FBIL Takes Over From FIMMDA For Valuation Of Government Securities

The Reserve Bank of India has appointed the Financial Benchmark India Pvt. Ltd. for valuation of portfolios of government securities, which was earlier done by the FIMMDA.

In its last bi-monthly monetary policy review of 2017-18, the RBI had proposed that FBIL take over the task from the Fixed Income Money Market and Derivatives Association of India.

As per the RBI directive, FIMMDA, an association of banks, public financial institutions, primary dealers and insurance companies, has ceased to publish prices/yield of government securities March 31 onward.

The association was set up in 1998 as a voluntary market body for bond, money and derivatives market and is an interface with the regulators on various issues that impact the functioning of these markets.

In a recent notification, the RBI said, “FBIL will commence publication of the g-sec (government securities) and SDL (state development loans) valuation benchmarks based on the extant methodology. Going forward, FBIL will undertake a comprehensive review of the valuation methodology.”

Banks, non-banking financial companies, primary dealers, co-operative banks and all financial institutions which are required to value government securities as per FIMMDA may use FBIL prices, it said further.

Besides, the other market participants who have been using government securities prices/yields published by FIMMDA can use the prices/yields published by FBIL for valuation of their investment portfolio.

FBIL would also compute and disseminate the daily reference rate for spot rupee-dollar peg and other major currencies against the rupee which used to be done by the RBI itself.

Set-up in 2014, FBIL used to benchmark instruments such as Mumbai Inter-Bank Outright Rate (MIBOR) and option volatility and also introduced benchmarks such as Market Repo Overnight Rate (MROR), Certificate of Deposits (CDs) and T-Bills yield curves.

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