The Warsaw Stock Exchange (GPW) and ACI Polska (the Polish Financial Markets Association) have signed an agreement whereby GPW will take over as the fixing organiser of the WIBID and WIBOR reference rates.
GPW becomes both the reference rate fixing organiser and the calculation agent.
The agreement will enter into force upon its approval by the WIBOR board and after the acceptance of the amendment to the Rules for Fixing WIBID and WIBOR Reference Rates by banks (fixing participants).
GPW decided to take over as reference rate fixing organiser following a proposal issued by ACI Polska.
ACI Polska resigned as the fixing organiser in view of Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, which takes effect at the beginning of 2018.
The regulation defines three main categories of benchmarks and imposes specific requirements on the entity which calculates the benchmark depending on its category. In light of the regulation taking effect, ACI Polska decided it would be unable to meet its requirements and approached GPW with a proposal to take over as the WIBID and WIBOR reference rate fixings organiser.
“GPW’s decision to take over as the organiser of WIBID and WIBOR rate fixings is a milestone in our history. While GPW has previously focused on trading in equity and commodity market instruments, it is now expanding into financial market services. I believe the decision will spike the interest of banks in GPW’s offer, especially in debt instruments and interest rate futures,” says Małgorzata Zaleska (pictured), president of the Warsaw Stock Exchange.
GPW will take over as the reference rate fixings organiser in co-operation with banks (fixing participants). This is particularly relevant due to the role played by banks in the process, as well as the scope of reference rate applications in the banks’ business.
“According to the WIBOR board, the Warsaw Stock Exchange, with its experience in calculating market benchmarks, the necessary organisational and technical resources and profile of an institution of public trust, will ensure high quality of the reference rates and full harmonisation with regulatory requirements,” says Sławomir Panasiuk, chairman of the WIBOR board.
GPW will take over as the organiser and later as the administrator of reference rate fixings in two stages.
First, following an amendment of the Rules for Fixing WIBID and WIBOR Reference Rates, GPW will become the organiser and the calculation agent.
Second, measures will be taken to have GPW authorised as an administrator under the Regulation (EU) of the European Parliament and of the Council.
A review of the reference rate methodology is an important part of the planned change and will be carried out, after GPW is authorised, in an open consultation with a broad range of financial market participants, in particular those using reference rates in contracts with clients.
“ACI Polska has developed the benchmark for the interbank market. It should be noted, its structure, where a quote was also an obligation to close a trade, was globally unique. The association has successfully administered the benchmark for more than 20 years. Over that time, WIBOR has become the key benchmark of the interbank market and much more. ACI Polska has carefully reviewed the Regulation, which requires a new administrator of WIBID and WIBOR should have no conflict of interest, perform professionally, have a good reputation in the financial market and the necessary organisational resources. ACI Polska has approached GPW with a proposal to take over this function as the best entity on the domestic financial market which fulfils these criteria,” says Marta Kępa, president of ACI Polska.