Benchmarks Regulation and Risk free rate of return: Difference between pages

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imported>Doug Williamson
(Add 2nd definition. Source: FCA https://www.fca.org.uk/publication/policy/benchmarks-regulation-proposed-amendments-financial-services-bill.pdf)
 
imported>Doug Williamson
(Source: http://www.bis.org/publ/bppdf/bispap72l.pdf)
 
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(BMR).
The theoretical rate of return which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes.


1. ''Interest rates - reference rates - European Union.''


Regulation (EU) 2016/1011 of the European Parliament and of the EU Council of 2016.
Historically, the rates of return on certain types of domestic central government debt were considered to be a close enough proxy for such hypothetical risk-free investments.


In the modern era, domestic central government debt is no longer considered to be risk-free for this purpose, nor for a number of other purposes for which it was historically considered to be risk-free.


The Benchmarks Regulation relates to indices used:
*As benchmarks in financial instruments and financial contracts or
*To measure the performance of investment funds.
The Benchmarks Regulation imposed new requirements on firms that provide, contribute to or use a wide range of interest rate, currency, securities, commodity and other indices and reference prices.
Most of the new rules apply with effect from 1 January 2018, but some provisions relating to critical benchmarks were brought into effect earlier.
The rules present a significant implementation challenge, particularly where EU firms reference non-EU benchmarks in securities or derivatives, or use them in the management of investment funds.
2. ''Interest rates - reference rates - UK.''
The Benchmark Regulation as applicable in the UK since the end of the Brexit Transition period on 31 December 2020, as part of retained EU law in the UK.




== See also ==
== See also ==
* [[Base rate]]
* [[Credit spread ]]
* [[Benchmark]]
* [[Gilts]]
* [[EURIBOR]]
* [[Interest rate risk]]
* [[Interest rate]]
* [[LIBOR]]
* [[Pre-€STR]]
* [[Reference rate]]
* [[Regulation]]
* [[Retained EU law]]
 
[[Category:Accounting,_tax_and_regulation]]

Revision as of 11:56, 12 August 2013

The theoretical rate of return which can be earned on hypothetical investments which are considered to be risk-free for modelling purposes.


Historically, the rates of return on certain types of domestic central government debt were considered to be a close enough proxy for such hypothetical risk-free investments.

In the modern era, domestic central government debt is no longer considered to be risk-free for this purpose, nor for a number of other purposes for which it was historically considered to be risk-free.


See also

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