OTTAWA: Canada has not suffered the manipulation of its financial benchmarks that the London Interbank Offered Rate (Libor) has, but is nonetheless tightening up its rules to make sure this remains the case, Bank of Canada Deputy Governor Tim Lane said on Monday.
"Whether it is a liter of wine, a pound of butter or an interest rate benchmark, there should be no question that measurements for commercial and financial transactions are accurate and fair," he said in the text of a speech he was to give in Toronto.
The closest Canadian equivalent to Libor is the Canadian Dealer Offered Rate, and Lane said special features of CDOR made it less likely to be subject to the problems that afflicted Libor.
Nonetheless, on behalf of Canadian financial authorities the Bank of Canada has discussed with industry "the need for it to establish more formal administrative arrangements for CDOR." He also said banks on the CDOR panel should fairly soon release a submitters' code of conduct.
Work has also begun on what changes may be needed to the Canadian Overnight Repo Rate Average (CORRA), which the Bank of Canada calculates and publishes based on broker-submitted data.
Finally, the Bank of Canada recognizes that the indicative foreign exchange rates that it posts, while not intended as benchmarks, seem to be used as benchmarks for some transactions.
"While there is no evidence of market manipulation affecting the Bank of Canada's rates, we are reviewing these rates and considering any changes that may be appropriate," he said.
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