Overnight MIBID/MIBOR benchmark will be revised from July 22, 2015

The Reserve Bank of India announced today (02/07/2015) that the methodology for the FIMMDA-NSE-Overnight Mumbai Interbank Bid/Offer Rate (Overnight MIBID/MIBOR) benchmark will be revised from July 22, 2015. The newly constituted entity ‘The Financial Bench Marks India Pvt. Ltd (FBIL)’ is also stated that it is taking over the administration of the benchmark, replacing the existing Overnight MIBID/MIBOR by ‘FBIL- Overnight MIBOR’ which will be on the basis on actual traded rates. The existing benchmark being set on the basis of on polled rates amongst FIMMDA and National stock Exchange (NSE). The FBIL is also stated to have said that it would take over administration of foreign exchange benchmarks and other Indian Rupee interest rate benchmarks over a period of time. Meantime FIMMDA and FEDAI would continue to act as administrators for Rupee interest rate and foreign exchange benchmarks respectively till they are shifted to the FBIL.

Hitherto, the Fixed Income Money Market and Derivative Association of India (FIMMDA) and Foreign Exchange Dealers Association of India (FEDAI) have been acting as the Rupee interest rate and foreign exchange benchmarks respectively. For the purpose of strengthening the governance framework for benchmark submission, currently being disseminated by other agencies, an independent new company titled ‘Financial Benchmarks India Pvt. Ltd. (FBIL)’ is incorporated jointly floated by FIMMDA, FEDAI, and IBA. The reason for the integration of the above agencies is, in view of concerns arising from reports of manipulations of key benchmark rates in certain financial markets and conflict of interests, in the process of setting the benchmark. The Reserve Bank has stated to have advised the benchmark submitter to implement various measures for strengthening the governance framework for benchmark submission.