FSB Publishes Progress Report on Implementation of IBOR Reforms
FSB published a progress report on implementation of its 2014 recommendations to reform major interest rate benchmarks such as key interbank offered rates (IBORs). The 2014 report recommended measures for strengthening benchmarks and other potential reference rates based on interbank markets and developing alternative nearly risk-free benchmark rates. The progress report concludes that IBOR administrators have continued to take important steps to implement the FSB recommendations, including steps to adjust methodologies used to calculate benchmark rates.
The 2014 recommendations were made following examples of attempted market manipulation and false reporting of global reference rates, along with the post-crisis decline in liquidity in interbank unsecured funding markets. Regulators have taken a number of steps to address the issues, including developing powers to require mandatory contributions to benchmarks; however, it remains challenging to ensure the integrity and robustness of benchmarks and it is uncertain whether submitting banks will continue to make submissions over the medium to long-term. Regulators in some FSB jurisdictions have made good progress in supporting workstreams focused on identifying new or existing risk-free reference rates (RFRs) that could be used instead of IBORs in a range of contracts, in particular derivatives. However, limited progress has been made to date on migration from major IBORs to RFRs, even where they are already available.
The official sector has also actively engaged with the International Swaps and Derivatives Association (ISDA) to tackle the risks associated with permanent discontinuation of widely used IBORs. ISDA has established a series of working groups and is drafting fallback arrangements for new derivatives contracts and a future protocol to amend existing contracts. The official sector places great importance on all industry stakeholders, on both the buy and sell side, entering into such protocols. It is also important that work on contract robustness is extended to other non-derivative markets where contracts reference IBORs such as mortgages, loans, floating rate notes, and futures contracts. In addition to this report, FSB had already published progress reports in 2015 and 2016. FSB will publish another progress report in 2018.
Related Links
Keywords: International, Banking, Progress Report, IBOR, Interest Rate Benchmark, RFR, FSB
Previous Article
ESRB Publishes Risk Dashboard for September 2017Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.