RUONIA Administration
In 2020, the Bank of Russia and SRO NFA decided to transfer the responsibility for administering RUONIA rate to the Bank of Russia.
Due attention was given to the necessity to preserve the role of RUONIA in the financial market and to ensure the reliability and independence of the interest rate indicator for monetary policy and financial stability. According to the relevant agreement, the Bank of Russia is responsible for the methodology of RUONIA, collection of data, and calculation and publication of interest rates, whereas SRO NFA organises panel discussions and prepares opinions about the methodology, monitors the quality of RUONIA and sensitive situations, and also considers complaints and inquiries from RUONIA users.
Under its remit of RUONIA administrator, the Bank of Russia addresses three objectives:
- Ensuring the compliance of RUONIA with the Principles for Financial Benchmarks of the International Organization of Securities Commissions.
- Minimising the cost of adaptation of RUONIA to the EU and UK legislative requirements for financial benchmarks (EU Benchmark Regulation, EU BMR).
- Ensuring overall operational continuity of RUONIA.
The administration of the RUONIA rate includes the following objectives:
- collection and preparation of data related to RUONIA
- calculation of RUONIA
- publication of RUONIA
- storage of data related to RUONIA
- internal audit of RUONIA administration activities
- handling of inquiries regarding RUONIA and administration thereof by the Bank of Russia
- interaction of the Bank of Russia and the Expert Council on Benchmarks and Rates of the SRO National Finance Association
- interaction with international organisations on issues of RUONIA administration and use, and also with the foreign administrators of financial benchmarks.
In the Bank of Russia, control over the compliance with the international requirements is vested with the Committee for RUONIA Supervision with the involvement of SRO NFA representatives. The role of the customer committee of RUONIA is played by the Expert Council on Benchmarks and Rates of SRO NFA.
Performance of the functions of the administrator of interest rate indicator by the Bank of Russia (and by other central banks worldwide) reflects a global trend based on the fact that central banks, as the public institution, conform with the principles, standards and procedures ensuring the reliability and independence of benchmark formation. The number of central banks acting as the administrators of interest rate benchmark include the US Fed, the European Central Bank, the Bank of Japan, the Reserve Bank of Australia and several other central banks.
The Bank of Russia closely communicates with stakeholders on RUONIA-related issues. Any applicant may address the Bank of Russia with a suggestion, complaint or question via the specialised channel — the section ‘Inquiries about RUONIA’. Such an application will be duly registered and considered, after which the applicant will receive a reply according to the established procedure.
Meaningful applications associated with data on RUONIA and its calculation method will be considered by the Committee for RUONIA Supervision. If any particular issue is especially important, the Committee may decide to carry out additional discussions with the engagement of external experts. In order to ensure the high quality of this benchmark interest rate, the Bank of Russia invites major RUONIA users to take part in discussions, including Russia’s Ministry of Finance, and leading methodologists, such as the Federal State Statistics Service and Moscow Exchange, as well as universities.
Prior to introducing any changes to the RUONIA methodology, the Bank of Russia shall fulfil its public obligation to carry out open consultations. The Bank of Russia aims to ensure that open consultations are conducted in advance and all stakeholders have ample time to analyse documents and formulate their position. The results of such consultations are reviewed by the Committee for RUONIA Supervision. Applications regarding RUONIA and discussions of its methodology are not the only channels used by the Bank of Russia to provide communication on RUONIA. To support confidence in RUONIA and ensure the transparency of its administration, the Bank of Russia holds public expert sessions and releases consultation papers. Communication with RUONIA users and RUONIA panel banks also largely takes place at non-government organisations uniting financial market participants. Following such communication, the Bank of Russia either publishes an information notice or a press release, or its representatives make a statement at thematic conferences.
The Independent Practitioner’s Assurance Report to the management of the Central Bank of the Russian Federation (Bank of Russia) on the assurance engagement in respect of the Bank of Russia’s statement of compliance with the IOSCO Principles for Financial Benchmarks, as of 23 December 2020
The Bank of Russia engaged us to provide for review the Independent Practitioner’s Assurance Report regarding compliance of the financial benchmark determination process with the Principles for Financial Benchmarks of the International Organization of Securities Commissions (IOSCO). This Report was prepared pursuant to Agreement No. AAS-2020-00023 dated 7 July 2020.
The Report was prepared solely for the use by the Bank of Russia and reviews specific issues. Accordingly, we were allowed not to review any other issues of your concern. Also, the Report was compiled as of the date specified therein, and we carried out no further analysis of this issue after this date. This Report does not take into account any material events that could have happened after this date.
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RUONIA quality
The Bank of Russia has a well-established multi-level system of control ensuring the quality of data underlying the RUONIA rate. Original information is collected from the RUONIA panel banks in the form of supervisory reporting. Its collection is the remit of the Information Technology Department and the regional branches of the Bank of Russia.
The information received is processed automatically. If control rules are breached, supervisory reporting is rejected, and the report acceptance system automatically sends a notice of rejection to the credit institution specifying the error due to which the reporting cannot be accepted. The Statistics Department verifies whether the data collection is complete and credit institutions — counterparties provide symmetric information on transaction terms. Should any error be detected, banks are requested to resubmit their reporting.
The Bank of Russia elaborates requirements for banks’ supervisory reporting and imposes sanctions where its submission is delayed. In 2019, the Russian Federation established criminal liability for invalid reporting, which can involve both fines and imprisonment from three to seven years with the deprivation of the right to hold certain positions or to carry out certain activity for a period of up to three years. Criminal liability is aimed at ensuring discipline in reporting, which will provide timely, complete and valid data for RUONIA calculation.
The RUONIA rate is also calculated automatically. The software does not allow manual input of any changes to original data or calculation results. After RUONIA calculation is accomplished, its value is emailed to the robot to be automatically uploaded and published on the Bank of Russia website. After being published, data on RUONIA become available to external information providers, including news agencies.