Asia – IBOR Transition

Market data coverage across the Asian alternative reference rate market.

In a constantly evolving environment, financial institutions need to choose a data and analytics partner that is committed to agility and delivering timely new functionality for their business.

Why is the IBOR Transition taking place in Asia?

The IBOR (Interbank Offered Rate) transition in Asia is a process by which financial institutions and market participants will transition from using benchmark interest rates that are based on IBOR, such as LIBOR (London Interbank Offered Rate), to new benchmark rates that are based on overnight indexed rates (such as SORA or TONA).

How will the IBOR Transition affect financial markets in Asia?

The transition to these new rates is necessary because many of the existing IBORs are being phased out due to concerns about their accuracy and reliability. The new overnight indexed rates are seen as more robust and reliable, and the transition to these rates will help to ensure the continued functioning and stability of the global financial system.

The IBOR transition in Asia is being coordinated and implemented by the region’s central banks and financial regulators. It is expected to bring several benefits to the financial services industry, including greater transparency, increased efficiency and reduced operational risk. The transition will also pave way for more accurate pricing and risk management, making financial markets more resilient in the long run.

What are the new Alternative Reference Rates in Asia?

The new alternative reference rates in Asia are:

The Australian Overnight Index Average rate (AONIA), also known as the ‘RBA Cash Rate’ is based on the rate at which unsecured funds are lent in the domestic interbank market.

The HKD Overnight Index Average (HONIA) is an unsecured overnight lending rate, executed through the panel of five [5] contributing brokers. The Treasury Markets Association (TMA) has identified the HKD Overnight Index Average (HONIA) as the alternate reference rate to the HK Interbank Offered Rate (HIBOR) but there is no plan to discontinue HIBOR.

The Singapore Overnight Rate Average (SORA) is the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore. The Monetary Authority of Singapore administer SORA and will become the recommended rate for the derivatives market.

The Tokyo Overnight Average Rate (TONA) is a pre-existing OIS rate. The domestic version of TIBOR (DTIBOR) will continue to be used with EuroYen TIBOR (ZTIBOR) most likely to be ceased.

The THB Overnight Repurchase Rate (THOR), which has been developed by the Bank of Thailand to replace the THBFIX. The Bank of Thailand (BOT) has identified the overnight interbank repo to be the most suitable underlying market for the new alternative reference rate of Thai financial market. The new Thai reference rate is named Thai Overnight Repurchase Rate (THOR).

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