Summary of conclusions from the public consultation on Recommendation on the application of the WIRON index in issues of floating-rate debt securities

Following the issuance of draft recommendations as to the application of the WIRON index in issues of floating-rate debt securities, the National Working Group for the benchmark reform (NWG) has now published a summary of conclusions in this context.
Specifically, the document outlines the responses the NWG has received to its consultation and describes the way forward on this matter. To recall, in its final efforts to replace WIBOR, the Warsaw Interbank Offered Rate, as a benchmark interest rate in floating rate securities with WIRON, the Warsaw Interest Rate Overnight index, the NWG proposed two different alternatives for the calculation of interest payments for floating-rate debt securities both based on the shift methodology.
In its conclusion document now, the NWG states that the comments and criticism provided by respondents do not mandate an alteration of the NWG’s approach. Indeed, the arguments brought forward simply reemphasize that the replacement of spot interest rate benchmarks, e.g. the 3-month or 6-month WIBOR with the WIRON index based on overnight transactions pose new challenges which the industry will have to overcome. However, there is plenty of time for the adoption and adaptation to the new overnight WIRON. As far as the technical terms are concerned, the NWG notes that the proposed methods both have downsides and benefits. Nonetheless, it is the opinion of the Working Group that the proposed methods are fit for purpose and do not warrant further adjustments.
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For more information on the responses and the feedback provided by the NWG, please consult the summary.