Canada's financial regulator is reviewing the way the country's equivalent of the Libor benchmark lending rate is set in light of revelations of a global rigging scheme in setting Libor, a spokeswoman said on Friday.
The subject of the review is CDOR, the Canadian Dealer Offered Rate. CDOR is determined daily by a survey of bid-side rates provided by the main market makers, including the major Canadian banks. The survey is posted by Reuters.
IIROC, the Investment Industry Regulatory Organization of Canada, is a self-regulatory entity that oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
“While we are not aware of concerns at this time with the setting of CDOR, recent experiences with Libor point to a need for increased scrutiny of such survey-based reference rates and IIROC is conducting a review of current practices among CDOR survey participants,” said Lucy Becker, IIROC vice- president for public affairs.
More than a dozen banks are under investigation by authorities in Europe, Japan and the United States over suspected rigging of Libor, the London interbank offered rate, which is used in financial contracts worth hundreds of trillions of dollars globally.
The Canadian government’s Competition Bureau has also been investigating alleged collusion in the setting of yen Libor rates, between 2007 and 2010.
The year 2007 happens to be when regulators and industry started meeting to discuss how CDOR is set.
“Since 2007, there has been a working group, comprised of all CDOR survey participants, IIROC and Bank of Canada representatives, which acts as a forum to discuss matters related to the setting and dissemination of CDOR,” Ms. Becker said.
“IIROC will continue to engage this working group and other stakeholders as appropriate as it conducts its review.”
Ms. Becker said IIROC’s CDOR review was separate from the working group.