What changed
RBI directed FIMMDA and FEDAI to act as benchmark administrators and form independent bodies to avoid conflicts of interest. Benchmark submitters must now implement internal governance measures including board-approved policies, conflict of interest frameworks, maker-checker systems, and whistleblowing policies.
What it means for you
Banks and primary dealers acting as benchmark submitters face stricter compliance requirements to ensure submission integrity and transparency. The new framework aims to prevent manipulation and enhance credibility of Indian Rupee benchmarks, aligning with global standards. Lenders must invest in internal controls and documentation to meet RBI's expectations.
What you must do
- Adopt a board-approved policy on governance of benchmark submission process with accountable senior personnel.
- Implement a conflicts of interest policy to identify, manage, and mitigate potential conflicts.
- Establish a maker-checker system and periodic senior-level review of submissions against minimum variance thresholds.
- Set up a whistleblowing policy for early detection of misconduct in benchmark data submissions.
- Maintain records of all submissions, procedures, personnel roles, and conflict declarations.
Who it affects
All scheduled commercial banks, Primary dealers, FIMMDA and FEDAI
What is the role of FIMMDA and FEDAI under this circular?
FIMMDA will administer Indian Rupee interest rate benchmarks, and FEDAI will administer forex benchmarks. They must form an independent body to avoid conflicts of interest and select benchmark submitters based on standing, market share, and representative character.
What internal controls must benchmark submitters implement?
Submitters need a board-approved policy, conflicts of interest policy, maker-checker system, periodic variance review, transaction recording, documentation of qualitative assessments, whistleblowing policy, and record retention.
Are benchmark submitters required to participate in polling?
Yes, once selected by the administrator, submitters must necessarily participate in the polling process and comply with the Code of Conduct.