MAS announced expansion of the mandate of the Steering Committee for Swap Offer Rate (SOR) transition to Singapore Overnight Rate Average (SORA), to enable it to oversee the interest rate benchmark transition from Singapore Interbank Offered Rate (SIBOR) to SORA. The Committee will be renamed as the Steering Committee for SOR and SIBOR Transition to SORA (SC-STS) and will be responsible for providing strategic direction and overseeing smooth implementation of the transition to SORA. This follows a joint industry report announcing the discontinuation of the remaining SIBOR tenors in phases over the next four years.
The joint industry report notes that, while growth in the SORA derivatives market has been encouraging, the underlying activity is still not sufficient to underpin a robust term-SORA benchmark. Other jurisdictions face similar challenges in the development of term benchmarks based on risk-free rate derivatives. As such, the development of a term-SORA market is unlikely in 2021 and remains uncertain thereafter. The SC-STS will integrate the work on SIBOR-to-SORA transition with its current roadmap for SOR-to-SORA transition, such that the transition of legacy one-month and three-month SIBOR contracts will take place after the key SOR-to-SORA initiatives have been substantially completed.
The industry report also presents the timeline for the SIBOR-to-SORA transition. In the first half of 2021, timeline will be announced to cease usage of SIBOR in new contracts. Nevertheless, banks may face operational resource constraints if they have to prepare for the simultaneous discontinuation of both benchmarks, six-month SIBOR will be discontinued three months after six-month SOR is discontinued. In the second half of 2022, the authorities would explore transition approach for one-month and three-month SIBOR contracts and, by the end of 2024, one-month and three-month SIBOR will be discontinued. The SC-STS is fully committed to supporting the industry’s transition away from both SOR and SIBOR and will outline a roadmap for this, ahead of the end of 2021. SC-STS encourages market participants to shift away from usage of SIBOR as soon as possible, to reduce reliance on a benchmark that will be discontinued, and to contribute to the deepening of new SORA markets.
Keywords: Asia Pacific, Singapore, Banking, SORA, SIBOR, COVID-19, SC-STC, IBOR Reform, Derivatives, FED
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleFCA Welcomes IBA Consultation to Cease Publication of LIBOR Settings
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)