SARB is seeking public comments on a statement on methodology and policies governing the interest rate benchmarks that are administered by SARB. The statement describes technical specifications for the suite of interest rate benchmarks that are administered by SARB and provides an overview of the policies that govern these benchmarks. This suite comprises four new benchmarks and a reformed version of South African Benchmark Overnight Rate (SABOR), which is the existing overnight benchmark rate. SARB will embark on a data collection process to enable testing of the proposed benchmarks and their subsequent refinement. All stakeholders are invited to provide comments by September 19, 2020.
The statement details the methodologies and policies that will be applied for the following suggested benchmarks:
- South African Rand Interbank Overnight Rate (ZARIBOR)
- South African Secured Overnight Financing Rate (ZASFR)
- South African Rand Overnight Index Average (ZARONIA)
- Term Wholesale Financial Corporate Fixed Deposit Benchmark Rate
- Term Wholesale Non-financial Corporate Fixed Deposit Benchmark Rate
The benchmark proposed as a replacement for SABOR is ZARONIA, which is an unsecured overnight rate. While the number of proposed interest rate benchmarks is not definitive, the ultimate outcome of reform will likely feature the coexistence of several interest rate benchmarks to fulfill different market and policy purposes. Additionally, SARB is the official administrator of the Johannesburg Interbank Average Rate (JIBAR). However, the policies specified in the statement do not apply to JIBAR, given an existing JIBAR Code of Conduct, Governance Process, and Operating Rules. In addition, efforts are underway to strengthen the JIBAR and add to its credibility as an interim solution, until an alternative reference rate is fully operational. Details of the work being undertaken in this regard will be published later this year.
The suite of benchmarks stipulated above is based on confidential statistical information on daily money market transactions, in accordance with the reporting instructions specified by SARB. The reporting instructions include standards for transmission and accuracy of data. Reporting institutions are expected to comply with the reporting instructions determined by SARB. Additionally, SARB may conduct an ad hoc audit of the controls implemented by reporting institutions to assess their adequacy in ensuring that the data supplied to the SARB on a daily basis comply with the specified standards. Reporting institutions that are non-compliant will be required to implement corrective measures. However, an infringement procedure may be initiated against a reporting institution that repeatedly fails to adhere to the reporting standards.
Comment Due Date: September 19, 2020
Keywords: Middle East and Africa, South Africa, Banking, Securities, Interest Rate Benchmarks, Governance, IBOR Reform, ZARIBOR, ZASFR, ZARONIA, SABOR, SARB
Previous ArticleIOSCO Board Elects Leadership for the 2020-2022 Term
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.