UK:
Bank Of England Confirms Implementation Of SONIA Reforms
08 May 2018
Shearman & Sterling LLP
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On April 23, 2018, the BoE confirmed that it has implemented its
reforms to the SONIA interest rate benchmark. SONIA, the Sterling
Overnight Interbank Average Rate, which has been administered since
April 2016 by the BoE, is the existing unsecured reference rate for
the sterling Overnight Indexed Swap market.
The BOE announced in October 2017 that the methodology for
calculating SONIA would move from being based on a market for
brokered deposits (which has limited transaction volumes) to a
methodology involving a volume-weighted trimmed mean. The BOE has
also separately published the key features and policies for SONIA,
which summarize how SONIA is calculated and administered, including
the governance arrangements. The BoE intends to publish an
assessment of the benchmark's compliance with the International
Organization of Securities Commissions' Principles for
Financial Benchmarks in Summer 2018.
The BoE press release is available at: https://www.bankofengland.co.uk/-/media/boe/files/news/2018/april/sonia-reform-implemented.pdf
and the SONIA key features and policiesdocument is available at: https://www.bankofengland.co.uk/-/media/boe/files/markets/benchmarks/soniakey-features-and-policies
The content of this article is intended to provide a general
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