NIBOR - the Norwegian Interbank Offered Rate - is a collective term for Norwegian money market rates at different maturities. NIBOR is intended to reflect the interest rate level lenders require for unsecured money market lending in NOK with delivery in two days after trade. The rules adopted by FNO apply to NIBOR with maturities of one week, one month, two months, three months and six months.
Best possible estimates
NIBOR is calculated as a simple average of interest rates published by the NIBOR panel banks for each maturity, after omitting low and high rates based on provisions laid down in the rules. The interest rates published by the panel banks shall reflect which interest rate the bank charges on lending in NOK to a leading bank that is active in the Norwegian money and foreign exchange markets. The rates are to be regarded as best possible estimates, not binding offers.
NIBOR is published as an annual nominal interest rate over 360 days, in accordance with foreign exchange market standards. The percentage return over the term is thus calculated by dividing the interest rate by 360 and multiplying it by the actual number of days to maturity.
The rules describes what the different interest rates represents, the requirements laid on the suppliers of data (the panel banks) and how the rates are to be calculated and published.
There is established a steering group to regularly evaluate the rules and make recommendations on approvals of panel banks. The panel banks are approved by Finance Norway. A panel bank shall be entitled, but not obliged, to be represented in the steering group.
A compliance committee shall monitor compliance with the rules. The panel banks’ representatives must not be in the majority on the committee.