FBIL takes over from FIMMDA for valuation of government securities

FPJ BureauUpdated:Wednesday, May 29, 2019, 11:05 PM IST
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Mumbai: The Reserve Bank has appointed the Financial Benchmark India Pvt Ltd (FBIL) for valuation of portfolios of government securities, which earlier used to be done by FIMMDA.

In the last bi-monthly monetary policy review of 2017-18, RBI had proposed that FBIL would be tasked for valuation of government securities.

As per RBI directive, FIMMDA has ceased to publish prices/yield of government securities from March 31, 2018.

The Fixed Income Money Market and Derivatives Association of India (FIMMDA) is an association of banks, public financial institutions, primary dealers and insurance companies.

It 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, 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 (NBFCs), 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 may 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 USD/INR and other major currencies against the rupee which used to be done by 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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