Monday, 13 July 2020

SC-STS welcomes launch of central clearing for SORA derivatives

 The Steering Committee for SOR Transition to SORA (SC-STS), established by the Monetary Authority of Singapore, welcomed the launch of central clearing for over-the-counter (OTC) Singapore Overnight Rate Average (SORA) derivatives by LCH (clearing house). This will deepen liquidity in OTC SORA derivatives and catalyse the growth and development of the overall SORA market.     

LCH’s announcement on the central clearing of OTC SORA derivatives includes SORA Overnight Indexed Swaps (OIS) and basis swaps between SORA and SGD Swap Offer Rate (SOR). Central clearing arrangements allow wholesale market participants to transact through a single central counterparty, instead of bilaterally with each other.

This helps to mitigate counterparty credit risks and allows participants to undertake greater volumes of transactions, while reaping operational and cost synergies. Enabling central clearing arrangements for SORA OIS and SORA-SOR basis swaps will catalyse interbank activity in these derivative products and anchor SORA’s role as the replacement benchmark for SOR.  

Implementing central clearing arrangements for SORA derivatives is a key priority in the SC-STS’ transition roadmap to facilitate the development a deep and liquid SORA market. This follows the recent publication of SC-STS’ response to feedback received on the consultation for the transition from SOR to SORA.

Daniel Koh, the global head of treasury markets at Standard Chartered Bank, who chairs the Steering Committee’s work on SORA derivatives, said, “We strongly welcome LCH’s launch of central clearing for SORA instruments. This is a major milestone. It is an important enabler that will allow key local and international banks to step up their efforts to build a vibrant SORA derivatives market. This will help broaden participation in SORA derivatives trading, enhance price discovery and facilitate the transition of legacy SOR derivatives to SORA.”

Re-disseminated by The Asian Banker

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28 August 2020 | China
Finance Vietnam 2020
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MEA International Finance Convention 2020
16 September 2020 | UAE
Wealth & Society Conference - Middle East 2020
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Wealth & Society Conference 2020
24 September 2020 | United Kingdom