About VMF

The company

The company Virðisbrævamarknaður Føroya (The Faroese Securities Market), hereafter called VMF, was established on the 7th of November 2000. The founders of the Company included issuers, investors, banks and a brokerage firm and Faroese governmental authorities. At the time VMF was founded, the share capital was 3 million DKK or 750,000 DKK from each category of investors. Since then, the capital has been raised to 9 million DKK by an investment of 6 million DKK. The Faroese Government contributed 4 million DKK and the Faroese Governmental Bank 2 million DKK of this investment.

The present owners are:

  • Issuers (Framtaksgrunnur Føroya, Føroya Reiðarafelag, Føroya Arbeiðsgevarafelag and Fíggingargrunnurin frá 1992), 750,000 DKK
  • Investors (Tryggingarfelagið Føroyar and Føroya Lívstrygging), 750,000 DKK
  • Banks and a brokerage firm (Føroya Banki, Føroya Sparikassi, Kaupthing Føroyar Virðisbrævameklarafelag, Norðoya Sparikassi and Suðuroyar Sparikassi ), 750,000 DKK
  • Faroese Public Authorities (Føroya Landsstýri and Landsbanki Føroya), 6.75 million DKK

The Board of Directors has five members. The Board consists of one elected individual from each of the above-mentioned interest groups. These four in turn elect the fifth member. The current board members are:

  • Stefán Halldórsson, chairman, director of Lífeyrissjóður verkfræðinga and former director ICEX
  • Marner Jacobsen, vice- chairman, director of Føroya Sparikassi
  • Tummas Eliassen, board member, director of Føroya Lívstrygging
  • Ólavur Gregersen, board member, business adviser for ENI
  • Sigurd Poulsen, board member, director of Landsbanki Føroya.

Sigurd Poulsen is the president and chief executive officer of the Company and Landsbanki Føroya provides administrative services for the Company. Hans Ellefsen serves as secretary for the Board.


The discussion on the establishment of a Faroese securities market started in 1997, subsequent to publishing of the report, Stock Market and Equity Issues (Partabrævamarknaður og eginpeningsviðurskifti). This report concluded that there was a need for a Faroese securities exchange.

Even though Faroese companies could list their stocks on the Danish Stock Exchange, for example, this has not happened. The presumed reasons for this are multifold: the Copenhagen Stock Exchange was considered too big for Faroese companies; no effort was made to assist these companies to list themselves; the interest on deposits in Faroese banks were very lightly taxed thus making it appealing to maintain cash deposits with a guaranteed return.

There have been efforts to issue bonds. Most experience in this area lay with the Faroese Government that has issued bonds on the Danish Stock Exchange since 1994. These bonds, however, have seen but little trading.

Thus, in 1997 it was concluded that it would be best to establish a Faroese securities exchange for both stocks and bonds. It was felt that a securities exchange could generate not only value for any stakeholders of a securities exchange, but also be of great benefit to Faroese society as a whole.


With the establishment of the Faroese Securities Market, domestic issuers will gain easier access to capital for both existing and future initiatives. This is of great importance, especially when a Faroese company desires to expand within the Faroe Islands or abroad. Industries that are capital intensive, like fish farming, and companies that are innovative and avant-garde also benefit from having access to a localized securities market.

Such a market will enable investors to safely invest in Faroese companies. Because pension savings are expected to increase considerably in the coming years, the lack of a securities market would mean that this capital would not be available to help Faroese industry, but would be exported abroad.

Brokers and financial institutions will gain access to new revenue streams through facilitating securities trading for their customers. Moreover, as businesses grow and prosper because of greater accessibility to capital, this in turn will further benefit brokers and banking institutions. Banks will have additional collateral upon which to secure their business loans.

For Faroese society as a whole, it is predicted that the securities market would create greater growth as industry in general becomes more productive and competitive. The securities market is also a tool to assist in the privatization of the publicly owned companies, and can give ordinary people a better understanding of how business works, and what influences the success or failure of an investment.

A deciding factor influencing the development and growth of Faroese society is that the various Faroese pension funds will be able to place investment in the Faroe Islands. This is not possible at present. At the moment, there is a lack of capital in the Faroes, because all of it flows abroad and no capital comes into the country because there are no investment possibilities in which to invest.

Thus, a securities market is anticipated to generate greater potential for growth than if no market were available.


Since the formation of the Company, ongoing discussions have been held on how to organize the Faroese securities market. In the beginning, there were plans to organize it as an independent ‘alternative’ market on the Faroes. Later though, it was determined that this was not the optimal solution as this would mean that some institutional investors would not respond to the opportunity to invest locally in Faroese securities. Also it was clear that the foreign investor would not be that interested in the Faroese market, unless it was an ‘official’ market.

The solution was to cooperate with another securities market, so that the company’s investment could be held to a minimum. In this manner, the Faroese market would eventually become more attractive to both the international investor and the institutional investor.

After some investigation, the Company concluded that to meet its goals, cooperating with the Icelandic Stock Exchange (ICEX) was the cheapest and best solution for the Company.

The NOREX Alliance is a strategic co-operation of Nordic stock exchanges, consisting presently of the Copenhagen Stock Exchange, the Iceland Stock Exchange, the Oslo Börs and Stokholmsbörsen. Through collaboration with the Iceland Stock Exchange, the Faroese securities market will become a part of this Alliance. Association with this Alliance is another strong argument for the consensus that Faroese securities would eventually become attractive to the international investor.

The securities are listed in Danish Kroner, as this is the currency of the Faroes and the depository for the securities will be on the depository Danish VP (see www.vp.dk). The reason for using the Danish VP is that it is the best solution for the Faroese market.


Two markets

There are two markets for shares: one ‘official’ market, the main list, and one regulated market, the Alternative market. The official market is regulated by EU directives that govern all securities markets in EU. The alternative market has lesser demands, particularly on the size of the company and how many owners the company must have.

The reason why some companies would want to put themselves under more stringent demands is that this would attract more investors. Some companies do not want to or cannot meet these stricter requirements, but still they want to be listed on the market to gain access to the other advantages of listing on an exchange.

In addition to these stock markets, there are markets for bonds, and mutual funds.