Rule changes make SWESTR more predictable

News To increase the predictability and reduce the uncertainty of the transaction-based reference rate SWESTR around the turn of the year, the Riksbank is changing the alternative calculation method and one of the robustness requirements for SWESTR. By means of a further measure, the SWESTR value for the last day of the year will never affect the SWESTR value for the first day of the year. The changes to the framework for the reference rate will apply from 23 September 2024.

In Sweden, the transition from Stibor T/N to SWESTR has been slow, which is considered to be partly due to the uncertainty about SWESTR's value at the turn of the year. The Riksbank is now taking steps to enable SWESTR to become the dominant reference rate in Swedish kronor. In addition to the year-end change and the alternative calculation method for SWESTR, the robustness requirement for total transaction volume will be lowered from SEK 6 billion to SEK 2 billion, which reduces the likelihood of the alternative calculation method being used at all. The measures are in line with the proposals published by the Riksbank on 8 April 2024, which were subsequently supported by the consultative bodies.

In Sweden, the reference rate SWESTR has been available as a complement to STIBOR T/N since September 2021. As in currency areas outside Sweden, the transaction-based reference rate initiative is about strengthening confidence and reliability in reference rates. The background to these initiatives is the risk of manipulation that was highlighted by the 2012 LIBOR scandal involving the so-called IBOR rates.

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Updated 07/06/2024