WHY IS THERE A NEED TO TRANSITION TO SORA?


The Singapore Swap Offer Rate (SOR) relies on US Dollar London Interbank Offered Rate (USD LIBOR) in its computation. USD LIBOR will no longer be available as international regulators have announced that it would be discontinued, or cease to be representative immediately after 30 June 2023. As such, SOR will also be discontinued immediately after 30 June 2023.

In line with global interest rate benchmark reforms, Singapore Interbank Offered Rate (SIBOR) will similarly be discontinued soon. The 6-month SIBOR will be discontinued on 31 March 2022, while the more widely used 1-month and 3-month SIBOR will be discontinued immediately after 31 December 2024. To prepare for the discontinuation of SIBOR, all financial institutions have ceased usage of SIBOR in new loans.

To support a smooth transition away from SOR and SIBOR, the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee (ABS-SFEMC) had earlier identified the Singapore Overnight Rate Average (SORA) to replace SOR and SIBOR as the key interest rate benchmark for use in Singapore Dollar financial instruments such as loans, bonds and derivatives. SORA is an interest rate benchmark published daily by the Monetary Authority of Singapore (MAS). It is a transparent, robust and reliable interest rate benchmark that is underpinned by a deep and liquid overnight funding market.

SORA, SOR and SIBOR AT A GLANCE

SORA, SOR AND SIBOR AT A GLANCE

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