Governance of SWESTR
The Riksbank is administrator of the transaction-based reference rate SWESTR (Swedish krona Short Term Rate). This means that the Riksbank is responsible for governance of SWESTR, in addition to which the Riksbank is responsible for collecting transaction data and calculating and publishing the interest rate.
International principles and practice
In 2013, the International Organization of Securities Commissions, IOSCO, published 19 principles for financial benchmarks. Among other aspects, these principles cover the data that should form the basis of reference rate calculations, documentation and transparency of the calculations, and guidance on the administrator’s internal oversight. IOSCO’s principles then formed the basis of the regulatory framework for reference rates that Swedish market participants are obliged to follow, namely the EU’s Benchmarks Regulation (BMR), which came into force in 2018.
Central banks that are administrators of a reference rate are explicitly exempt from both the Benchmarks Regulation and IOSCO’s principles. Nonetheless, the central banks providing reference rates have chosen, where appropriate, to follow and evaluate themselves against the IOSCO principles; the Riksbank has also chosen to follow this international practice.
Using IOSCO’s principles as a starting point, the Riksbank has established an internal organisation and a governance structure for SWESTR as well as for SWESTR averages and index. The Markets Department is tasked with operationalising the Riksbank’s role as administrator, while the Financial Stability Department is responsible for the Riksbank’s internal oversight of SWESTR.
The Riksbank has also set up a structure of governing documents for SWESTR, where the Executive Board has established a Policy and a Rule for SWESTR. The information is also available in the information document SWESTR: Comprehensive information on Sveriges Riksbank’s framework for SWESTR.
The Riksbank has set up an internal oversight committee to monitor whether SWESTR complies with the applicable and relevant IOSCO principles. An internal oversight committee is in line with the IOSCO principles and international practice. The oversight committee will be organisationally separated from the part of the Riksbank that administers SWESTR.
The Riksbank will regularly assess how SWESTR is working and whether there is a need to make adjustments, for example to how we calculate and publish SWESTR. To this end, the Riksbank has set up an advisory group. Among other things, the group is tasked with assessing whether SWESTR is representative of the interest rate on the underlying market and reviewing and advising on the framework the Riksbank has established for the reference rate.