Guidelines for financial benchmark administrators issued

“On the Reserve Bank notifying a benchmark as a ‘significant benchmark’, the person administering that benchmark should make, within a period of three months from the date of the notification, an application for authorisation to continue administering that benchmark,” the central bank said.

FBA should be a company incorporated in India with a minimum net worth of Rs one crore at all times, the RBI said.

On October 6 last year, the Reserve Bank had announced that it will introduce a regulatory framework for financial benchmarks in markets regulated by it. The robustness and reliability of financial benchmarks are critical for efficient pricing and valuation of financial instruments, the RBI said.

“The London Inter-Bank Offered Rate (LIBOR) controversy and the related events underlined the need to establish or reform the frameworks for administration and governance of financial benchmarks,” the banking regulator said.

The need for setting standards for the benchmark administrators has since been accepted worldwide in several jurisdictions, it added.

“The directions are based on the practices recommended by the International Organization of Securities Commissions (IOSCO) in their report on Principles for Financial Benchmarks as well as in the report of the Committee on Financial Benchmarks set up by the RBI,” the Reserve Bank said.