In a notification on Friday (23, June) the RBI said that the Financial Benchmark Administrators (FBAs), which control ‘significant benchmarks’ in the markets for financial instruments regulated by the banking regulator, have been accorded approval to cease the publication of the Mumbai Interbank Forward Outright Rate (MIFOR) after June 30, 2023.
“In light of the cessation of the publication/non-representativeness of US Dollar London Interbank Offered Rate (USD LIBOR) settings after June 30, 2023, FBIL has been accorded approval to cease the publication of the Mumbai Interbank Forward Outright Rate (MIFOR) after June 30, 2023, in terms of provisions of the Financial Benchmark Administrators (Reserve Bank) Directions, 2019. Accordingly, the MIFOR administered by FBIL shall cease to be a ‘significant benchmark’ after June 30, 2023”, it said.
Accordingly, the MIFOR administered by FBIL shall cease to be a ‘significant benchmark’ after June 30, 2023.
The term Mumbai Interbank Forward Offer Rate (MIFOR) refers to a benchmark rate used by commercial banks for certain financial contracts in India. MIFOR is used for setting prices on forward-rate agreements and derivatives. It has been transformed into the Modified MIFOR (MMIFOR) using the alternate reference rate, secured overnight financing rate (SOFR) instead of LIBOR in line with the global transition away from the LIBOR. Modified MIFOR is now being used for all new contracts.
The updated list of ‘significant benchmarks’ administered by FBIL is given below:
(i) Overnight Mumbai Interbank Outright Rate (MIBOR)
(ii) USD/INR Reference Rate
(iii) Treasury Bill Rates
(iv) Valuation of Government Securities
(v) Valuation of State Development Loans (SDL)
(vi) Modified Mumbai Interbank Forward Outright Rate (MMIFOR)
The updated list of ‘significant benchmarks’ shall come into effect from July 01, 2023.
A benchmark is a standard against which something is compared. Investors use benchmarks to measure the performance of securities, mutual funds, exchange-traded funds, portfolios, or other investment instruments.
Significant benchmarks are benchmarks used for financial instruments or financial contracts or to measure the performance of investment funds and that fulfill the requirements of being a critical benchmark or a significant benchmark.
