On 31 March 2021 the Singapore Steering Committee for SOR and SIBOR Transition to SORA (“SC-STS”) published a report providing guidance on new industry timelines to cease issuance of SOR derivatives and SIBOR-linked financial products. On the same day SC-STS and the Association of Banks in Singapore issued a joint press release (the “Press Release”) relating to the publication of the SC-STS report.
Both benchmarks–SOR and SIBOR–to date have been used widely as the benchmark rates in Singapore dollar financial instruments. SOR currently is expected to be discontinued in mid-2023, while SIBOR currently is expected to be discontinued by March 2022 (for 6-month SIBOR) and by the end of 2024 (for 1- and 3-month SIBOR). SORA is expected to become the key interest rate benchmark referenced in Singapore dollar financial instruments. SORA is the Singapore Overnight Rate Average published by the Monetary Authority of Singapore and reflects the volume weighted average rate of Singapore dollar unsecured overnight interbank lending transactions in Singapore.
The new timelines to cease issuance of SOR derivatives and SIBOR-linked financial products are:
- By mid-September 2021, all financial institutions and their customers should cease usage of SIBOR in new contracts. The Press Release notes that this timeline is consistent with the preparation for the discontinuance of 6-month SIBOR by March 2022 and 1- and 3-month SIBOR by the end of 2024.
- By mid-September 2021, all financial institutions and their customers should cease usage of SOR in new derivative contracts, except for specified purposes relating to the risk management and transition of legacy SOR positions to SORA. The Press Release notes that this timeline complements existing industry timelines to reduce the stock of outstanding SOR products ahead of SOR’s discontinuance in mid-2023, including the cessation of the use of SOR in new cash market products by end of April 2021.