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.
Next steps
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.
- Overview on the Usage of SORA in Loans: Customer Segments and Preferences. This sets out how SORA can be used in loans to meet the various needs of financial firms, large corporates, small- and medium-sized enterprises and retail customers.
- SC-STS End-User Checklist on Benchmark Transition. This provides non-financial corporates, investment firms, insurers and other buy-side participants with a list of key steps needed to implement effectively the transition from SOR to SORA, as well as from LIBOR to alternative reference rates.
- SORA Market Compendium on the Transition from SOR to SORA. This provides market participants with a comprehensive overview of SORA market conventions across derivatives, floating rate notes, business and retail loans, and outlines considerations for contractual and technical specifications of SORA products and contractual fallbacks for relevant SOR contracts.
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.
