The Steering Committee of the National Working Group has endorsed recommendations on products, achieving the key milestone of the Reform Roadmap

The Polish Financial Supervision Authority, KNF, has published a press statement to announce the achievement of another milestone by the National Working Group in its preparation of the benchmark rate reform and the transition from WIBOR, the Warsaw Interbank Offered Rate, to WIRON, the Warsaw Interest Rate Overnight index. Specifically, the group has issued the following three final recommendations for the use of WIRON in financial products and contracts:
(1) Recommendation on the rules and methods of applying the WIRON benchmark (or benchmarks from the WIRON Compound Indices Family) when entering into new contracts for benchmark-based products in PLN offered by financial market entities: These recommendations aim to provide „best practices for applying the WIRON benchmark (Warsaw Interest Rate Overnight) or benchmarks from the WIRON Compound Indices Family to calculate floating interest rate when entering into new contracts with clients for benchmark-based products in PLN“. The recommendations are not mandatory, but may be applied by financial market participants when using WIRON in
– retail client mortgage loans, overdrafts, or other types of loans;
– in bank account remuneration; or
– interest rate computation in credit card arrangements.
They set out the specific tenor that may be used and the computation methodology that best suits their purpose (e.g. current day rate, 5-day lookback period, etc.).
(2) Recommendation on the methods of applying the WIRON interest rate index (or indices from the WIRON Compound Indices Family) when entering into new contracts in PLN for leasing products for benchmark-based products in PLN offered by financial market entities: These recommendations aim to provide „best practices for applying the WIRON benchmark (Warsaw Interest Rate Overnight) or benchmarks from the WIRON Compound Indices Family to calculate interest rate when entering into new contracts with clients for benchmark-based leasing products in PLN“. The recommendations are also not mandatory, but may be applied by financial market participants when using WIRON in leasing, advance leasing, and other financial products offered by leasing companies. They set out the specific tenor that may be used (1-month compound rate) which apparently best suits the purpose of lease contracts (leasing payments are typically made monthly).
(3) Recommendation on the rules and methods of applying the WIRON interest rate index (or indices from the WIRON Compound Indices Family) when entering into new contracts in PLN for factoring products for benchmark-based products in PLN offered by financial market entities: These recommendations aim to provide „best practices for applying the WIRON benchmark (Warsaw Interest Rate Overnight) or benchmarks from the WIRON Compound Indices Family to calculate interest rate when entering into new contracts with clients for benchmark-based products in PLN“. The recommendations, too, are not mandatory, but may be applied by institutions providing factoring services when calculating the rate of interest to be expected by their clients. The recommended rate is thereby based on the 1-month compound WIRON rate with a five day lookback period.