Kiwi company snares Euribor job

NZ firm Global Rate Set Systems takes over as the Euribor 'calculating agent' in May. Photo / AP

Euribor-EBF, the organisation responsible for setting Europe's benchmark wholesale interest rates, has chosen New Zealand's Global Rate Set Systems to collect, process and distribute its financial benchmarks from May.

The role of "calculating agent" was previously carried out by Thomson Reuters, the international news and financial information company, after a long-standing co-operation deal.

Guido Ravoet, chief executive of Euribor-EBF, said Global Rate Set Systems' appointment would help to improve the transparency, monitoring and accuracy of its benchmarks.

Euribor-EBF last year brought in reforms to improve its governance and control mechanisms and to provide the market with greater confidence in the benchmarks.

The Euro Interbank Offered Rate (Euribor) is a daily reference rate based on the averaged interest rates at which eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market.

Euribor is Europe's version of Libor (London Interbank Offered Rate), the benchmark at the centre of the rate-fixing scandal that has cost several big name international banks billions of dollars in fines.

The integrity of Libor, which forms the benchmark for major lending transactions around the world, dived in 2012 when it became clear some banks were inflating or deflating their rates to profit from trades.

The scandal prompted regulators to shore up their wholesale credit rate markets with tighter rules.

Global Rate Set Systems, formed in 2009 to provide independent calculation agent capabilities to financial market associations and benchmark administrators, is part owned by the current chief executive of the NZ Financial Markets Association, Paul Atmore, with Craig McIvor and energy trading specialist Steve Cheval.

Atmore has held senior positions at Westpac, Reuters NZ and Dow Jones Telerate. McIvor is a former managing director of AAP Reuters.

Global Rate Set Systems describes itself as a "technology and governance facilitator".

Atmore said that Euribor-EBF's decision to take on the Wellington-based company showed New Zealand continued to be at the leading edge of capability and development in terms of market practice.

New Zealand and Australian financial markets have long adopted a transaction-based market model for its interbank markets, rather than the estimates-based model that was at the core of the Libor scandal.

In the past year, Euribor-EBF has implemented several reforms to improve the Euribor governance and control mechanisms and provide the market with greater confidence in the benchmarks.

The measures included the introduction of a new code of conduct and a conflicts of interest policy.

Keen interest

* Euribor-EBF was founded in 1999 with the launch of the euro. It manages interbank benchmarks such as Euribor.

* Euribor rates are based on the average interest rates at which a large panel of European banks borrow funds from one another.

* Global Rate Set Systems helps markets create trustworthy wholesale interbank interest rates.