(Bloomberg) -- South Korean financial regulators will hold a briefing to boost the adoption of their risk-free reference rate as they seek to follow other countries in moving away from benchmarks based on bank submissions such as Libor.
The Bank of Korea and Korea Capital Market Institute will hold a seminar to encourage use of the Korea Overnight Financing Repo Rate on Aug. 28, according to the institute’s web page. The event will see the unveiling of new KOFR-related research and surveys conducted by the central bank, the government and financial institutions, according to Youngwoong Hwang, head of the money markets team at the Bank of Korea.
While South Korea introduced KOFR back in 2021, the market still largely relies on the 91-day Certificate of Deposit rate as its main short-term benchmark. That rate is calculated by the Korea Financial Investment Association based on submissions from 10 financial institutions, and announced at 4:30pm Seoul time each trading day. The Financial Services Commission, the central bank and financial institutions set up a new team to promote use of KOFR in March.
“The fact that the Certificate of Deposit rate is managed as a key indicator doesn’t mean that the current reference rate system will be maintained in the future,” BOK’s Hwang told Bloomberg in an interview. “Korea will inevitably move to a KOFR-centric system to align with global reference rate trends, and the authorities are firmly committed to do so.”
Reuters earlier reported that Korea planned to announce guidelines to encourage use of the KOFR benchmark in its interest-rate swap market.
--With assistance from Whanwoong Choi.
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