The Hungarian Forex Association (MFT) and the MNB agreed on the transfer of the administrative role in the context of BUBOR, BIRS and HUFONIA Swap Index reference rates. The reliable functioning of these benchmarks is important for the MNB, because they are relevant indicators in terms of monetary transmission, financial stability and supervisory responsibilities.

Interbank reference rates are the “public goods” of the financial system. They facilitate the effective functioning of lending and other financial products. Currently the amount of financial products that are priced based on BUBOR is close to Hungary’s annual GDP. In line with international practice, the production of BUBOR and other important interbank reference rates (BIRS and HUFONIA Swap Index) has been organised by the Hungarian Forex Association (MFT), the professional body of forex market dealers, since the 1990s. The MNB took part in the process with the daily collection, inspection and publication of the interest rate quotes.

In the crisis and especially in recent years, growing regulatory attention has been paid to the reference indicators. A new EU regulation came into force in June 2016 with the purpose of ensuring the reliability of reference interest rates. The regulation sets strict requirements for the organisations producing reference indicators.

In connection with the new regulation, the MFT indicated that they do not have the resources to comply with the rules, and therefore asked the MNB to act as the administrator of BUBOR, BIRS, and HUFONIA Swap Index. The Monetary Council has decided that the MNB should take on this role, as the reference indicators are important in terms of monetary transmission, financial stability and supervisory responsibilities. The representatives of the MNB, the MFT and the Hungarian Banking Association signed an agreement on the handover on 9 September.

After the handover of BUBOR, BIRS, and HUFONIA Swap Index, every task and authority in connection with the production of the reference rates (including the formulation and enforcement of the regulations and communication with panel banks) has been transferred to the MNB. However, the public, the users of the reference rates and the panel banks will not experience any difference after the change, because the daily operative tasks (collection, inspection and publication) have already been the MNB’s responsibility.

The MNB established the Benchmark Quotation Committee (RJB) with the purpose of managing the tasks related to the reference rates. In addition to experts from the MNB, market participants are also invited to attend the Committee meetings with a right to be consulted. The Committee held its inaugural meeting on 30 September 2016.