ASEAN-Korea Financial Cooperation Centre

Financial Cooperation Note Series Vol. 5

Description of the Korea RFR Provision and Disclosure

Table of Contents

1. Background of the Benchmark Reform

2. Progress of RFR Selection in Korea

3. RFR Organization and Main Features

4. RFR Determination and Disclosure System

5. Key Issues Going Forward

Introduction

The benchmark rate determines the profit and loss and the price of financial contracts. The most well-known benchmark rate is the LIBOR, which has been widely used around the world for decades.

However, after the Barclays investigation in 2012 revealed widespread LIBOR manipulation, movements to reform benchmark rates were initiated across the globe. In the aftermath of the manipulation, the stability and reliability of LIBOR as a benchmark rate collapsed, and the British Financial Conduct Authority (FCA) decided to cease the provision of the LIBOR.

Accordingly, major countries began to develop and switch to the RFR, a risk-free reference rate based on actual transactions, to replace the LIBOR.

ASEAN-ROK Financial Cooperation Centre