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    SARB Seeks Comments on Policies for Interest Rate Benchmarks

    June 19, 2020

    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.


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    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

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