Description of the working group's assignment

The working group's objective

The working group must submit a recommendation for an alternative to Stibor, in respect of both the reference interest rate and its administration.

The working group's assignment

The working group must:

Analyse the possibility of a risk-free or virtually risk-free short-term interest rate for SEK.

1. Design a method for fixing.
2. Assess how the new reference interest rate can replace Stibor.
3. Make proposals for a reference rate as an alternative to STIBOR for extended terms to maturity, if the working group considers this to be necessary.
4. Identify and minimise the risks with the transition from Stibor to an alternative reference interest rate.
5. Assess and make proposals as to how the transition should take place.
6. Analyse how different instruments and markets can handle a transition from Stibor to the new reference interest rate, and any possible consequences this may entail.
7. Submit recommendations about an alternative reference interest rate to parties proposed by the working group as possible administrators of the new reference rate.
8. Investigate and implement information and training initiatives for markets, concerned authorities and the general public.

Organisation and staffing

The group's work must be carried out independently and its decisions made by group members with voting rights. To enable work to be done efficiently, and because time is short, the group should be organised to include a smaller group comprising the banks that today set Stibor. The working group may set up subgroups to focus on special subjects. The subgroups may be structured in a manner considered appropriate by the working group. The Swedish Bankers' Association and the Swedish Central Bank have observers in the working group. The observers do not have voting rights in the working group.

The working group must possess expertise in the following fields:

• Borrowing
• Trading in financial instruments
• Regular lending linked to Stibor
• Accounting
• Risk

In order for the working group to enjoy legitimacy and breadth, it must constantly seek support for work in progress through reference meetings, roundtable discussions and similar meetings with other parties affected by the introduction of the supplementary/alternative reference rate. All recommendations and decisions that can affect banks other than those participating in the working group, must be preceded by consultation in which all who may be affected have the right to express themselves. The working group must take into account the reference groups' observations and consultation responses in its decisions.

Deliveries

The working group must deliver the following:

1. A recommendation on a suitable risk-free or virtually risk-free interest rate in respect of short-term maturity and other, longer-term maturities including a description of the underlying transactions, how these should be captured and the fixing method.
2. Proposed alternatives for suitable reference rate administrators.
3. Information to the general public about the recommendation drawn up and how different instruments and markets can handle a transition from Stibor to the new interest rate.

The working group's agendas and minutes must be announced through publication on the Swedish Bankers' Association website. Conclusions from reference meetings and roundtable discussions or similar forums must, as far as possible, also be made known to the general public.

Timetable

Sweden is lagging behind in the transition. To avoid any commercial or legal requirement that compels Sweden to change reference rates used primarily in derivatives linked to foreign transactions, Sweden must work to catch up with the major currency areas. Thus the working group must deliver its proposals no later than the fourth quarter, 2019.

Conflicts of interest and transparency

All participants in this collaboration must have knowledge of regulations concerning competition and conflicts of interest in both Sweden and other affected jurisdictions.

Information processed during the work must remain confidential until otherwise decided by the working group. The working group must decide at an early stage when various steps in the work should be made public and how this will take place.

The working group's agendas and minutes must be published on the Swedish Bankers' Association website. Agendas must be published in good time before meetings, and minutes no later than 30 days after. Consultations must be public and open, as must consultations that require responses from specific groupings.

When the working group decides on recommendations, greater focus must be given to informing and enlightening market players about what is taking place. This may require special initiatives to reach different groups.