(Bloomberg) -- Singapore signaled that local banks and borrowers should move away from using the discredited London interbank offered rate to price financial products this year, even after global Libor authorities looked to delay its retirement.
A steering committee overseeing the transfer to a new benchmark emphasized on Tuesday that the proposed delay by the administrator of pivotal U.S. dollar Libor benchmarks shouldn't slow down Singapore's transition.
Policymakers around the world have been developing new gauges to replace Libor after European and U.S. banks were found to have manipulated it for their own gain. The ICE Benchmark Administration Ltd. late last year said it was consulting on plans to extend the retirement date for some Libor U.S. dollars rates until late June 2023, although regulators have been pushing for banks to move away from the benchmarks as soon as they can.
The Singapore committee, formed by the city-state's central bank, reaffirmed its previous guidance for lenders and borrowers to cease using the SGD swap offer rate (SOR), which is computed using Libor, for new SOR-linked cash market products by end-April 2021.
It outlined new measures on Tuesday to expand use of its new proposed benchmark, the Singapore overnight rate average, or SORA.
“The likely extension of SOR's end date to mid-2023 due to the extension of USD LIBOR cessation does not derail the industry's efforts to develop a SORA-centered interest rate market,” said Samuel Tsien, chairman of the committee and group chief Executive officer of OCBC Bank in a statement. “Financial institutions, large corporations, smaller enterprises and retail consumers need to understand and come on board the SORA regime.”
Read more about steering committee proposals here:
The likely added time before the end of Libor benchmarks should be used to build a “deep and robust SORA market,” according to Tsien.
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