The Financial Services Commission selected Korea Financial Investment Association (KOFIA) as the administrator of a critical benchmark rate (certificate of deposit rate) and approved the rules governing its calculation and publication duties of CD rates during its regular meeting held on June 21.

In March 2021, the FSC selected CD rate as a critical benchmark rate under the Act on the Management of Financial Benchmarks. With the FSC’s selection of KOFIA as a critical benchmark administrator and approval of its duties, CD rate as a critical benchmark rate will begin to have legal effect beginning on October 2 this year after a grace period of about three months (from June 22 to October 1) granted for adjustment in its calculation method.

The method for calculating CD rates will be changed to a waterfall calculation method based on real transactions and expert judgment from the method that previously relied on securities companies submitting asking prices on a voluntary basis.

Meanwhile, the frequency of calculating and publishing CD rates will be reduced from twice daily (12:00 and 16:30) previously to once a day (16:30). Due to their low level of usage, CD rates of specialized banks (Korea Development Bank and Industrial Bank of Korea) will no longer be calculated or published.

During the three-month grace period, KOFIA will prepare a standard manual on CD rates and hold information sessions to ensure a seamless utilization of newly calculated CD rates.

* Please refer to the attached file for details.