What is the TIBOR
TIBOR is an acronym for the Tokyo Interbank Offered Rate. The Japanese Bankers Association, JBA, publishes the TIBOR every business day at 11:00 am Japan Standard Time and no later than 12:35 p.m.
BREAKING DOWN TIBOR
There are two types of TIBOR rates – the European TIBOR rate and the Japanese Yen TIBOR rate. The European TIBOR rate is based on Japan offshore market rates. The Japan offshore market was created in 1986 to help internationalize the country's financial markets. Yen traded in the offshore market is termed Euroyen. The Japanese Yen TIBOR rate is based on unsecured call market rates. The call market provides a place for financial institutions to lend to, or borrow from, other banks and lenders to either adjust an unexpected short-term surplus or make up an unexpected deficit.
The Japanese Yen TIBOR has been calculated and published publicly by the Japanese Bankers Association since November 1995, while the Euroyen TIBOR rates have been published since March 1998. Publishing the TIBOR rates helps contribute to the development and vitalization of Japan’s short-term financial markets. TIBOR rates are used for analysis by The Ministry of Finance, the most powerful finance-related government agency in Japan. The ministry's responsibilities include all of those that are individually held by the U.S. Department of Treasury, the IRS, the Federal Reserve, the Department of Commerce and the Securities and Exchange Commission.
How TIBOR is Calculated
The Ippan Shadan Hojin established the JBA TIBOR Administration, also known as the JBATA on April 1, 2014, which enabled the JBA TIBOR to be calculated and published on the same day. The JBATA calculates the JBA TIBOR as a prevailing market rate by using quotes for six different maturities at 1 week, 1 month, 2 months, 3 months, 6 months and 12 months. Each maturity is given by 11:00 AM by the reference bank on each business day.
In order to come up with the TIBOR, the JBATA throws out the two top and bottom maturity reference rates and calculates the average of the remaining rates. The average maturity rates are published as the TIBOR rates with 6 rates each for Japanese yen and Euroyen. The TIBOR rates are published by authorized information providers and include Thomson Reuters Markets KK, QUICK Corp., Jiji Press, Ltd., Bloomberg Finance L.P. and Nomura Research Institute, Ltd. Any TIBOR rate that is published outside of authorized information providers is considered for informational purposes only.