Working Group on Short-Term Reference Rate

In January 2021, Danmarks Nationalbank set up a working group with financial sector participants to support the launch of DESTR and the transition from the Tom/Next rate to DESTR.

The Working Group is to recommend the future benchmark short-term reference rate in Danish kroner and prepare a plan for the adoption of DESTR and for the transition from the Tom/Next rate to DESTR.

The participants represent a wide range of Danish market players. In addition, Danmarks Nationalbank and the Danish Financial Supervisory Authority participate as observers.

Agendas and minutes of meetings as well as other publications will be published regularly on this website.

Publications and milestones

Final recommendation for the transition from Tom/Next to DESTR

Based on the consultation on the transition from Tom/Next to DESTR, the Working Group is to make its final recommendation for the transition. The consultation has not given rise to any changes to the transition proposed in the consultation paper.

Consultation on the transition from Tom/Next to DESTR

The Working Group proposes the following transition from Tom/Next to DESTR: Once DESTR is launched as expected by 1 April 2022, the Tom/Next methodology will be recalibrated to DESTR plus a spread.

The spread should be based on the historical daily differences between DESTR and Tom/Next observed from 19 March 2021 until a date prior to the launch of DESTR. No trimming should be applied to the spread calculation. The specific end date for the observation period will be decided by the Danish Financial Benchmark Facility, the administrator of Tom/Next.

Once DESTR is launched and Tom/Next has been reformed, a transition period will follow in which market participants should start trading DESTR-related instruments instead of Tom/Next. It is the Working Group’s recommendation that the transition period ends on 1 January 2026, when the reformed Tom/Next will cease to exist.

The working group will take into account all comments received by 3 November 2021. An anonymised summary of the comments and the final recommendation of the Working Group will be published shortly after. All entries must be submitted by email to DESTR@nationalbanken.dk under the heading ‘Comments to consultation’.

The consultation paper is only available in English.

DESTR recommended as the preferred risk-free interest rate in Danish kroner

In June 2021, the Working Group recommended DESTR as the preferred risk-free reference rate in Danish kroner. The Working Group finds that DESTR will be a robust reference rate that can serve as a strong, reliable anchor in the short end of the curve, enhance a liquid swap and loan market and function as both a complement to and fallback for the CIBOR fixings. The recommendation delivers on the first part of the Working Group’s mandate.