Singapore Central Bank MAS Announces Initiatives to Support New Interest Rate – Singapore Overnight Rate Average (SORA)
6th August 2020 | Singapore
The Central bank of Singapore, Monetary Authority of Singapore (MAS) has announced several initiatives to support the adoption of the new interest rate, the Singapore Overnight Rate Average (SORA). The new SORA rate was introduced to replace the existing interest rates benchmarks in Singapore – the Singapore Interbank Offer Rate (SIBOR) and the Swap Offer Rate (SOR).
” SORA becomes singapore new interest rate benchmark, to replace SIBOR & SOR “
New Initiatives to Support SORA
The new initiatives includes launching SORA-based Floating Rate Notes, providing Compounded SORA Rates and SORA Index, designating SORA as a financial benchmark under the Securities Futures Act (SFA) and compliance with the IOSCO Principles.
New Initiatives:
- Launching SORA-based Floating Rate Notes to promote liquidity, SORA-benchmarking and as a Pricing reference.
- Provide Compounded SORA Rates and SORA Index to promote transparency and data availability
- SORA becomes a financial benchmark under Securities Futures Act (SFA)
- Compliance with IOSCO Principles (International best practices)
What is SORA – Singapore Overnight Rate Average
SORA stands for Singapore Overnight Rate. It is defined as the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore between 8.00am and 6.15pm.
SORA for a given business day, will be published by 9.00am on the next business day.
Learn More:
- SORA Interest Rate Benchmark
- SORA Features & Calculation Methodology
- Singapore Interest Rates History
Moving from SIBOR and SOR to SORA
In August 2019, the Association of Banks in Singapore (ABS) and the Singapore Foreign Exchange Market Committee (SFEMC) had recommended SORA as the most suitable and robust benchmark to replace the SGD Swap Offer Rate (SOR) for SGD interest rate derivatives, given the likely discontinuation of LIBOR after 2021.
At the same time, MAS had also established an industry-led Steering Committee from key banks, industry association and MAS to provide strategic direction and oversee the transition from SOR to SORA. The steering committee is led by appointed Chairman, Samuel Tsien, who is the Group CEO of OCBC Bank and ABS Chairman and 14 other members including Jacqueline Loh, Deputy Managing Director, Markets and Development of MAS.
Steering Committee
| S/N | Member | Representatives |
| 1 | OCBC | Samuel Tsien (Chairman) |
| 2 | Monetary Authority of Singapore (MAS) | Jacqueline Loh |
| 3 | Barclays Bank | Felix Green |
| 4 | Citicorp Investment Bank | Jose Luis Yepez |
| 5 | DBS Bank | Andrew Ng Wai Hung |
| 6 | Deutsche Bank | David Kevin Lynne |
| 7 | HSBC Bank | Anthony William Cripps |
| 8 | JP Morgan Chase Bank | Brijen Puri |
| 9 | Maybank | Dr John Lee Hin Hock |
| 10 | Standard Chartered Bank | Daniel Koh Kok Yu |
| 11 | United Overseas Bank | Chan Kok Seong |
| 12 | Association of Corporate Treasurers (Singapore) (ACTS) | Goh Seng Ti |
| 13 | Investment Management Association of Singapore (IMAS) | Jenny Sofian |
| 14 | Life Insurance Association of Singapore (LIAS) | Nishit Piyush Majmudar |
| 15 | Singapore Foreign Exchange Market Committee (SFEMC) | Lam Kun Kin |
1. SORA-based Floating Rate Notes: Liquidity, Benchmarking and Pricing Reference
Starting from 21st August 2020, MAS will issue SORA-based floating rate notes (MAS FRN) on a monthly basis.
This will provide a wider range of money market instruments that are used to manage banking system liquidity. The notes will also facilitate using SORA as a floating rate benchmark, providing pricing reference for SORA cash products and hedging activities through the SORA derivatives market.
2. Compounded SORA Rates and SORA Index: Transparency and Data Availability
MAS will enhance transparency and data availability on SORA, including publishing key features, calculation methodology and daily release of key statistics. SORA rates for 1 month, 3 month, 6 months and a SORA Index will facilitate calculation of Compounded SORA over specific periods.
Both the Compounded SORA rates and SORA Index will provide market participants with a standardised and transparent basis to derive rates for given tenors.
3. SORA – Financial Benchmark under SFA Act
MAS has designated SORA as a financial benchmark under the Securities and Futures Act (SFA).
This will ensure that regulatory and enforcement powers, including criminal and civil actions, can be taken against any market misconduct relating to SORA. This will also safeguard the integrity and robustness of SORA, given its growing role as a key interest rate benchmark for SGD financial markets.
4. SORA Compliance with IOSCO Principles
MAS has issued a Statement of Compliance with the IOSCO Principles for Financial Benchmarks (IOSCO Principles) for SORA.
Compliance with IOSCO Principles means that the administration of SORA meets international best practice relating to benchmarks administration, which will generate broader market confidence by both domestic and international market participants in the use of SORA.
About IOSCO The International Organization of Securities Commissions (IOSCO) is the international body that brings together the world's securities regulators and is recognized as the global standard setter for the securities sector. IOSCO develops, implements and promotes adherence to internationally recognized standards for securities regulation. It works intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda. IOSCO was established in 1983. Its membership regulates more than 95% of the world's securities markets in more than 115 jurisdictions; securities regulators in emerging markets account for 75% of its ordinary membership.
Jacqueline Loh, Deputy Managing Director, MAS:
“These initiatives mark an important milestone in supporting broad-based adoption of SORA in SGD financial markets. 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.”
List of Reporting Banks for SORA (Updated August 2020):
- ABN AMRO Bank
- Australia and New Zealand Banking Group
- Barclays Bank
- BNP Paribas
- Chang Hwa Commercial Bank
- CIMB Bank
- Citibank
- Commerzbank
- Credit Agricole Corporate & Investment Bank
- DBS Bank
- Deutsche Bank AG
- HL Bank
- Industrial and Commercial Bank of China
- ING Bank
- KBC Bank
- Malayan Banking Berhad
- Mizuho Bank
- MUFG Bank
- National Australia Bank
- Natixis
- Oversea-Chinese Banking Corporation
- Standard Chartered Bank
- Hongkong and Shanghai Banking Corporation
- United Overseas Bank
About Monetary Authority of Singapore 
(MAS)
The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator. The Monetary Authority of Singapore (MAS) promotes sustained, non-inflationary economic growth through appropriate monetary policy formulation and close macroeconomic surveillance of emerging trends and potential vulnerabilities.
As an integrated financial supervisor, MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore – banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. It is also responsible for well-functioning financial markets, sound conduct, and investor education.
MAS also works with the financial industry to promote Singapore as a dynamic international financial centre. It facilitates the development of infrastructure, adoption of technology, and upgrading of skills in the financial industry.
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