The Steering Committee for SOR Transition to SORA (SC-STS) has announced timelines for the end of SGD Swap Offer Rate (SOR) in financial products, and published market guidance to support the transition to the Singapore Overnight Rate Average (SORA).
After end-April 2021, SORA is expected to be the de facto floating rate benchmark for all institutional SGD financing activity, and to support this transition, by April 2021, financial institutions should stop issuing SOR-linked loans and securities that mature after end-2021, SC-STS said in an announcement on Tuesday.
All domestically systemically important banks should be ready to offer a full-suite of SORA-based products to their customers by end-February 2021, while other banks have up to end-April 2021 to offer new SORA-based products.
«MAS expects all market participants to take clear and proactive steps to reduce their exposures to SOR, and to actively promote the understanding of and migration to SORA financial products,» Jacqueline Loh, deputy Managing Director, Monetary Authority of Singapore (MAS), said in the announcement.
Support for Shift
SOR is set to be discontinued alongside LIBOR discontinuation after end-2021, and SORA had been identified previously as the replacement benchmark in SGD funding markets.
To support the industry-wide transition, SC-STS has also published a set of market guides to help users prepare for the shift away from SOR, and for the adoption of SORA in financial products such as derivatives, floating rate notes, business and retail loans. The guides include a report on customer segments and preferences, a SORA market compendium, and an end-user checklist.
The Monetary Authority of Singapore (MAS) has previously said that the SORA, which is a transaction-based interest rate benchmark underpinned by the SGD overnight interbank funding market, is more transparent and is aligned with the development that risk-free rates are being used across the global markets as new benchmark rates for financial markets.
