SONIA Complies With IOSCO Benchmark Principles

Shanny Basar

The Bank of England has today published its Statement of compliance with the IOSCO principles for Financial Benchmarks.

This shows the Bank complies with the principles, and therefore with international best practice, in its administration of SONIA.

The statement has been independently assured by Ernst and Young. SONIA was recommended by the Working Group on Sterling Risk-Free Reference Rates as the preferred risk-free rate for sterling markets in April 2017 and work is underway to transition away from sterling Libor to SONIA.

At its June 2018 meeting the Financial Policy Committee judged that “continued reliance of financial markets on Libor poses a risk to financial stability that can be reduced only through a transition to alternative rates”. This IOSCO compliance statement plays an important role in this transition process by providing transparency over the administration of SONIA to the expanding set of SONIA users.

The IOSCO Principles were published in 2013 and have since been endorsed by the Financial Stability Board, the G20’s body for international coordination of financial sector policies, as part of their reform work following benchmark manipulation scandals. The principles have since been adopted widely by benchmark administrators. Today’s publication is an important step in demonstrating the Bank’s commitment to meeting international best practice in its administration of SONIA. In complying with the principles, the Bank is meeting best practice in governance, quality of benchmark determinations, quality of methodology and accountability.

Source: Bank of England


Following the Statement of compliance today from the Bank of England showing it complies with the principles in its administration of SONIA, Gerard Jacob, Partner at Parker Fitzgerald said:

“This announcement from the Bank of England shows that SONIA has been recognised as fully complying with internationally recognised “gold seal” IOSCO Principles governing benchmark administration.

IOSCO principles promote the reliability of benchmark determination by addressing governance, methodology quality and aligning accountability. Importantly, IOSCO mandates that the benchmarks should be constructed from active, observable, transactional data, removing the reliance on expert judgement which was taken advantage of during Libor manipulation scandals.”

Source: Parker Fitzgerald,  an advisor and consultancy to financial institutions


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