Singapore Exchange Lists 3-Month Singapore & Tokyo Overnight Rate Average Futures Contracts SORA & TONA to Allow Investors to Trade & Hedge Interest Rate
7th August 2024 | Hong Kong
The Singapore Exchange (SGX) has listed the new 3-Month Singapore & Tokyo Overnight Rate Average futures contract (SORA & TONA) to allow investors to trade & hedge interest rate. SGX Three-Month Singapore Overnight Rate Average (SORA) Futures – Feedback from market participants has encouraged SGX to launch Three-Month SORA futures as summarized below. The contract closely resembles existing STIR futures (Short-Term Interest Rate) referencing other Overnight Rates, facilitating hedging of Singapore interest rate risks and aiding price discovery particularly in the short end of the curve. SORA ( Singapore Overnight Rate Average ) is the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore between 8am and 6.15pm. SGX Three-Month Tokyo Overnight Average Rate (TONA) Futures – To equip market participants with a complete toolkit for trading the Japanese interest rate curve, SGX has announced the launch of 3-Month TONA Futures. TONA ( Tokyo Overnight Average Rate ) is volume-weighted average rate of all transactions in the interbank Japanese yen (“JPY”) uncollateralized overnight call money market. The Final Result of TONA is published by the Bank of Japan (BOJ) on the next Japan Bank Business Day at JST 10am or SGT 9am. In Japan, TONA has been identified as an alternative Risk-Free Rate(RFR) to the JPY London Interbank Offered Rate (“LIBOR”) in the reform of the interest rate benchmark. By end of 2023, the ISDA-Clarus RFR Adoption Indicator for JPY was at 98.8%, which indicates that 98.8% risk-weighted DV01 across JPY interest rate derivatives were traded in RFRs.”
“ Singapore Exchange Lists 3-Month Singapore & Tokyo Overnight Rate Average Futures Contracts SORA & TONA to Allow Investors to Trade & Hedge Interest Rate “
KC Lam, Global Head of Foreign Exchange (FX) & Rates at SGX Group: “Anchored to benchmarked central bank overnight interest rates, STIR futures allow participants to hedge interest rate risk in a transparent market at a single price point. With the growing issuance of cash products referencing SORA, this exchange-traded contract will help fill a gap in the market for Singapore interest rates trading and hedging instruments which provide greater transparency and capital efficiencies, and we welcome Standard Chartered as a market participant.”
Liu Chee Wei, Head, Markets, Singapore & ASEAN at Standard Chartered: “Since the interbank offered rate (IBOR) transition and the successful launch of SORA, the market depth and volumes of interest rate derivatives have grown significantly. Complementing the existing suite of instruments, this new product alternative helps enhance hedging and risk management, supporting the growing SORA over-the-counter (OTC) derivatives market across a wide range of client segments. As a leading market participant in the Singapore derivatives space, Standard Chartered Bank looks forward to the new opportunities presented by this new SORA futures instrument and block market trading.”
Singapore Exchange Lists 3-Month Singapore & Tokyo Overnight Rate Average Futures Contracts SORA & TONA to Allow Investors to Trade & Hedge Interest Rate
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