LONDON Feb 24 The International Swaps and
Derivatives Association (ISDA) has started looking for an
independent administrator for the ISDAFIX benchmark interest
rate that is being investigated over alleged rigging.
ISDA said in a statement on Monday that it is inviting
tenders to administer and calculate the ISDAFIX benchmark, an
interest rate widely used to help to price derivatives and other
contracts, from the second quarter of this year.
Regulators are keen for major benchmarks used across markets
to be run by independent bodies to maintain confidence in them.
Banks have already been fined for rigging the London
Interbank Offered Rate, or Libor, and investigations into
foreign exchange benchmarks are also under way.
"The tender is the latest step in ISDA's process to align
ISDAFIX with evolving best practices in the setting of benchmark
rates by establishing a fully automated rate-setting process,"
ISDA said in a statement.
Last month the global swaps trade body announced changes to
the benchmark to bring it in line with new standards from a
global group of securities regulators stating that benchmarks
should be based on actual market transactions rather than
estimates from banks.
As part of the changes, interdealer broker ICAP lost
its role as the data-collection agent for the U.S. dollar rate
within ISDAFIX. Thomson Reuters Corp, which collects
data for the other currencies, took over the role.
Thomson Reuters, parent of Reuters News, would have to win
the tender to remain the calculation agent for the benchmark.
A Thomson Reuters spokeswoman said in a statement that the
company had worked with ISDA to introduce recent improvements to
the calculation methodology.
"Thomson Reuters will continue to support ISDA's efforts to
enhance the governance and operations of ISDAFIX to meet
evolving practices," the statement added.
ISDA said the new body would be responsible for all
governance of the benchmark, including oversight of systems and
controls. The body will also collect the data, calculate the
rates and make checks on the data submitted.
ISDA wants the new administrator to be up and running when
the new automated system for obtaining live price quotes from
third-party electronic trading platforms starts in the second
Transatlantic exchange group IntercontinentalExchange
became the administrator for Libor on Feb. 1 after the
British Bankers' Association was stripped of the role.