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OCBC Bank and Standard Chartered complete Singapore’s first OIS trade based on SORA

OCBC Bank and Standard Chartered have announced that they have completed Singapore’s first overnight indexed swap (OIS) derivatives transaction using the Singapore Overnight Rate Average (SORA) as the interest rate benchmark. This comes after the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee (ABS-SFEMC)’s 30 August 2019 consultation report, which set out a roadmap for the development of new SORA-based markets.

Singapore provides a wide range of hedging instruments that financial market participants can benefit from. As the first financial institutions in Singapore to successfully transact in derivatives that reference SORA, the two banks have taken the first step to help pave the way for further SORA adoption as an interest rate benchmark. The trade completed is a one-year interest rate swap fixed against SORA.

“This marks a key first step in our efforts in Singapore to develop a vibrant and active interest rate derivatives market based on SORA," said Daniel Koh, global head of Treasury Markets at Standard Chartered Bank. "We will continue to work with the industry to develop best practices and market conventions to encourage the adoption of SORA-based products.”

“The global financial industry is moving towards referencing overnight Risk Free Rates as they are anchored on active and liquid underlying market transactions as part of daily liquidity management or cash management balancing," said Lam Kun Kin, head of Global Treasury and Investment Banking at OCBC Bank. "With this first derivatives transaction involving the use of SORA, we hope to set out the market conventions for SORA-based products and develop some baseline activity for market participants to gain confidence in SORA. The financial industry needs to come together to build a liquid market to allow for an easier transition to SORA.”

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This item appears in the following sections:
Risk Management
Financial Risk Management
% Rate Hedging & Risk Management
Cash & Liquidity Mngm in Asia-Pacific
Asia

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