Foreign exchange transactions

Spot foreign exchange transactions are defined as transactions involving two currencies where the exchange rate is determined on the trade date and settlement occurs after two or fewer days.

There are three market makers in the foreign exchange market according to rules no. 600/2020: Arion Bank, Íslandsbanki and Landsbankinn.

Transactions of all domestic financial institutions other than market makers in the interbank market, pension funds and the Central Bank of Iceland. Transactions between Kvika Bank and the other commercial banks are in this category as Kvika is not a market maker according to rules no. 600/2020.

Other domestic financial institutions include:
• Depository institutions other than FX market makers
• Insurance companies
• Mutual funds, investments fund sand institutional investment funds
• Finance companies engaged in lending mainly to NFCs and households
• Investment banks
• Credit card companies
• Financial leasing companies
• Security dealers

A resident is any individual and legal entity permanently residing in Iceland, irrespective of nationality. Students and embassy employees are exempt from the residency requirement. Therefore, Icelandic students and their families who reside abroad are considered residents, and foreign embassy employees are considered non-residents. Non-residents shall mean all parties except residents.