Help Desk: 022-49746049

Background

Financial benchmarks are indices, values or reference rates used for the purpose of pricing, settlement and valuation of financial contracts. Globally huge volumes of financial transactions are referenced to or valued using various such benchmarks. Financial benchmarks play a very critical role in promoting efficient and transparent financial markets and ensuring financial stability.

The manipulation and complicity involved in the method of computation of LIBOR and EURIBOR benchmarks in the recent period led to imposition of huge penalties on banks by regulators. It drew global attention to various aspects of the benchmark calculation and administration. The sovereign authorities, central banks and many international bodies are concerned about the governance process of the financial benchmarks and have commissioned working groups and committees to comprehensively look into the existing benchmarks setting process in their respective jurisdictions and suggest policies and procedures for bringing about robust improvement in the benchmark governance framework.

The IOSCO has issued Principles on Financial Benchmarks while the Wheatley Review Report has looked into the various aspects of LIBOR setting process and issued ten point proposals for reform of the LIBOR.

Reserve Bank of India set up a Committee on Financial Benchmarks in June 2013 to review the existing systems governing major financial benchmarks in India. The Committee headed by Shri Vijaya Bhaskar, the then Executive Director, Reserve Bank of India made wide-ranging recommendations to reform the benchmark administration in India. These were accepted by the Reserve Bank of India in early 2014, who identified FIMMDA and FEDAI as the benchmark administrators for the Indian rupee interest rates and Forex benchmarks respectively. It was suggested that these associations may jointly or independently form a separate entity to administer the benchmarks. This is the first major step for formation of Financial Benchmark India Pvt. Ltd (FBIL) as an independent benchmark administrator for interest rates and foreign exchange.

The FBIL, jointly owned by FIMMDA, FEDAI and IBA, was formed in December 2014 as a private limited company under the Companies Act 2013. Its aim is to develop and administer benchmarks relating to money market, government securities and foreign exchange in India. It is responsible for all the aspects relating to the benchmarks to be issued by it, namely, collection and submission of market data and information including polled data , formulation, adoption and periodic review of benchmark calculation methodologies, calculation, publication and administration of benchmarks confirming to the highest standards of integrity, transparency and precision.

The FBIL is committed to providing financial benchmarks that are (i) free from bias, (ii) backed by robust data driven research and (iii) compliant with global best practices.