The IIBR is defined as the profit rate that an individual Contributor Panel bank would perceive to be reasonable for Shariah compliant funding  were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11.00 am Makkah local time (GMT + 3).

The value dates for settlement are T+0 for Overnight funds and T+2 for all other tenors.

A poll of approximately 16 pre-selected banks contributed rates are snapped by Thomson Reuters contributions technology (Thomson Reuters Spreadsheet Publisher or TRSP) at 10.45 AM on every business day (Sunday - Thursday).

Banks are asked to contribute rates between 9.00 AM - 10.44 AM Makkah local time (GMT +3) as per the following question:

Thomson Reuters undertakes both automated and manual audit and review procedures at this stage to ensure that the rates contributed are genuine.

The rates are ranked from highest to lowest and the top and bottom quartiles (25%) of the rates are excluded to ensure that outliers do not influence the distribution (from 16 contributed rates, 8 rates are excluded – 4 each of the highest and lowest rates).

The arithmetic mean (average) of the remaining mid quartiles’ values is then calculated to produce the IIBR, rounded to 5 decimal places.

In order to publish the rate, certain conditions must be fulfilled; which include:

• A minimum of 8 banks contributing to each tenor
• Banks must supply rates to all points on the curve (all tenors)
• Banks must quote every day – Sun-Thurs (although as a fallback and to help reduce the incidence of non fixing days a minimum number will be required (8)
• A contributor will be permitted to maintain the same rates for one additional day