FMDQ Begins NIBOR Reform

Share This Article
Share on facebook
Share on linkedin
Share on twitter
Share on email

FMDQ Begins NIBOR Reform. FMDQ OTC PLC (FMDQ) announces the commencement of the Nigerian Inter-bank Offered Rate (NIBOR) in compliance with the Principles for Financial Benchmarks of the International Organisation of Securities Commissions (IOSCO). The reform is centred on enhancing and formalising the NIBOR process towards strengthening its credibility as a money market benchmark.

The reform will ensure NIBOR, over phased approaches, complies with the nineteen (19) principles of IOSCO which have been internationally adopted as the standards for financial benchmarks.

Having taken over as the administrator of the three (3) Nigerian over-the-counter (OTC) financial market fixings: the Nigerian Inter-Bank Offered Rate (“NIBOR), the Nigerian Foreign Exchange Fixing (“NiFEX) and the Nigerian Inter-bank Treasury Bills’ True Yields Fixing (“NITTY) from the Financial Markets Dealers Association  (FMDA) in 2013, FMDQ is poised to ensure the benchmarks comply with the new governance expectations. Of the three (3) fixings, NIBOR has been the most criticized by both the buy- and sell-sides depending on the direction of interest rates. The LIBOR crisis has also set the NIBOR up for scrutiny.

Consequently, the NIBOR process including the benchmark definition and design, calculation methodology, governance, supervision, audit, contingency plans, etc. were all subjected to a review. The review revealed that while there are no fundamental concerns around the NIBOR determination process, certain aspects specifically the benchmark design and governance process could benefit from enhancements and formalisation. The reform therefore would focus on these areas instituting changes that would strengthen the benchmark design and governance of the NIBOR process in order to boost its credibility.

In doing so, FMDQ has reviewed the NIBOR definition, underlying philosophy, calculation methodology, benchmark tenors and the selection criteria of the NIBOR contributory banks. Furthermore, a Reference Bank Code of Conduct has been established. This is to guide the performance of the contributory banks (Reference Banks) and formalise a proper governance process.

The reformed NIBOR will consist of only four (4) tenors (Overnight, 1, 3 & 6 Months) in compliance with the IOSCO principle on benchmark quality. This ensures the rates published are representative of the economic realities of the interest that the benchmark seeks to measure.

“The NIBOR is a major financial market benchmark for the pricing of floating rate money market instruments, bonds and interest rate derivatives. Its credibility is a key financial market infrastructure need” says Jumoke Olaniyan, Market & Business Development Officer in FMDQ OTC PLC.

Daily NIBOR rates are available on the FMDQ corporate website and various newspapers nationwide.

FMDQ commences NIBOR Reform – Punch
FMDQ OTC Restructures NIBOR – THISDAY LIVE
FMDQ attracts N2trn Fixed Income deals since ‘E-Bond’ debut – BusinessDay

FGN Bond Quotation & T.Bills Listing Ceremony
FMDQ Launch – Event Snapshot
FMDQ OTC MD/CEO Interview with Opeyemi Agbaje
Press Interviews at FMDQ Launch

More Articles

FMDQ Exchange Lists Lagos State Government ₦19.82 billion Forward Ijarah Lease Sukuk on its Platform

FMDQ Exchange Admits Lionseal Industries Limited’s ₦10.00 Billion Commercial Paper Programme on its Platform

Zylus Homes and Property Limited Taps the Capital Markets, Registers Commercial Paper Programme on FMDQ Exchange

FMDQ-OXFO Partnership
With innovative technology and strategic partnerships we create a new value network and redefine the cost structure for homeownership so that more people
FMDQ Sustainability Agenda
FMDQ, through its activities, aims to achieve sustainability in the areas it actively operates and impacts, as such, its Sustainability Strategy is guided by five (5) main Sustainability Pillars…
Report

Get access to industry data and reports

Report

Get access to industry data and reports

Report

Get access to industry data and reports

Report

Get access to industry data and reports