Reforming Interest Rate Benchmarks: How Are We Progressing?
by
Andy Traveller
The latest report reveals that progress is being made in the quest to clean up major interest rate benchmarks following fixing scandals.
The Financial Stability Board (FSB) has released an interim progress report, which explores how reforms to existing major interest rate benchmarks (such as Libor, EURIBOR and TIBOR) and the development and introduction of alternative near risk-free interest rate benchmarks (RFRs) are progressing.
The report updates readers on the quest to reform interest rate benchmarks and prevent further ‘fixing’ in the future.
The FSB, Chaired by Bank of England’s Mark Carney, is an international organisation established to coordinate the work of national financial authorities and international standard setting bodies for the development and promotion of proper transparency and Compliance measures for market participants across 24 countries.
Following the LIBOR and FX fixing scandals, the FSB set up an Official Sector Steering Group (OSSG), composed of central banks and regulatory authorities, to coordinate international work to review and reform interest rate benchmarks and prevent further ‘fixing’ in the future.
The review pertains only to the mostly widely used interest rate benchmarks; specifically, LIBOR, EURIBOR and TIBOR. The intention is that other jurisdictions will fall in line.
The most recent FSB report comes on the heels of an earlier report published back in July 2014 by the OSSG, which laid out a number of recommendations.
The Recommendations
The earlier report recommended:
There should be a strengthening in existing IBORs and other reference rates based on unsecured bank funding costs by underpinning them to the greatest extent possible with transactions data. These enhanced rates are termed “IBOR+”.
Steps should be taken to develop alternative RFRs, given that there are certain financial transactions, including many derivatives transactions, that are better suited to reference rates that are closer to risk-free.
Progress
According to the report released today, progress has been made in a number of areas, including:
reviews of respective benchmark methodologies and definitions,
data collection exercises and feasibility studies,
consideration of transitional and legal issues, and
broad consultations with submitting banks, users and other stakeholders.
As well as the three major “IBORs”, reforms are also being seen in other jurisdictions.
As well as the three major “IBORs”, reforms are also being seen in other jurisdictions. Australia, Canada, Hong Kong, Mexico, Singapore and South Africa have all taken steps to reform their own existing rates.
In relation to the development and introduction of RFRs, the report notes additional progress. In particualar, “detailed data collection exercises have been undertaken in key markets, and work is now underway to identify potential RFRs, where these do not currently exist. In addition to authorities in the euro area, Japan, UK and US, several other OSSG members are also working with industry in local markets to develop RFRs in their respective currencies.”
Pundits can expect another update from the FSB regarding interest rate benchmark reforms in July 2016, as they continue to monitor progress.
The Financial Stability Board (FSB) has released an interim progress report, which explores how reforms to existing major interest rate benchmarks (such as Libor, EURIBOR and TIBOR) and the development and introduction of alternative near risk-free interest rate benchmarks (RFRs) are progressing.
The report updates readers on the quest to reform interest rate benchmarks and prevent further ‘fixing’ in the future.
The FSB, Chaired by Bank of England’s Mark Carney, is an international organisation established to coordinate the work of national financial authorities and international standard setting bodies for the development and promotion of proper transparency and Compliance measures for market participants across 24 countries.
Following the LIBOR and FX fixing scandals, the FSB set up an Official Sector Steering Group (OSSG), composed of central banks and regulatory authorities, to coordinate international work to review and reform interest rate benchmarks and prevent further ‘fixing’ in the future.
The review pertains only to the mostly widely used interest rate benchmarks; specifically, LIBOR, EURIBOR and TIBOR. The intention is that other jurisdictions will fall in line.
The most recent FSB report comes on the heels of an earlier report published back in July 2014 by the OSSG, which laid out a number of recommendations.
The Recommendations
The earlier report recommended:
There should be a strengthening in existing IBORs and other reference rates based on unsecured bank funding costs by underpinning them to the greatest extent possible with transactions data. These enhanced rates are termed “IBOR+”.
Steps should be taken to develop alternative RFRs, given that there are certain financial transactions, including many derivatives transactions, that are better suited to reference rates that are closer to risk-free.
Progress
According to the report released today, progress has been made in a number of areas, including:
reviews of respective benchmark methodologies and definitions,
data collection exercises and feasibility studies,
consideration of transitional and legal issues, and
broad consultations with submitting banks, users and other stakeholders.
As well as the three major “IBORs”, reforms are also being seen in other jurisdictions.
As well as the three major “IBORs”, reforms are also being seen in other jurisdictions. Australia, Canada, Hong Kong, Mexico, Singapore and South Africa have all taken steps to reform their own existing rates.
In relation to the development and introduction of RFRs, the report notes additional progress. In particualar, “detailed data collection exercises have been undertaken in key markets, and work is now underway to identify potential RFRs, where these do not currently exist. In addition to authorities in the euro area, Japan, UK and US, several other OSSG members are also working with industry in local markets to develop RFRs in their respective currencies.”
Pundits can expect another update from the FSB regarding interest rate benchmark reforms in July 2016, as they continue to monitor progress.
FX Volatility Impacts Q1 Revenue of Compagnie Financière Tradition
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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