Norway Banks to Hand Nibor Oversight to Bourse After Probe

Norway’s banks are working on handing oversight and setting of the nation’s benchmark interbank rate to the stock exchange after a probe into claims of manipulation was inconclusive.

Finance Norway, which represents banks in the country, is preparing an agreement with the exchange to take over the Norwegian interbank offered rate, the Oslo-based association said in a statement today.

“Nibor is one of the capital markets most important tools and we see it as a vote of confidence that Finance Norway has agreed for the bourse to become an independent third party to calculate the rate,” said Bente A. Landsnes, head of the exchange, in a separate statement. “It’s very important that there’s confidence in the rate domestically and internationally for well-functioning capital and fixed-income markets in Norway.”

The Financial Supervisory Authority in April recommended an overhaul of how the rate was shaped. That followed an investigation after bankers outside the country claimed it was being rigged. Documents released by the central bank in January revealed e-mailed complaints from traders around the world going as far back as 2010.

“The Financial Supervisory Authority of Norway has found no evidence of rigging, or attempted rigging, of Nibor, but cannot disprove rigging either,” the regulator said in April. “The Nibor framework should be strengthened and made more robust to manipulation. It also needs to be more transparent to allow for subsequent testing and oversight.”

Ensuring Confidence

Finance Norway today said it would start disclosing the rate contributions from the banks and establish a control committee to handle complaints. The number of rates will also be limited to one week, one month, two-month, three-month and six-month maturities, according to the group.

“Publication of the banks’ rate contributions will contribute to ensure continued high confidence in Nibor,” said Jan Digranes, director at the group, in a statement.

In correspondence released in January, a June 2010 e-mail by a banker, whose name was blacked out, said Nibor fixings “seem to bear no resemblance to market realities.”

Interbank rates came under international scrutiny after Barclays Plc was fined a record 290 million pounds ($444 million) in June last year for attempting to rig the London interbank offered rate and Euribor.

Nibor was linked to as much as 5.8 trillion kroner ($1 trillion) in derivatives in April 2010, according to central bank documents. Nibor is used as a benchmark for mortgage rates, corporate bond yields and derivative contracts. It has been calculated as an average of rates published by a panel of banks for various maturities, excluding low and high quotes. That panel is made up of DNB ASA, Danske Bank A/S, Svenska Handelsbanken AB, Nordea Bank Norge ASA, SEB AB and Swedbank AB.

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