Bank of Canada calls on markets to prepare for interest rate benchmark changes
Source: Financial Post
Author: Theophilos Argitis
The Bank of Canada called on financial institutions to get up to speed on changes that global regulators are making to interest rate benchmarks that underpin trillions of dollars in securities.
In an update on the Canadian central bank’s work on the issue of benchmarks, Deputy Governor Lynn Patterson said financial organizations need to begin considering their “readiness” for coming changes, including potential enhancements to the current benchmark regime in Canada.
“I realize I am giving you more work to do, but it is important that you keep up with these developments and ensure you are operationally prepared,” Patterson said in a prepared text of a speech she is giving in Toronto to the Investment Industry Association of Canada.
Tarred by rate-fixing scandals that struck at the height of the financial crisis, bankers and investors for years have been grappling with finding a replacement for benchmarks like the London Interbank Offered Rate, which Patterson said is supporting a US$350 trillion market of loans and derivatives.