Interest rate benchmarks are a cornerstone of the global financial system and are used by market participants across a wide range of financial products and contracts. In 2013, the Financial Stability Board (FSB) established the Official Sector Steering Group (OSSG) to advise the FSB on recommendations to strengthen existing interbank offered rate benchmarks (commonly known as IBORs), as well as to promote the development of alternative risk-free or nearly risk-free reference rates that could be used for some types of transactions. Both existing and new benchmarks would need to adhere to international regulatory standards, including the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks.
In response, Canada established the Canadian Alternative Reference Rate Working Group—sponsored by the Canadian Fixed-Income Forum—to identify and seek to develop a Canadian dollar term risk-free rate benchmark that is robust, reliable, and resilient to any market stress, as well as consistent with the IOSCO Principles for Financial Benchmarks and compliant with any applicable regulations. CARR will also explore possible enhancements to the existing Canadian overnight risk-free rate, the Canadian Overnight Repo Rate Average (CORRA).
Overview on Financial Benchmark Reform Efforts
Managing Director and Vice-Chair, Global Markets
CIBC Capital Markets
Alberta Investment Management Corporation
Bank of America Merrill Lynch
Bank of Montreal
Canada Mortgage and Housing Corporation
Canadian Imperial Bank of Commerce
National Bank of Canada
Ontario Teachers’ Pension Plan
Royal Bank of Canada
Sun Life Financial
Canadian Derivatives Clearing Corporation