The International Swaps and Derivatives Association (ISDA) is seeking a benchmark administrator and calculation agent for ISDAFIX rates.
The association published an invitation to tender this week, marking the latest step in ISDA’s process to align ISDAFIX, a benchmark for annual swap rates for swap transactions worldwide, with best practice in benchmarking.
The successful applicant will be responsible for governance of all ISDAFIX administrative processes including oversight and decisions of methodology, systems and controls; daily operations, including collection of input data and calculation of ISDAFIX rates; and ex-ante and ex-post checks on submissions.
The deadline to submit a tender is 21 March, and ISDA expects to announce the successful bidder by the end of April.
The tender process follows a number of changes made to the submission methodology process last month, including a standardisation of the polling process across currencies. The next phase of development is moving from the current bank submission-based method to an automated model that uses live, executable prices from multilateral trading facilities (MTFs).
The target for the transition to an MTF-based approach is the second quarter of this year for euro swaps, with the US dollar and sterling swaps following by the end of 2014.
ISDAFIX provides rates for euro, pound, Swiss franc and US dollar. It is currently based on a midday and, in some markets, end-of-day polling of mid-market rates.
ISDA established ISDAFIX in 1998 in co-operation with Thomson Reuters and London brokerage giant ICAP. The association stripped ICAP, which has been fined for Libor fixing, of its role in helping set ISDAFIX earlier this year. It handed over the responsibility to Thomson Reuters for the interim, which has served as the collection agent for all non-US dollar ISDAFIX rates. Thomson Reuters took on the USD process on 27 January.
Banks and brokers have been facing increasing scrutiny around benchmark contributions following recent benchmark-fixing investigations, with regulations looking into firms’ compliance measures closely to ensure more transparency and control.