What changed
RBI has notified MMIFOR, administered by FBIL, as a significant benchmark under the 2019 Directions. The updated list now includes seven benchmarks, with MMIFOR joining MIBOR, MIFOR, USD/INR Reference Rate, T-Bill Rates, G-Sec Valuation, and SDL Valuation. FBIL must apply for authorization to continue administering MMIFOR within three months from the date of this notification (December 01, 2022).
What it means for you
Banks and lenders using MMIFOR for forex forward pricing now face stricter governance and reporting standards under the significant benchmark framework. This enhances transparency and reduces manipulation risk, aligning with global benchmark reforms. FBIL's compliance burden increases, but market confidence in MMIFOR reliability should improve.
What you must do
- Review your exposure to MMIFOR-linked contracts and ensure compliance with RBI's benchmark governance requirements.
- Update internal policies to reflect MMIFOR's new status as a significant benchmark.
- Coordinate with FBIL to understand any changes in benchmark submission or calculation processes.
- Monitor RBI's authorization timeline for FBIL to avoid disruptions in MMIFOR usage.
Who it affects
Financial Benchmarks India Pvt. Ltd. (FBIL), Banks using MMIFOR for forex forward pricing, Treasury and risk management teams, Regulatory compliance departments
What is MMIFOR and why is it now significant?
MMIFOR is the Modified Mumbai Interbank Forward Outright Rate, a benchmark for forex forward contracts. RBI designated it as significant to ensure robust governance and reduce manipulation risk, following global standards.
What must FBIL do within three months?
FBIL must apply to RBI for authorization to continue administering MMIFOR as a significant benchmark, as per paragraph 3(ii) of the 2019 Directions.
Does this affect existing MIFOR status?
No, MIFOR remains a significant benchmark till further notice, as clarified in the notification.