Framework in the works for integrity of benchmarks

Mumbai: The Reserve Bank of India will put in place a comprehensive risk-based framework to provide greater assurance about the accuracy and integrity of financial benchmarks, including those for government bond valuation.

The framework will cover the administration of all benchmarks related to foreign exchange, interest rates, money markets and government securities, the RBI said in its statement on developmental and regulatory policies.

Benchmarks for rates on certificate of deposits, repo rates, and FX Options Volatility Matrix as well as other benchmarks on government securities, will be covered. "Revised directions which are being issued separately, envisage regulatory prescriptions for benchmark administrators, encompassing, inter alia, governance and oversight arrangements, conflict of interest, controls, and transparency," the central bank said.


In June 2019, the RBI issued a regulatory framework on the administration of significant benchmarks. That framework was for benchmark administrators in financial markets regulated by the RBI and covered the dollar-rupee reference rate, the overnight MIBOR (Mumbai Interbank Outright Rate) and valuations of government securities administered by the Financial Benchmarks India Private Limited (FBIL).