The effort to shore up confidence in financial benchmarks continued Monday with the publication of a new, voluntary industry code of conduct for banks that participate in the setting of CDOR.
The Investment Industry Regulatory Organization of Canada (IIROC) announced that a code of conduct has been developed for banks that participate on the submission panel for the interest rate benchmark known as the Canadian Dollar Offered Rate (CDOR). The voluntary code was developed by the submitting banks, along with IIROC, and the Bank of Canada.
The code sets minimum standards for submission methodology, internal oversight, and managing conflicts of interest, among other things. “The code underscores the industry’s commitment to enhanced governance and transparency for this important Canadian benchmark,” IIROC says, noting that this is one of several steps being taken to improve the Canadian benchmark following a review by IIROC, and the development of new principles by the International Organization of Securities Commissions (IOSCO) for financial benchmarks in the wake of the LIBOR scandal.
Along with the new code, CDOR’s governance will be strengthened through the appointment of an administrator that will be responsible for the day-to-day operation of the benchmark, in line with the IOSCO principles. The banks also issued a request for proposal today to fill the role of administrator.
And, last week, the Office of the Superintendent of Financial Institutions (OSFI) issued a draft guideline setting out its expectations for CDOR submitting banks in terms of governance and internal controls.
IIROC also noted today that now that these submissions only come from banks rather than investment dealers, it is no longer involved in the oversight of CDOR, or the panel members. And, CDOR’s acronym has also reverted back to the “Canadian Dollar Offered Rate” from the previously used “Canadian Dealer Offered Rate”.