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The Telbor Market - Tel Aviv Inter-Bank Offer Rate |
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As part of the Bank of Israel's program concerning financial market development, the Monetary Department has decided to help in developing the Telbor market. Transactions connected in this market are based on interest rate quotations by the commercial banks on inter-bank shekel loans for various terms, while the "Telbor" interest rates are calculated from these quotations, and may serve as a basis for derivative assets. However in light of assessments during 2006 among participants in the market that the Telbor interest rate as reported does not provide a reliable indication of the "true" interest rate for transactions that are actually concluded among the banks, a decision was made to help develop this market.
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In order to provide regulatory coverage of the market, the Bank of Israel has instituted the "Telbor Interest Rate Committee", in cooperation with the Stock Exchange and the banks, whose role is to create a mechanism to ensure that the commercial banks quoting in the inter-bank market are committed to operating responsibly in this market, and that their activity in the market is transparent. In order to achieve this goal, the committee has prescribed definitions and guidelines for quotations, a list of quoting banks, and the rules for calculating and publishing the Telbor rates - the interest rates based on these quotations.
(See the document on
The Telbor Market - Rules and Definitions).
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The Telbor interest rate is the Israeli version of the LIBOR (London Inter-Bank Offer Rate), which serves as the underlying asset for the market for futures contracts on worldwide interest rates and is regarded as one of the largest and most liquid financial markets in the developed countries. Regulatory coverage of the Telbor market is expected to increase significantly the volume of transactions in futures contracts on the shekel interest rate. This will enable the public in Israel, and especially companies, to manage interest-rate risks in a more effective manner. Therefore, standardization of the market plays an important role in the sophistication and deepening of the money market through interest rate derivatives, and in the stability of the Israeli banking system in general by creating a credible infrastructure for conducting inter-bank transactions for various terms.
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The commercial banks that operate in Israel began operating in the framework of the new guidelines at the beginning of March 2007 (See the list).
The committee will monitor developments in the Telbor market, ensuring that the definitions and regulations that it has defined are being implemented by each of the contributor banks.
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The Telbor Interest Rate Committee is comprised of three representatives - Bank of Israel, Forex Israel and the Tel Aviv Stock Exchange - who cooperate with full transparency, and set fair rules in line with the developing situation of the inter-bank market.
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The Telbor Market - Rules and Definitions |
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The List of Quoting Banks Approved by the Telbor Interest Rate Committee |
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Official TELBOR Interest Rate Fixings,
last update: 05/09/2008 |
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Minutes of the Telbor Committee Meeting 28 April 2008 |
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Minutes of the Telbor Committee Meeting 25 February 2008 |
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Minutes of the Telbor Committee Meeting 22 October 2007 |
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Minutes of the Telbor Committee Meeting 3 July 2007 |
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