The South African Reserve Bank (SARB) published the ‘Consultation paper on selected interest rate benchmarks in South Africa’ (Consultation Paper) on 30 August 2018. The paper contains proposals on the reform of key interest rate benchmarks used in South Africa as well as proposals on a suite of new benchmarks that could potentially be used as reference interest rates.
The Consultation Paper envisages the establishment of a joint public and private sector body, to be referred to as the Market Practitioners Group (MPG). The MPG will function alongside other structures, such as the Financial Markets Liaison Group (FMLG) and will be chaired by the Deputy Governor: Markets and International of the SARB. The MPG will comprise members of the SARB, the Financial Sector Conduct Authority (FSCA), as well as senior professionals from a variety of institutions to reflect different market interest groups active in the domestic money market. The primary purpose of the MPG will be to facilitate decisions on the choice of interest rate benchmarks to be used as reference interest rates for financial and derivative contracts, as well as to provide input to the SARB and the FSCA on the operationalisation of the interest rate benchmark proposals as contained in the Consultation paper.
The MPG will remain in existence until such a time as the new benchmarks have been implemented and embedded, after which the Reference Rate Working Group of the FMLG will assume responsibility for further work on reference interest rates.