Interest Rate Benchmark Transition

MAS introduced initiatives to drive interest rate benchmark transition

July and December 2020

In July 2020, the Association of Banks in Singapore (ABS), the Singapore Foreign Exchange Market Committee (SFEMC) and the Steering Committee for SOR Transition to SORA (since been renamed as the Steering Committee for SOR & SIBOR Transition to SORA) published its recommendations to discontinue the Singapore Interbank Offer Rate (SIBOR), and to shift to the use of the Singapore Overnight Rate Average (SORA) as the main interest rate benchmark for the Singapore Dollar financial markets.

To facilitate price discovery in the nascent SORA derivatives market, MAS commenced daily auctions of SORA derivatives among key dealer banks in June 2020. To further support the development of new SORA markets, MAS announced on 5 August 2020 that it would issue SORA-based floating rate notes (MAS FRN) on a monthly basis, starting from 21 August 2020, and enhance transparency and data availability on SORA. MAS also prescribed SORA as a financial benchmark under the Securities and Futures Act (SFA) and issued a Statement of Compliance with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks for SORA.

MAS further announced on 11 December 2020 that the mandate of the Steering Committee for SOR Transition to SORA would be expanded to oversee the interest rate benchmark transition from SIBOR to SORA in phases over the next four years.