Official BUBOR Regulation. 12 October 2015

Transcription

1 Official BUBOR Regulation 12 October 2015 Regulation of the BUBOR Steering Committee of the Hungarian Foreign Exchange Society, of the fixing procedure of the Budapest Interbank Offered HUF Credit Interest Rate. 1. Introduction The Hungarian Foreign Exchange Society (MFT) is the professional organisation of FX and money market dealers working in domestic credit institutions, and considers its chief task is to provide active professional support for the organisation and the development of domestic financial markets. The Budapest Interbank Offered Rate (hereinafter: BUBOR), following its launch in August 1996 (1 and 3-month fixing) and its introduction in May 1997 (6-month fixing), within a short period of time became the primary interest basis used by banks for purposes of HUF lending in the domestic market. BUBOR, the only interbank offered HUF credit interest rate, has provided a sound basis for exchange traded interest rate futures deals, and as a reference interest rate, is in the position to support the development of the market of derivative deals (FRA, IRS, interest rate option transactions). MFT continues to consider one of its prime tasks to keep BUBOR introduced at the initiative of the market and for purposes of developing the market in the position to fulfil this role in the future and be used as a reference rate for the pricing of assets and liabilities of variable interest, as well as for the settlement of exchange traded and over-the-counter interest rate derivative deals. MFT, in order to effectively implement the above principles and initiatives, and in compliance with the Recommendation of the Chairman of the Hungarian Financial Supervisory Authority for BUBOR Quoters no. 8/2013. (IV. 29.), in cooperation with the National Bank of Hungary (MNB) and the Hungarian Bank Association, has created the BUBOR Steering Committee of the Hungarian Foreign Exchange Society, which body will take over the tasks and responsibilities of the MFT Professional Committee in managing reference rates in the market. The BUBOR Steering Committee, following the approval of this Regulation, will act as sponsor of the reference rate for BUBOR as a reference rate of prime importance. Members of MFT have the right to initiate the embedding of international standards and best practice procedures in the BUBOR fixing procedure with the BUBOR Steering Committee. 2. Definitions used in the Regulation 2.1. Panel bank All banks which: (a) (b) have approved the regulation of BUBOR fixing; and are ready to take part in the BUBOR fixing procedure; and (c) have issued a statement for the BUBOR Steering Committee based on Attachment C of this Regulation, in compliance with Section Active panel bank All domestic credit institutions with direct Viber or BKR membership, required to raise mandatory reserves, which on a specific day quotes a rate in BUBOR fixing based interest rate, in compliance with Section Quoted interest rate Quoted interest rate means the interest rate quoted on actual/360 based interest basis defined by the specific bank quoting the specific interest rate, using which rate to the best knowledge and in the best judgement of the bank providing the quoted rate, on a specific Hungarian banking day, at the time specified in Section 2 of Attachment A, in the context of the tenors specified in Section 3 of Attachment A, and in consideration of the 1

2 provisions stipulated by Section 3.4, an active panel bank defined pursuant to Section 5.1 provides a business offer for an uncovered interbank credit (the so-called unsecured interbank loan) to another active panel bank News agency Attachment A of this Regulation includes the list of news agencies authorised to publish BUBOR fixing real time Quoted interest rates to be ignored In terms of quoted interest rates received by the National Bank of Hungary (MNB) as the party assisting the BUBOR fixing procedure, on a given banking day in Hungary, with respect to a specific tenor: (a) (b) (c) (d) they are represented by the four highest and four lowest quoted interest rates if the number of received quoted interest rates reaches 16; they are represented by the three highest and three lowest quoted interest rates if the number of received quoted interest rates reaches or exceeds 12, and it is lower than 16; they are represented by the two highest and two lowest quoted interest rates if the number of received quoted interest rates reaches or exceeds 8, and it is lower than 12; they are represented by the highest and lowest quoted interest rates if the number of received quoted interest rates does not reach The fixing procedure 3.1. The interest rates incorporated in the fixing procedure are reported by the active panel banks on each Hungarian banking day, at the time specified in Section 2 of Attachment A, applying the means of communication they have access to using fax when needed to MNB who registers and summarises the rates Quoted interest rates must apply to the tenors specified in Section 3 of Attachment A MNB makes a summary of the received quoted interest rates, and, leaving out the quoted interest rates to be ignored in each tenor, calculates the BUBOR interest rates to be fixed that day. The calculation is performed by establishing the mathematical average of the quoted interest rates retained in each tenor following the rules of rounding, rounded to two decimal places The interest rates reported by the active panel banks, incorporated in the fixing calculation, and the BUBOR rates generated from them, are applicable to the deals concluded on the second Hungarian banking day following the day of fixing, except for the overnight period where the trade date equals the settlement date The storage and retention of the documents used in the course of interest rate fixing are performed by the members of the BUBOR Steering Committee delegated by MNB. 4. Publishing BUBOR 4.1. After BUBOR fixing procedure, BUBOR interest rates, the names of active panel banks and their quoted interest rates are immediately issued by MNB for the news agencies, for purposes of publication. The historic electronic publishing of these data (i.e., in certain cases retrospectively, back to January 2004) is ensured by the news agencies specified in Section 4 of Attachment A In compliance with the provisions of Section 4.1 specified by MNB, the interest rates issued to the news agencies are to be considered the official BUBOR reference rates. 2

3 5. Establishing the range of active panel banks 5.1. The list of active panel banks is established by the BUBOR Steering Committee, in cooperation with MNB, and the number of active panel banks is published in Section 1 of Attachment A. The ranking order prepared by MNB serves as the basis of the list: to the extent of 50% it is generated by the quarterly turnover ranking preceding the subject period of all HUF interbank deposit/loan and FX swap deals, weighted by theirtenor, and to the extent of 50% it is generated based on the total assets reported at the end of the calendar quarter preceding the subject period. In the course of compiling the ranking order by MNB, in the case of market deals, the HUF amount traded for the start value date is considered: turnover details are consolidated at the level of credit institution groups, consequently intra-group transactions are filtered out. In the course of compiling the list, out of the credit institutions producing a consolidated financial report in compliance with the applicable legal regulations for MNB as the financial supervisory authority, only one group member from the credit institutions belonging to the same group (the group member performing the highest market turnover) may be included in the list. From among the banks represented in this ranking order, and in line with the rank achieved in the list, the maximum number of banks taking part in the BUBOR fixing procedure, as defined by the BUBOR Steering Committee in cooperation with MNB, and published from time to time in Section 1 of Attachment A, is The data serving as the basis for the turnover ranking list are not public, are handled by MNB on a confidential basis, and retained for a retrospective period of at least 5 years If in the course of a quotation period, any of the active panel banks renounce their right as panel bank, then the next panel bank in the ranking order becomes active panel bank The list of active panel banks is reviewed by the BUBOR Steering Committee in cooperation with MNB at the end of the month following the calendar quarter in the context of recent market developments, and then, based on Section 5.1, the list of active panel banks for the next 3 months is defined If any of the active panel banks tends to quote interest rates in the context of the BUBOR fixing procedure in some way other than stipulated by the provisions in Section 2.3, the BUBOR Steering Committee has the authority to use one of the following sanctions, in the light of the seriousness of the case: (a) (b) (c) (d) written notification to the bank about its actions in conflict with the Official BUBOR Regulation; written warning to comply with the provisions of the Official BUBOR Regulation; temporary suspension of the BUBOR quotation right; ultimate exclusion from the range of BUBOR panel banks. 6. Other 6.1. The BUBOR Steering Committee has the authority to make a decision on amending the Official BUBOR Regulation and its attachments. 6.2 The BUBOR Steering Committee forwards the amended Regulation and its Attachments to the active panel banks 30 calendar days prior to the Regulation taking effect. The active panel banks are required to forward the Statement represented by Attachment C of the Regulation, complete with company signatures to the BUBOR Steering Committee, prior to the Regulation and its Attachments taking effect at the latest. On condition any of the active panel banks fails to observe this commitment, despite the repeated written notice of the BUBOR Steering Committee, the BUBOR Steering Committee, based on the assessment of the seriousness of the incident, has the right to use one of the sanctions listed in Section 5.5. The BUBOR Steering Committee is not required to send a preliminary notification about the changes to Sections 1 and 4 of Attachment A of the Regulation, and the active panel banks are not obliged to add company signatures to Attachment C repeteadly. 3

4 Attachment A 1. Number of active panel banks: 10 Panel banks: 1. Budapest 2. CIB 3. Erste 4. FHB 5. K&H 6. MKB 7. OTP 8. Raiffeisen 9. Takarék 10. Unicredit 2. The time of forwarding quotes to MNB: between 10:15h and 10.30h 3. Quotation tenors: overnight, 1 week, 2 weeks, 1, 2, 3, 6, 9 and 12 months 4. Fixed BUBOR rates are published by the following news agencies (including the historic publication of unique quotes submitted by panel banks): (a) news agencies with the right to publish rates real time: THOMSON REUTERS, BLOOMBERG; (b) news agencies with the right to publish historic rates: THOMSON REUTERS, BLOOMBERG 4

5 Attachment B Code of Conduct 5

6 Attachment C On behalf of. Bank, active panel bank participating in the BUBOR fixing procedure, we hereby make the statement that the Bank takes part in the BUBOR fixing procedure, and complies with the prevailing effective legal regulations related to the BUBOR fixing procedure and the provisions stipulated by this Official BUBOR Regulation and its Attachments. Dated, Name Signature 6