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What are ‘Significant Benchmarks’?

Reserve Bank of India (RBI) has notified Modified Mumbai Interbank Forward Outright Rate (MMIFOR) administered by FBIL as a ‘significant benchmark’.

What are Financial Benchmarks?

Financial Benchmarks mean prices, rates, indices, values or a combination thereof related to financial instruments that are calculated periodically and used as a reference for pricing or valuation of financial instruments or any other financial contract.

What is ‘Significant Benchmark’?

‘Significant benchmark’ means any benchmark notified by Reserve Bank of India (RBI) as a ‘significant benchmark’ under Financial Benchmark Administrators (Reserve Bank) Directions, 2019. RBI notifies a benchmark as a ‘significant benchmark’ taking into consideration its use, efficiency and relevance in domestic financial markets.

Who is Financial Benchmark Administrator?

Financial Benchmark Administrator (FBA) means a person who controls the creation, operation and administration of ‘significant benchmarks’ in the markets for financial instruments regulated by RBI.

FBA shall be a company incorporated in India and shall maintain a minimum net worth of ₹1 crore at all times.

Financial Benchmarks India Pvt. Ltd. (FBIL)

RBI had set up a Committee on Financial Benchmarks (Chairman: Shri Vijaya Bhaskar, Executive Director, RBI) in June 2013 to review the existing systems governing major financial benchmarks in India. 

Based on the recommendations of the Committee, Financial Benchmarks India Pvt. Ltd. (FBIL) was jointly promoted by Fixed Income Money Market and Derivatives Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and Indian Banks' Association (IBA) in December 2014. In July 2015, FBIL was recognised by RBI as an independent benchmark administrator. 

FBIL aims to develop and administer benchmarks relating to money market, government securities and foreign exchange in India. 

Which are the ‘significant benchmarks’ administered by FBIL?

Adding to the existing list of ‘significant benchmarks’, RBI has notified Modified Mumbai Interbank Forward Outright Rate (MMIFOR) administered by FBIL as a ‘significant benchmark’.

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 MIFOR after June 30, 2023. Accordingly, the MIFOR administered by FBIL shall cease to be a ‘significant benchmark’ after June 30, 2023.

Consequently, the updated list (w.e.f. July 01, 2023) of ‘significant benchmarks’ administered by FBIL is as follows –

  1. Overnight Mumbai Interbank Outright Rate (MIBOR)
  2. USD/INR Reference Rate
  3. Treasury Bill Rates
  4. Valuation of Government Securities
  5. Valuation of State Development Loans (SDL)
  6. Modified Mumbai Interbank Forward Outright Rate (MMIFOR)
What are the guidelines on administering the ‘significant benchmark’?

On RBI notifying a benchmark as a ‘significant benchmark’, the person administering that benchmark shall make, within 3 months from the date of the notification, an application for authorization to continue administering that benchmark.


References

Financial Benchmarks India Pvt. Ltd. (n.d.). 'Background'. Retrieved from https://www.fbil.org.in/#/aboutus/background

Reserve Bank of India. (2019, June 26). 'Financial Benchmark Administrators (Reserve Bank) Directions, 2019'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11601&Mode=0

Reserve Bank of India. (2020, April 01). 'Government Securities Market in India – A Primer'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=79

Reserve Bank of India. (2022, December 01). 'Notification of Significant Benchmark'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12414&Mode=0

Reserve Bank of India. (2023, June 23). 'Status of MIFOR as a Significant Benchmark'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12519&Mode=0


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