By the end of 2021, the London Interbank Offer Rate (LIBOR), one of the global benchmark rates for financial products ranging from loans and bonds to derivatives, will be replaced. LIBOR is one of the Interbank Offer Rates (IBOR) used globally to set the benchmark rate for a wide range of financial products.
As a bank with a global network across Asia Pacific, Europe and North America, UOB is engaging regulators across various jurisdictions on the transition from IBOR-based interest rate benchmarks to appropriate alternatives in the banking products we offer to our customers.
We are committed to providing our customers advance notice before these changes take place to keep you updated on the changes that will impact you. We also encourage you to stay up to date on industry developments, including referring to UOB’s Rates Strategy reports on developments of the IBOR transition.
In 2014, the Financial Stability Board released a report recommending the replacement of the LIBOR. Regulators around the world are now working through an IBOR transition process to identify and to develop risk-free reference rates (RFRs). RFRs are overnight interest rate benchmarks based on actual transactions and are hence more transparent and more reflective of market conditions.
The transition from IBOR to RFRs is expected to occur by end-2021. Regulators and market participants, including UOB, are working toward effecting a smooth transition.
Several major economies are transitioning to alternative benchmark rates. Click the links in the table below for more information and the latest developments.
|IBOR Currency||IBOR Administrator||Alternative RFR||Alternative RFR Administrator||Public/Private Sector Working Group|
|Australia||Bank Bill Swap Rate (BBSW)||Australian Securities Exchange||Reserve Bank of Australia Interbank Overnight Cash Rate (AONIA)||Reserve Bank of Australia||The IBOR Transformation Australia Working Group|
|Canada||Canadian Dollar Offered Rate (CDOR)||Refinitiv||Canadian Overnight Repo Rate Average (CORRA)||Bank of Canada||Canadian Alternative Reference Rate Working Group|
Euro Interbank Offered Rate (EURIBOR)
|ICE Benchmark Administration (IBA)
European Money Markets Institute
|Euro Short-term Rate (€STR)||European Central Bank||Working Group on Euro Risk-free Rates|
|Hong Kong||Hong Kong Interbank Offered Rate (HIBOR)||Treasury Markets Association (TMA)||Hong Kong Dollar Overnight Index Average (HONIA)||TMA||Working Group on Euro Risk-free Rates|
Tokyo Interbank Offered Rate (TIBOR)
Japanese Bankers Association TIBOR Administrator
|Tokyo Overnight Average Rate (TONA)||Bank of Japan||Cross-industry Committee on Japanese Yen Interest Rate Benchmarks|
|Singapore||Singapore Dollar Swap Offer Rate||The Association of Banks in Singapore Benchmarks Administration Co||Singapore Overnight Rate Average (SORA)||Monetary Authority of Singapore||Steering Committee for SOR Transition to SORA|
|Switzerland||LIBOR||IBA||Swiss Average Rate Overnight (SARON)||SIX Swiss Exchange||National Working Group on Swiss Franc Reference Rates|
|Thailand||Thai Baht Interest Rate Fixing (THBFIX)||Bank of Thailand||Thai Overnight Repurchase Rate (THOR)||Bank of Thailand||Steering Committee on Commercial Banks' Preparedness on LIBOR Discontinuation|
|UK||LIBOR||IBA||Sterling Overnight Index Average (SONIA)||Bank of England||Working Group on Sterling Risk-free Reference Rates|
|US||LIBOR||IBA||Secured Overnight Financing Rate (SOFR)||Federal Reserve Bank of New York||Alternative Reference Rates Committee|
Source: "Benchmark Reform and Transition from LIBOR", The International Swaps and Derivatives Association (ISDA).
In Singapore, there are two key Singapore Dollar (SGD) interest rate benchmarks, namely the Swap Offer Rate (SOR) and the Singapore Interbank Offered Rate (SIBOR) , that are widely referenced in financial contracts for products such as bonds, derivatives, loans, mortgages and structured notes.
The Monetary Authority of Singapore (MAS) also publishes the Singapore Overnight Rate Average (SORA), which is the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore. More details on SORA are available on
The Association of Banks in Singapore's (ABS) website and the MAS website.
Expected cessation of SOR
SOR is affected by the expected discontinuation of LIBOR after 2021. This is because the SOR methodology relies on US Dollar (USD) LIBOR in its computation.
In August 2019, ABS and the Singapore Foreign Exchange Market Committee (SFEMC) announced that they had identified SORA as the most suitable and robust interest rate benchmark to replace SOR.
SORA has been published by the Monetary Authority of Singapore (MAS) since 2005 and is a robust benchmark that is underpinned by a deep and liquid overnight interbank funding market. You may wish to visit the ABS website for more details on SORA.
To ensure a smooth transition to SORA, the MAS has set up an industry-led Steering Committee for SOR Transition to SORA (SC-STS). The SC-STS, comprising senior representatives from key banks, relevant industry associations and MAS, provides strategic direction on industry proposals to develop new products and markets based on SORA while supporting this transition process. In March 2020, the SC-STS released the transition roadmap and their key priorities to achieve a smooth transition to SORA. Read the report here.
On 27 October 2020, the SC-STS announced industry timelines to support a coordinated shift away from the use of the SOR in financial products and concurrently, to accelerate usage of SORA. The timelines seek to reduce exposures to SOR steadily well before end-2021, in preparation for USD LIBOR and SOR discontinuation, while ensuring that SORA-based products are available to meet the financing needs of customers. After end-April 2021, SORA is expected to be the de facto floating rate benchmark for all institutional SGD financing activity.
Proposed discontinuation of SIBOR
Arising from global efforts on interest rate benchmark reform, ABS and the SFEMC have initiated the reform of SIBOR. They have assessed that it will be beneficial in the long run for SGD financial markets to shift to a SORA-centred SGD interest rate market. This will avoid market segmentation, facilitate transparency and easier comparison of loan pricing, and promote the development of deep and efficient SGD financial markets.
The ABS announced in June 2020 that the 12-month SIBOR will be discontinued in end-2020, with the last publication to be on
31 December 2020. The discontinuation of the 12-month SIBOR is due to low market usage as well as a lack of underlying transactions underpinning this tenor.
In July 2020, ABS, the SFEMC and the SC-STS issued a consultation report which recommends the discontinuation of SIBOR and a shift to the use of SORA as the main interest rate benchmark for SGD financial markets. Read the report here.
The 6-month SIBOR is expected to be discontinued when or shortly after the 6-month SOR is discontinued after end-2021. The discontinuation of 6-month and 12-month SIBOR is not expected to impact many customers given the low market usage of these rates.
The transition of financial contracts referencing the more widely-used 1-month and 3-month SIBOR will take place after the industry has substantially completed the transition from SOR to SORA. As such, 1-month and 3-month SIBOR will only be discontinued in three to four years, potentially by 2024, to provide sufficient time for the transition of existing SIBOR contracts.
Publication of SORA
SORA is derived from taking the volume-weighted average of all the SGD rates of overnight cash transactions done in Singapore in the interbank market from 8.00 am to 6.15 pm for a given business day. It is then published by 9.00am the next business day on the MAS website.
If you wish to find more about Singapore’s transition to SORA, you can visit the ABS website. The SC-STS has also published a set of market guides to help users prepare for the shift to SORA across a range of financial products, including derivatives, floating rate notes, business and retail loans.
If you have outstanding contract(s), for example loan(s) or derivative(s) that reference(s) SOR or SIBOR, we will be contacting you with details of how you may be impacted. We will provide you with ample notice to consider your options before the transition takes place.
You can also contact us through our Customer Service hotline or speak with your relationship manager or client adviser for further assistance.