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TORA

JPY – Tokyo Overnight Average Rate (TONA)

Tokyo Overnight Average Rate (TONA): An Alternative Reference Rate for Tokyo Financial Markets
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The following 5 datasets are available for resale as part of the TONA data package:

Dataset Description
Tenors
JPY OIS TONA (LCH Cleared)
ON – 40Y
JPY OIS TONA (JSCC Cleared)
ON – 40Y
JPY OIS TONA vs USD SOFR
1M – 40Y
JPY OIS TONA vs EUR ESTR
1Y – 40Y
JPY TONA Forward Starting IMM Dated OIS
1-8 IMM Dates
SUMMARY

The transition to TONA brings a number of benefits to the financial services industry in Thailand.

What is TONA?

As the world of finance continues to evolve, financial services professionals are always seeking new and improved methods for managing risk, making informed decisions, and growing their businesses. One alternative reference rate that is gaining traction in the financial industry is TONA (Tokyo Overnight Average Rate), which is an alternative reference rate for the Yen London Interbank Offered Rate (JPY LIBOR).

TONA is a pre-existing OIS rate.The domestic version of TIBOR (DTIBOR) will continue to be used whilst Euroyen TIBOR (ZTIBOR) is most likely to be ceased.

TONA reflects the average overnight cost of unsecured borrowing in the Japanese market. It is designed to provide a stable and transparent measure of the cost of borrowing in Japan, and is calculated using data submitted by participating financial institutions.

How is TONA calculated?

TONA is calculated by the Bank of Japan (BOJ) based on the weighted average of interest rates charged by major financial institutions for overnight loans in the Japanese interbank market. The BOJ collects data on interest rates and credit conditions in the interbank market every business day and publishes the TONA on its website.

As a rate that is based on actual market transactions, it provides greater transparency and reduces the risk of rate manipulation. This in turn helps to ensure the stability and reliability of the financial markets in Tokyo

Key features of TONA

The transition to TONA as an alternative reference rate brings several benefits to financial services. These features include:

  • A more stable and reliable benchmark, as it is based on real market transactions
  • Enhanced transparency and accountability, as the methodology for calculating TONA is publicly available
  • Helps to promote market efficiency, as it provides a clear and accurate benchmark for pricing financial instruments.
BENEFITS OF TONA

Financial services can use TONA in several ways:

Setting interest rates on loans and financial products

Evaluating the cost of borrowing and lending in Japan

Making informed investment decisions

Hedging against interest rate risk

Calculating the value of financial derivatives and other securities

Monitoring market trends and conditions in Japan’s financial sector.

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