Transition to sterling risk-free rates from Libor

Together with the FCA, we are working with market participants to catalyse a transition to using SONIA as the primary interest rate benchmark in sterling markets.

Overview

The Working Group on Sterling Risk-Free Reference Rates was established in 2015 to implement the Financial Stability Board's recommendation to develop alternative risk-free rates (RFRs) for use instead of Libor-style reference rates.  In April 2017, the Working Group recommended the SONIA benchmark as their preferred RFR and since then has been focused on how to transition to using SONIA across sterling markets. 

Catalysing transition to SONIA as the risk-free rate (2018 onwards)

The Working Group’s mandate is to catalyse a broad-based transition to using SONIA – the market’s preferred risk-free rate – as the primary sterling interest rate benchmark in bond, loan and derivatives markets, over the next four years. That reflects concerns about the sustainability of Libor beyond 2021.

The membership of the Working Group includes banks and dealers, investment managers, non-financial corporates and other sterling issuers, infrastructure firms and trade associations. We have published the full list of member firms and membership selection criteria.

We invite further expressions of interest in participating in transition work either as members of technical sub-groups or market sector forums to share views on aspects of the transition. This includes expressions of interest from professional services firms, in particular accountancy firms, law firms and financial consultancies where the work would be on a pro bono basis to provide expert input to the working group and related sub-groups.

*Please note: Market participants and professional service firms expressing their interest should not use their participation or contribution for marketing purposes.

For more details or to express interest, please contact RFR.Secretariat@bankofengland.co.uk.

PDFWorking Group on Sterling Risk-Free Reference Rates – Terms of reference

The choice of SONIA as the risk-free rate (2015 to 2017)

In the Working Group’s first phase they considered available risk-free rates and in April 2017, following two years of deliberations, the Working Group announced SONIA as its’ preferred risk-free interest rate benchmark for use in sterling derivatives and relevant financial contracts.  

The Working Group published a White Paper explaining its choice, seeking feedback on approaches to adoption and a gaining a better understanding of the views of a broad set of stakeholders. Feedback to the White Paper – and at an industry Roundtable hosted  by the Working Group in July 2017 – confirmed strong support for SONIA as the preferred sterling risk-free rate.

PDFWhite Paper: SONIA as the risk-free rate and approaches to adoption

This page was last updated 23 April 2018
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