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As financial benchmark reform continues around the world, the Bank of Canada is establishing new oversight mechanisms for Canada’s evolving interest rate benchmark landscape.

The central bank announced that the industry group that was initially formed to help support the transition to the Canadian Overnight Repo Rate Average (CORRA) as the key benchmark for derivatives and securities in Canada has now also been charged with reviewing its predecessor, the Canadian Dollar Offered Rate (CDOR).

In a release, the bank said that while new risk-free rates (such as CORRA) are expected to become the primary financial benchmarks around the world, they are not necessarily ideal for all products, “so having robust credit-sensitive benchmarks may also be desirable,” it said.

As a result, the Canadian Alternative Reference Rate working group (CARR) — which was originally formed to support CORRA — will now also undertake an in-depth review of CDOR, and make reform recommendations.

“Reforms to CDOR following the financial crisis have focused on the submission process, but to date no formal analysis has been conducted on the efficacy of CDOR as a credit-sensitive benchmark, including its architectural underpinnings,” the bank said.

“As global work on financial benchmark reform continues ahead of LIBOR’s cessation, it is crucial that the Canadian public and private sectors work together to ensure Canada’s framework of interest rate benchmarks remains robust and appropriate,” said Bank of Canada governor Tiff Macklem in a statement.

“The broadened mandate of the Canadian Alternative Reference Rate working group is a key step towards making this possible,” he added.

At the same time, the central bank also announced the creation of an advisory group on CORRA, which will provide input on any potential adjustments to the CORRA methodology.