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...
MIBOR may have a wider use with RBI's involvement in its determination The Mumbai Interbank Offered Rate (MIBOR) may have a wider use in the time to come with the Reserve Bank of India (RBI) coming up with the draft guidelines on financial benchmarks last Friday. According to experts through this would take time to come into effect, but the MIBOR is set to have more standing as it will be determined based on RBI guidelines. The MIBOR is currently a polled benchmark. Fixed Income Money Market and Derivatives Association of India and National Stock Exchange of India Limited (NSEIL) joined hand in 2002 to publish the daily quotes on MIBOR. The polling process is conducted by NSEIL where treasury officials of banks are called and asked to participate for the poll. The .MIBOR is currently used for majority of deals struck for interest rate swaps, forward rate agreements, floating rate debentures and term deposits. However its application is very meager when compared with the London Inte...
Comments
Post a Comment
You are requested to mentioned your full name with email id while commenting.