09/12/2013 – With effect from today, Finance Norway has given Oslo Børs the task of calculating NIBOR rates. Oslo Børs is also responsible for supervising reporting of the rates used for the calculation by the banks. Finance Norway is responsible for determining the rules for NIBOR. “We wanted to establish a neutral and trustworthy framework for this task. Oslo Børs provides this”, comments Idar Kreutzer, Managing Director of Finance Norway.
Manipulation of this type of interest rate in some countries has attracted a lot of attention. It is therefore important to ensure confidence in NIBOR through a trustworthy and transparent process for setting the rates. “We wanted to establish a recognised and neutral framework for setting the NIBOR rates. We have achieved this by appointing Oslo Børs as the calculation agent and giving it responsibility for surveillance of the rate setting. Maintaining confidence in these interest rates is very important for a well-functioning capital market and fixed income market in Norway”, explains Idar Kreutzer, Managing Director of Finance Norway.
“Oslo Børs, with its market surveillance system and long experience, will be able to ensure robust and reliable real-time surveillance of interest rate setting. This surveillance will be an important support for the NIBOR Compliance Committee that will be established at the same time. Representatives of the NIBOR banks will form a minority on the Compliance Committee, and the composition of the Committee is intended to ensure a good understanding of the financial markets and the factors that NIBOR should reflect”, continues Kreutzer.
“NIBOR is one of the capital market’s most important tools, and we see it as a vote of confidence that Finance Norway has decided to use Oslo Børs as an independent third party for calculating the Norwegian interbank rates”, comments Bente A. Landsnes, President and CEO of Oslo Børs.
Oslo Børs will use its existing infrastructure and systems for the submission, calculation, distribution and especially surveillance of the interbank rates. This means that the six banks participating in the NIBOR panel (known as the panel banks) will submit their interest rates through the Oslo Børs trading system, which will carry out the calculation of the average rates in accordance with the NIBOR rules as determined by Finance Norway.
“The NIBOR rates and the rates submitted by each of the NIBOR banks will be distributed in the same way as other price and index information from Oslo Børs, and will be available to the public free of charge with a 15 minute delay on the Oslo Børs website and elsewhere. The NIBOR banks have been very keen for their input to the NIBOR setting process to be more broadly and quickly available than is currently the case”, explains Kreutzer.
NIBOR (Norwegian Interbank Offered Rate) is a collective term for Norwegian money market rates with different maturities, ranging from one week to one year. With effect from 1 January 2014, the number of maturities will be reduced from ten to five. The longest maturity will then be six months. NIBOR is calculated as an average of what the panel banks indicate that they would require in interest on unsecured loans to other banks denominated in Norwegian kroner with two-day delivery. Interest rates are indicative and not based on actual trades.
NIBOR with 3-month maturity is widely used as a reference rate in the professional market. This applies to loans and deposits as well as derivatives. NIBOR is also used in contracts between private parties. The termination of NIBOR rates for some maturities with effect from the New Year may make it necessary to amend agreements that refer to NIBOR rates for maturities that will no longer be available.
From today, NIBOR can be seen at: http://www.oslobors.no/