FSB publishes benchmark reform proposals: FSB has published the results of its review of major interest rate benchmarks and plans for reform, and a paper by the International Organization of Securities Commissions (IOSCO) reviewing the implementation of its Principles for Financial Benchmarks by the administrators of LIBOR, EURIBOR and TIBOR. IOSCO found good progress and greater transparency but highlighted areas for further work and plans a further review in mid 2015. FSB appreciates that all benchmarks have their own characteristics but generally supports a multiple-rate approach to the reform of major interest rate benchmarks. The main elements of its proposals are:

  • to strengthen existing "IBORs" (Interbank Offered Rates) and other potential reference rates based on unsecured bank funding costs by underpinning them with transaction data so far as possible (this is known as "IBOR+"); and
  • to develop alternative, nearly risk-free rates.

Its plan is for groups dedicated to specific currencies to work with the private sector to implement new designs and methodologies for IBOR+ and to develop viable nearly risk-free rates where none currently exist. FSB wants to see proposals for change consulted on and strategies developed by the end of 2015. It also wants central banks and supervisory authorities to encourage at least one IOSCO- compliant risk-free rate by Q2 2016. (Source: FSB Publishes Benchmark Reform Proposals and IOSCO Reports on Benchmark Principles)