From: RegTech Analyst
The Monetary Authority of Singapore (MAS) has launched several initiatives to boost the adoption of its new interest benchmark.
Singapore Overnight Rate Average, or SORA, is, as the name suggests, a volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore between 8.00am and 6.15pm.
MAS has launched four new initiatives aimed at catalysing greater activity in SORA markets, safeguard the benchmark’s integrity and enhance market confidence in SORA.
“These initiatives mark an important milestone in supporting broad-based adoption of SORA in SGD financial markets,” said Jacqueline Loh, deputy managing director at MAS. “They complement the recently announced industry proposal to shift to a SORA-centered SGD interest rate market, by enhancing the robustness of SORA and supporting the development of deep, liquid and efficient SORA markets.”
The first initiative is that MAS will issue SORA-based floating rate notes (MAS FRN) on a monthly basis, starting from 21 August 2020. This is aimed at broadening MAS’ suite of money market instruments used to manage banking system liquidity and to dacilitate the adoption of SORA as a floating rate benchmark.
Secondly, MAS will enhance transparency and data availability on SORA. MAS has published the key features and calculation methodology of SORA.The document “SORA – Key Features and Calculation Methodology” is available. MAS will also publish, on a daily basis, key statistics involving SORA. These include aggregate volume and the highest/lowest transacted rates.
Thirdly, MAS has prescribed SORA as a financial benchmark under the Securities and Futures Act (SFA). This is supposed to ensure that regulatory and enforcement powers, including criminal and civil actions, can be taken against any market misconduct.
Finally, MAS has issued a Statement of Compliance with the IOSCO Principles for Financial Benchmarks (IOSCO Principles) for SORA. The IOSCO Principles have been endorsed by the Financial Stability Board, and have been adopted widely by benchmark administrators globally.
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