Bond trading customs

Trading customs

Bond prices are quoted as clean price (the buyer pays accrued interest).

Standard settlement period is two business days (T+2) and based on delivery-versus-payment.

Clearing is normally executed through VP Securities Services (the Danish Securities Depository and Clearing Centre, Værdipapircentralen).

Bid/offer spreads are typically 10 ticks (0.10 percentage point) for the liquid longer-dated bonds. Spreads on shorter-dated bonds are typically 0.06-0.08 tick.

Mortgage bonds and covered bonds with embedded call options can be repaid by instalments on each repayment date. Trading excludes the repayments (the fraction of the principal announced to be repaid) in the period between the ex-draw date (including) and the repayment date (excluding). The ex-draw date is also referred to as publication date.

Repo

The Danish bond market is backed by a large and liquid repo market for both government and covered bonds.

Danmarks Nationalbank, the Danish central bank accepts all Danish mortgage bonds and covered bonds as collateral in lending transactions with banks and mortgage credit institutions.

Settlement of Jyske Realkredit bonds

Bonds issued by Jyske Realkredit (previously BRFkredit) are bearer bonds in book-entry form registered with the VP Securities Services (Værdipapircentralen, the Danish Securities Depository and Clearing Centre) in Denmark or VP Luxembourg.

Investors must have a custody account and a clearing account with a custodian linked to VP Securities Services, Euroclear or similar.

Investors holding callable mortgage bonds on the ex-draw date will receive the instalment payment (both the ordinary and extraordinary instalment) plus the coupon on the notional amount of the bond.

Investors buying callable bonds in the period between ex-draw and the repayment date will only receive coupon payment at the coming repayment date.