FSB Issues Statement on Reforms to Interest Rate Benchmarks
FSB published a statement on reforms to interbank offered rates (IBORs) and the development of overnight risk-free, or nearly risk-free, rates (RFRs) and term rates. The statement is intended to inform market participants and other stakeholders about the views of FSB, ahead of a forthcoming consultation by ISDA. The ISDA consultation contemplates fall backs for certain derivative contracts based on overnight RFRs.
FSB welcomes the progress that has been made by public authorities and private-sector working groups on the identification and development of overnight RFRs that are sufficiently robust for such extensive use. These overnight RFRs are robust because they are anchored in active, liquid underlying markets. This contrasts with the scarcity of underlying transactions in the term interbank and wholesale unsecured funding markets, from which some IBORs are constructed, a characteristic which could make them susceptible to manipulation. The FSB continues to encourage the development and adoption of these overnight RFRs, where appropriate—for example, in business where term properties are not needed or where exposure to bank credit risk is not necessary or desirable. This will enhance financial stability.
In the markets that face the disappearance of IBORs, notably markets reliant on LIBOR, there needs to be a transition to the new reference rates. In these markets, it will be important to have a full discussion and establish further clarity among affected end users on how this transition should take place. In some other markets, authorities and market participants continue to work on further reform or strengthening of IBORs, in tandem with their efforts to identify and facilitate the wider use of RFRs. An overnight RFR may not, however, be the optimal rate in all the cases where term IBORs are currently used. FSB recognizes that in some cases there may be a role for term rates, including RFR-derived term rates, or term rates derived from other liquid markets. FSB published its progress report on implementation of reforms to the interest rate benchmarks in October 2017. It will publish a second progress report in November 2018.
Related Links
Keywords: International, Banking, Interest Rate Benchmarks, IBORs, RFR, FSB
Related Articles
|
News
FCA Publishes Its Business Plan for the Coming YearFCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.
May 17, 2019
WebPage
Regulatory News
|
|
News
IASB Issues Work Plan and Meeting Updates for May 2019IASB published an updated work plan, along with the update of its meeting in May 2019.
May 17, 2019
WebPage
Regulatory News
|
|
News
CFTC Proposes to Amend Derivatives Clearing Organization RegulationsCFTC proposed amendments to certain regulations applicable to registered derivatives clearing organizations (DCOs) under Part 30 of the CFTC regulations.
May 16, 2019
WebPage
Regulatory News
|
|
News
APRA Licenses Societe Generale As Foreign Deposit-Taking InstitutionAPRA granted Societe Generale a license to operate as a foreign authorized deposit-taking institution under the Banking Act of 1959.
May 16, 2019
WebPage
Regulatory News
|
|
News
EBA Provides Updates on Its Work on Basel III Impact Assessment in EUEBA is working to finalize the impact assessment on implementation of Basel III standards, in response to the EC call for advice, which was received on May 04, 2018.
May 16, 2019
WebPage
Regulatory News
|
|
News
ISDA Publishes Two Consultations on Benchmark FallbacksISDA published two consultations on benchmark fallbacks, the comment periods for which expire on July 12, 2019.
May 16, 2019
WebPage
Regulatory News
|
|
News
Sam Woods of PRA Speaks About Style of Regulation in UK After BrexitSam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of PRA, spoke at the UBS Financial Institutions Conference in Lausanne.
May 16, 2019
WebPage
Regulatory News
|
|
News
FED Publishes Report Summarizing Regulatory and Supervisory ActivitiesFED published a report that summarizes banking conditions and the supervisory and regulatory activities of FED, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision.
May 15, 2019
WebPage
Regulatory News
|
|
News
US Agencies Propose to Amend Regulatory Framework for Foreign BanksUS Agencies (OCC, FED, and FDIC) proposed a regulatory framework for foreign banks operating in the U.S. that would more closely match the rules for foreign banks with the risks they pose to the U.S. financial system.
May 15, 2019
WebPage
Regulatory News
|
|
News
ECB Consults on EONIA to €STR Legal Action PlanECB published a consultation, which was launched by the working group on euro risk-free rates, on recommendations to address the legal implications for new and legacy contracts referencing the euro overnight index average (EONIA), as a result of the proposed transition from EONIA to the euro short-term rate (€STR).
May 15, 2019
WebPage
Regulatory News
|
