BoE Statement on Conventions for Referencing SONIA in New Contracts
BoE released a statement from the Working Group on Sterling Risk-Free Reference Rates, along with an aggregated summary of responses to the March 2019 discussion paper, on SONIA conventions and SONIA referencing in new contracts. The discussion paper captured the most significant conventions identified at the time by the working group. In addition, the Infrastructure sub-group published a working paper to aid in the operational processing of loans referencing alternative risk-free rates, focusing on potential enhancements to loan systems for vendors and proprietary system owners. The sub-group has also published an update to its standing priority list with regard to infrastructure developments for the risk-free rate transition in UK markets.
The purpose of the statement is to continue to support market participants in their adoption of SONIA and provide further information when referencing SONIA in bonds, loans, and derivatives. In doing so the working group aims to further support template documentation and liquidity in SONIA referencing products. The March discussion paper had invited market participants to provide feedback to support the specific transition work program. It captured the most significant conventions identified at the time by the working group and provided information intended to support market participants in their preparations for addition of SONIA as well as infrastructure providers and calculation agents in their system development.
The Working Group on Sterling Risk-Free Reference Rates was established in 2015 to implement the FSB recommendation to develop alternative risk-free rates for use, instead of LIBOR-style reference rates. In April 2017, the working group recommended SONIA benchmark as their preferred risk-free rate and since then the group has been focused on how to transition to using SONIA across sterling markets.
Related Links
- Statement and Summary of Responses (PDF)
- Working Paper on Loan Processing (PDF)
- Priority List (PDF)
- Discussion Paper, March 2019 (PDF)
- Transition to Sterling Risk-Free Rates
Keywords: Europe, UK, Banking, Securities, SONIA, LIBOR, Risk-Free Rates, Interest Rate Benchmarks, BoE
Previous Article
Dubai FSA Updates Sourcebook Module on Application Forms and NoticesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
