FTSE Russell, the global benchmark and index provider, announced on Wednesday a reform to the methodology of its Vietnamese Dong interest rate benchmark, VND VNIBOR.
FTSE Russell Reforms Vietnamese Interest Rate Benchmark
The changes, effective from 3 November, are designed to align the benchmark more closely with the Financial Stability Board’s recommendations for interest rate benchmarks, ensuring it meets contemporary international standards.
FTSE Russell explained that the new methodology will transition away from quotes and will be grounded in VND deposit transactions for its overnight, spot-week, two-week, one-month and three-month tenors.
This shift aims to enhance the benchmark’s robustness and accuracy.
In addition to the methodology changes, FTSE Russell is launching new overnight VND VNIBOR compounded average rates and an overnight index, a move that will support the use of overnight VND VNIBOR as a risk-free rate (RFR), similar to the SOFR in the U.S. and SORA in Singapore.
The administration of the reformed tenors, compounded averages and index will be handled by FTSE International Limited, which will ensure compliance with UK and EU benchmark regulations (BMR).
Jacob Rank-Broadley, Head of LIBOR Transition at FTSE Russell, stated: “These methodology changes have been developed in conjunction with the market to ensure Vietnam has an accurate and robust interbank interest rate which will support development of Vietnam’s financial markets and economy.”
