Financial Benchmarks India adopts new method for inter-bank rate

The new benchmark will be known as the FBIL Overnight Mumbai Interbank Outright Rate and CCIL will be the calculating agent

The board of Financial Benchmarks India (FBIL) has taken over the responsibility of administration of the overnight inter-bank Mibor benchmark rate from Monday — a function which was performed by the National Stock Exchange till now. The move is seen as a first step in the process of taking over responsibility of benchmark setting over a period of time.

“Based on a detailed analysis of overnight call money market data, the board has decided to adopt a benchmark based on trade weighted inter-bank call money transactions on the Clearing Corporation of India Ltd (CCIL)’s NDS-Call platform between 9 am and 10 am,” FBIL said in a statement on Monday.

The new benchmark will be known as the FBIL Overnight Mumbai Interbank Outright Rate (FBIL-Overnight Mibor) and CCIL will be the calculating agent.

In the wake of developments involving misconduct relating to financial benchmarks in international financial markets, the Reserve Bank of India (RBI) had set up a committee on financial benchmarks in June 2013 which reviewed the process of computation and dissemination of major financial benchmarks in India and gave recommendations on the governance framework.  

As part of of the measures to initiate reforms in the area of benchmark setting, FBIL was jointly formed by Fixed Income, Money Market and Derivatives Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and Indian Banks’ Association (IBA), was incorporated in December 2014 and had commenced operations in February 2015.

FBIL said the methodology will be continuously reviewed in the light of further data and developments in best practices for domestic and global markets.  

“The FBIL-overnight Mibor shall apply on a prospective basis to contracts that have trade dates on or after Wednesday which is the effective date. The current FIMMDA-NSE Mibor polled overnight benchmark will cease to be published from the effective date,” the press release said.

FBIL proposes to take over administration of forex benchmarks and other Indian rupee interest rate benchmarks over a period of time after careful examination of the methodology and utility to the financial markets in consultation with the stakeholders.