RBI recently notified RBI (Financial Benchmark Administrators) Directions, 2023 to put in place a holistic risk-based framework covering all benchmark administrators in financial markets regulated by the Reserve Bank. These Directions shall apply to Financial Benchmark Administrators (FBAs) administering benchmark(s) based wholly or partially on financial instruments referred to or specified under Section 45W of the RBI Act. As per the directions, ‘Benchmarks’ mean prices, rates, indices, values or a combination thereof related to financial instruments that are calculated periodically and used as a reference for pricing, valuation or settlement of financial instruments or any other financial contract and ‘Financial Benchmark Administrator’ (FBA) means a person who controls the creation, operation and administration of benchmark(s) and shall be a company incorporated in India.

As per the directions, an authorised FBA shall be responsible for formulation of the benchmark calculation methodology; determination as well as dissemination of the benchmark values; ensuring transparency in the benchmark administration; periodic review of the benchmark; and, putting in place necessary organizational and process controls for effectively carrying out the above responsibilities.

Click here to access RBI notification-