South Africa: Review of the Rate-Setting Process of the Johannesburg Interbank Agreed Rate

press release

The South African Reserve Bank initiated a review, which started in 2011, of the processes and procedures related to the determination of domestic money-market reference rates, including the Johannesburg Interbank Agreed Rate (Jibar).

This was done under the auspices of the Financial Markets Liaison Group (FMLG), which is chaired by Deputy Governor Mminele. This review process was initiated proactively as part of the normal work programme of the FMLG and its subcommittees, and was not triggered by any event or development in the domestic financial markets or as a result of any problems encountered or suspected.

The review, which involved consultations with the commercial banks represented on the contributing panel, the Johannesburg Stock Exchange, Strate, regulators and the National Treasury, has been completed. On 16 November 2012 the Bank published two documents on its website. The first document, entitled "A review of the rate-setting process of the Johannesburg Interbank Agreed Rate as an interest rate benchmark", presents the findings of the review.

The review indicates that while there are no fundamental concerns around the Jibar determination process, certain aspects of the process can benefit from enhancements and formalisation, more specifically the governance process. This review, therefore, also contains recommendations that will contribute towards strengthening the governance process for determining Jibar rates, and to increase the credibility thereof.

The second document, entitled "The Johannesburg Interbank Average Rate (Jibar): Code of Conduct, Governance Process and Operating Rules", serves to formalise the recommendations of the review project. The Code of Conduct is of the utmost importance in ensuring the integrity and reliability of the determination process of the Jibar.

The Code of Conduct is published as a consultation document and enquiries, suggestions or comments are invited. The Bank will consider all input and the process will culminate in an implementation paper, which will also contain the effective date for the Code of Conduct and related processes.

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