The transition was made given USD LIBOR's likely discontinuation.
The Monetary Authority of Singapore (MAS) has set up the Steering Committee that will oversee the transition of interest rate benchmark from SGD Swap Offer Rate (SOR) to Singapore Overnight Rate Average (SORA), according to a press release.
The Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee (ABS-SFEMC) reported that financial contracts referencing SOR particularly on SGD interest rate derivatives should transition to referencing SORA given that the USD LIBOR may likely discontinue.
UK authorities announced that the USD LIBOR, which is used in the computation of SOR, will no longer be sustained by regulatory powers after 2021.
ABS-SFEMC said in a media release that they picked SORA as an alternative due to its being "a transaction-based benchmark underpinned by a deep and liquid overnight funding market."
The industry-led SC-STS, chaired by OCBC Bank CEO and ABS chairman Samuel Tsien, is set to provide strategic direction on industry proposals for the development of products and markets based on SORA.
They will also seek feedback with stakeholders and raise awareness on issues surrounding the transition.
Its members are composed of senior representatives from key banks in Singapore, as well as relevant industry associations and MAS.
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