DBS, StanChart execute Sora-linked interbank trade
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DBS Bank and Standard Chartered Bank (StanChart) have executed Singapore's first interbank option trade referencing the Singapore Overnight Rate Average (Sora).
The interbank trade was done on behalf of an undisclosed global real estate group to manage the potential market risk arising from a Sora interest rate option, both banks said yesterday.
The Sora interest rate option - which both parties say is another industry first - helps clients with loan facilities referencing Sora mitigate their downside risk in the event that the compounded daily Sora rate turns negative.
DBS group head of treasury and markets Andrew Ng said the interbank option trade by both banks marks a "significant milestone in widening the breadth of Sora derivatives necessary for a robust and liquid benchmark".
"By progressively offering more types of Sora derivatives, DBS is committed to ensuring a successful industry transition to Sora," he added.
StanChart global head of treasury markets Daniel Koh said: "We will continue to collaborate with our peers to develop more innovative financial products that can support our clients' smooth transition to Sora and meet the industry's guided timelines."
Singapore is in the midst of its transition from the Swap Offer Rate and the Singapore Interbank Offered Rate to Sora as the new interest rate benchmark.
THE BUSINESS TIMES
