Business Daily from THE HINDU group of publications
Wednesday, Jun 04, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Wednesday, Jun 04, 2008 ePaper | Mobile/PDA Version | Audio |
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Money & Banking
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Events 3-day MIBOR from June 6 Our Bureau Mumbai, June 3 In order to bring uniformity between the various financial market such as equities, foreign currency, government securities, repo and reverse repo and the overnight interest swap market, FIMMDA (Fixed Income Money Market and Derivatives Association of India), in consultation with the National Stock Exchange is, introducing a three-day MIBOR, with effect from June 6. Friday is the last working rate for foreign exchange market, government securities market and RBI’s Liquidity Adjustment Facility. On Saturday the inter-bank call market is the only open. But as most banks make sufficient provision for funds on Friday, volumes in the call market on Saturday are very thin and the MIBOR fixings on Saturdays are not truly representative of the general trend in the call money markets. So, there is the need for a three-day MIBOR, said a circular issued by FIMMDA to its members. If the MIBOR gets fixed at a higher rate on Saturday, due to thin volumes, the bank that borrows at that rate will find itself at a disadvantage, explained an official from FIMMDA. Following the three-day MIBOR, FIMMDA would also be declaring Saturdays as non-business days for rupee overnight index swap (INR-OIS) market. MIBOR is a floating rate benchmark, which is used for INR-OISS. The three- MIBOR fixing can be used as the benchmark for the floating leg of the INR-OIS Swaps, the circular added. There will still be a two-day MIBOR on Saturday, which will be used for inter-bank lending and for corporate loans that are linked to it, the official said. More Stories on : Events | Financial Markets
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