Securities Act of 1933 (the "Act") and may not be offered or sold within the United States except in accordance with Regulation S under the Act 12

13 or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act. The Distributor warrants and agrees that it has offered and sold, and will offer and sell, the Securities at any time, only in accordance with Rule 903 of Regulation S or Rule 144A under the Act. Accordingly, the Distributor warrants and agrees that neither it nor its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Securities. The Swedish National Debt Office warrants and agrees that it has not engaged nor will engage in any directed selling efforts with respect to the Securities. Terms used in this paragraph have the meanings given to them by Regulation S." 8 Limits of Liability A party is not liable for damage which is due to Swedish or foreign legislation, the actions of Swedish or foreign public authorities, acts of war, strikes, blockades, boycotts, lockouts, or other similar circumstances. The reservation in relation to strikes, blockades, boycotts and lockouts also applies if the party itself is subjected to, or adopts such measures. Damage which arises in other circumstances shall not be compensated by a party if such party has exercised reasonable care. In the event that a party is prevented, due to such circumstances as specified in the first paragraph, from performing its obligations in accordance with this agreement, such obligation shall be suspended until such time as the hindrance has ceased. 9 Suspension 13

14 If the Authorised Dealer fails to perform its obligations in accordance with this agreement, including the maintenance of market shares in accordance with 3.4 and 4.5, and the quoting of binding buying and selling interest rates in accordance with 4.4, the Swedish National Debt Office may decide upon an immediate suspension of the Authorised Dealer for a specified period or for an indefinite period. Where the Swedish National Debt Office is of the opinion that the offence is of a less serious nature, it may issue a warning. Prior to the Swedish National Debt Office deciding upon a suspension, the Authorised Dealer shall be afforded the opportunity to make representations, unless a delay in respect of such decision would be prejudicial. 10 Applicable law Swedish law shall apply to this agreement. 11 Entry into force and termination This agreement applies during the period 15 May 31 December Subsequently, the agreement will be prolonged for periods of one year, unless it is terminated before then, with observance of one month s notice. However, the agreement can be prolonged no longer than until 31 December In addition, the Swedish National Debt Office and the Authorised Dealer may provide notice of termination of this agreement not later than five banking days prior to the next General Auction Sale of Government Bonds. This agreement has been prepared in duplicate of which each party has received one. 14

15 Stockholm.... (place and date) Kingdom of Sweden, represented by the Swedish National Debt Office.. (the Authorised Dealer) By: By: By: 15

16 Appendix Half-yearly report concerning sale at General Auction Sales (in million SEK) 1. Division according to customer categories 1.1 Banks 1.2 Funds 1.3 Insurance companies 1.4 Corporates and others Total 1 2. Division according to geographical categorisation 2.1 Sweden 2.2 Other European countries 2.3 Non-European countries Total 2 16