The Board of Financial Benchmarks India Pvt Ltd (FBIL) has decided to take over the administration of the overnight Mumbai Inter-bank Offer Rate (Mibor) benchmark (so far being published by the National Stock Exchange) as a first step in the process of taking over responsibility of benchmark setting over a period of time.

Mibor is currently calculated everyday by the NSE as a weighted average of inter-bank offer (lending) rates of a group of 30 banks.

FBIL, which is a three-way joint venture between Fixed Income, Money Market and Derivatives Association of India (76 per cent stake), Foreign Exchange Dealers Association of India (14 per cent) and Indian Banks’ Association (10 per cent), will bring out the new benchmark — FBIL Overnight Mumbai Interbank Outright Rate (FBIL-Overnight Mibor).

FBIL-Overnight Mibor will adopt a benchmark based on trade weighted inter-bank call money transactions on the Clearing Corporation of India Ltd’s Negotiated Dealing System-Call platform. The new benchmark will apply on a prospective basis to contracts that have trade dates on or after Wednesday.

FIMMDA Chairman NS Venkatesh said since the new benchmark will be based on actual deals in the inter-bank call money market as against the current practise of polled rates, the FBIL-Overnight Mibor benchmark it will bring more credibility and integrity in the financial markets as well as the real sector.

FBIL proposes to take over administration of foreign exchange 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. There will be periodic review of the benchmark methods to ensure that they are robust and conform to the best governance standards.

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