Refinitiv set to launch Term SONIA benchmark as end of LIBOR approaches

The Refinitiv Term SONIA benchmark supports market participants including lenders and borrowers with their migration away from GBP LIBOR.

Today Refinitiv announced its plan to launch the Refinitiv Term SONIA benchmark on January 11, 2021. This follows the previous announcement in July 2020 that Refinitiv would launch the prototype version of the same rate.

The London InterBank Offered Rate (LIBOR) underpins hundreds of trillions of dollars of financial instruments and contracts, making it one of the most widely used benchmarks in the world.

Following announcements by the Financial Conduct Authority (FCA) the industry anticipates the cessation of LIBOR in the foreseeable future.

The Refinitiv Term SONIA benchmark supports market participants including lenders and borrowers with their migration away from GBP LIBOR.

Refinitiv Term SONIA rate leverages the firm’s extensive experience in administering benchmarks by creating a British Pound Sterling (GBP) forward-looking term risk-free rate available in one-month, three-month, six-month and twelve-month tenors that is published daily at 11:50 London time. A waterfall methodology ensures the rate is robust and can be published in almost all circumstances. The primary data source is executable bids and offers from TP ICAP’s i-Swap and Tradition’s Trad-X electronic platforms. The secondary source of data is streaming bids and offers from Tradeweb’s institutional electronic swaps platform. The rate also has an integrated fallback that applies the change in compounded SONIA in advance to the previous day’s rate.

Following the release of the Refinitiv Term SONIA prototype in July 2020 Refinitiv has worked closely with the industry to facilitate testing and refine the methodology.

Since July the prototype rate has been viewed over 20,000 times by over 600 users on Refinitiv Eikon and 200 users have accessed the rate via the dedicated website. In September Refinitiv issued a Consultation Paper and following this minor enhancements were made.

Jacob Rank-Broadley, Head of LIBOR Transition, Benchmarks & Indices at Refinitiv said: “Following extensive engagement with the industry and a positive reception from potential users testing the prototype we are pleased to announce the launch of our regulatory compliant Refinitiv Term SONIA benchmark and its migration to RBSL on January 11, 2021. We hope this will support those markets requiring a term rate and ensure a smooth transition away from GBP LIBOR.”

From January 11, 2021 Refinitiv Term SONIA will be administered by Refinitiv Benchmark Services (UK) Limited (RBSL), a wholly owned subsidiary of Refinitiv, in compliance with UK Benchmarks Regulation.

From this date licensed clients will be able to use the benchmark as a reference rate in financial instruments and financial contracts, and for valuation and pricing activities.

Sang Lee, Managing Partner at Aite Group, said: “As the financial industry approaches the unknown challenges and opportunities of 2021, launching a Term SONIA Reference Rate on January 11 serves as an essential and credible tool to facilitate transition away from LIBOR. More than ever the industry will require a robust and transparent rate that is administered by an experienced provider and subject to the highest regulatory standards, so markets can continue to function and grow even during periods of great uncertainty and stress.”

  • Read this next

    Retail FX

    Weekly Roundup: John Oliver rips into MetaTrader, Binance to pay $10 billion

    Welcome to this week’s roundup, where we delve into the latest developments in the Forex, Fintech, and cryptocurrency markets. Stay ahead of the curve with our comprehensive overview of the week’s most impactful events and trends across these dynamic sectors.

    Retail FX

    Lark Funding reopens to US traders, MyFundedFX picks cTrader

    Canada-based prop trading firm Lark Funding announced it will once again welcome clients from the United States.

    Institutional FX

    Cboe FX volume falls to lowest level since summer

    Cboe’s institutional spot FX platform, known as Cboe Spot, today announced its trading volume for the month ending February 2024, which took a step back after a strong rebound in December.

    Retail FX

    ThinkMarkets secures lucrative DFSA license in Dubai

    Melbourne-based broker ThinkMarkets has secured a license from the Dubai Financial Services Authority (DFSA) after it has already incorporated its new subsidiary in the Dubai International Financial Center (DIFC).

    Digital Assets

    New Horizen Lays Out Its Vision Of A Modular, Proof Verification Layer For Web3 Networks

    Horizen is forging a new path for the future of blockchain with its New Horizen initiative, which is building a modular Proof Verification layer that’s dedicated to verifying cryptographic proofs for any settlement layer, beginning with Ethereum. 

    Digital Assets

    Karma3 Labs Raises a $4.5M Seed Round Led By Galaxy and IDEO CoLab to Build OpenRank, a Decentralized Reputation Protocol

    Using OpenRank, developers and web3 companies can build consumer apps where people can discover, use, fund, read, or buy something on-chain without worrying about getting spammed or scammed.

    Digital Assets

    Worldcoin down as Elon Musk sues OpenAI CEO Sam Altman

    Worldcoin’s (WLD) token dropped following news of a lawsuit against related company OpenAI. The lawsuit was filed by Elon Musk and accused OpenAI and CEO Sam Altman of breach of contract.

    Institutional FX

    Exegy’s Liquidity Lamp adds intraday data to outperform S&P 500 by 31.8%

    Exegy has incorporated intraday signals into its AI-powered iceberg order detection tool, Liquidity Lamp. By adding intraday data to a baseline mean reversion strategy, Exegy’s model outperformed the baseline by 10.5% and the S&P 500 (SPY) by 31.8%, respectively in the out-of-sample testing.

    Industry News

    Think Elon Musk backed your crypto exchange? ASIC’s latest reveal may shock you

    In an absolutely shocking turn of events that nobody could have possibly seen coming, the Australian Securities and Investments Commission (ASIC) has bravely stepped forward to reveal that, yes, those videos of Elon Musk passionately endorsing a cryptocurrency exchange are as fake as a three-dollar bill.

    <