Policy
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benchmarks

ibor Transition

Purpose

This area is a resource for developments regarding benchmarks relating to IBOR transition.

In response to the weaknesses identified in the setting of financial benchmarks such as the London Interbank Offered Rates (LIBOR), the global regulatory community has been involved in a program to strengthen financial benchmarks. Major interest rate reference rates (such as LIBOR, EURIBOR, and TIBOR or generically known as IBORs) are widely used in the global financial system as benchmarks for a large volume and broad range of financial products and contracts.

For the Australian dollar, the key interest rate benchmarks are the bank bill swap rates (BBSW) and the cash rate. Reforms have also been undertaken to enhance the robustness of these benchmarks.

The United States and Europe are now working towards the phase-out of LIBOR rate. Given the ubiquitous embedding of LIBOR reference rates in financial instrument documentation, any phase-out has major implications for the markets. The Australian market is preparing for the effects of this development.

This is the most significant financial market development currently underway affecting markets globally. There are many concurrent streams of work and an abundance of information being constantly released. It is particularly important to know to know about the alternative benchmarks that are available or that are being developed. The purpose of this resource is to assist the reader have a general understanding of the topic and to keep up with developments both on the industry and the official side in Australia and globally.

AFMA's involvment

AFMA facilitates industry dialogue and thinking about these broader implications. For Australia, AFMA supports the IOSCO January 2018 Statement on Matters to Consider in the Use of Financial Benchmarks that users need to have robust fallback provisions in relevant contracts and instruments that reference a benchmark. If a permanent discontinuation of an IBOR or other benchmark occurs, the fallback provisions would need to be robust enough to prevent potentially serious disruption to markets and market participants (including users and their clients), and to safeguard the continuity of contracts, as a result.

From here the topic is categorised into these links to follow 

International - Official

Official sector announcements, developments, consultations and activities at the global level and in jurisdictions elsewhere to Australia.

International - Industry

Developments and work by industry to address change through groups and commercial endeavours elsewhere to Australia.

Australia - Official

Official sector announcements, developments, consultations and activities in Australia.

Australia - Industry

Developments and work by industry to address change through groups and commercial endeavours elsewhere to Australia, especially the work of AFMA.