RBI seeks to alter pricing method for money market rates - NDTVProfit.com

Mumbai: The Reserve Bank of India (RBI) on Friday recommended moving away from determining money market benchmarks through the current poll of traders towards one based on the trades done during a set period to remove any possible scope of manipulation.

The draft report issued by the RBI recommended that the overnight Mumbai Interbank Bid Rate-Mumbai Interbank Offered Rate (Mibid-Mibor) fixing, a key gauge in money markets, be based on the volume-based weighted average of traded rates from 9 to 10 in the morning.

That would move pricing away from the current system based on a poll of trader submissions.

The central bank had formed the committee to issue recommendations in the aftermath of regulatory investigations globally into accusations that banks colluded to set money market rates such as the London Interbank Offered Rate (Libor).

The central bank committee also recommended basing the government securities yield curve, including for illiquid debt, on the basis of volume-based weighted average rates instead of last traded yields.

Among other suggestions, the RBI proposed banks set pricing for state development bonds at a spread based on the last two auctions, instead of calculating those bond yields at a fixed spread of 25 basis points over government debt.

The central bank has asked market participants reply with feedback to the draft rules by January 17
Sent from BlackBerry® on Airtel

Comments




I would like to request you to join our following services.
It is the smartest way to stay on top of latest Mutual fund, Bonds & IPO News .

 Product Updates on whatsapp


 Product Updates on Email 

                                                   
 Product Updates on Telegram



You will get daily news updates for FREE. 
I also request you to spread the world by referring us to the smartest people you know.  

To share it with your friends, 
just Copy below message it & paste in your group

Subscribe to Our WhatsApp, Email & Telegram Update Service ! https://bit.ly/3ryhxBM
     

Popular Posts

Reliance Mutual Fund lowest bidder for managing NPS

Key Trigger Points for Market

FM's solution to fiscal deficit: Earn now, spend next year