LCH Clears First SGD Interest Rate Swaps Referencing SORA

Global clearing house LCH announced this Tuesday that it has cleared the first Singapore Dollar (SGD) interest rate swaps referencing the Singapore Overnight Rate Average (SORA), in response to customer demand.

According to a statement from the Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term today, LCH has implemented the clearing of SORA swaps as the industry continues to adopt alternative interest rate benchmarks. LCH also clears in €STR swaps, SOFR swaps, SONIA Futures and SARON swaps.

In particular, SORA is the volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore between 9:00 am and 6:15 pm. The benchmark is available on the Monetary Authority of Singapore’s (MAS) website and the Association of Banks in Singapore (ABS) announced last year that the SORA will be the preferred benchmark borrowing rate within the next two years.

Commenting on the announcement, Kate Birchall, Head of Asia Pacific, LCH, said in the statement: “The introduction of clearing derivatives referencing SORA is another important milestone in the global efforts to move to alternative reference rates.

“Clearing this product has involved close collaboration with a variety of stakeholders in Singapore and the wider market. We are pleased to bring these efforts to fruition by being the first to offer these new cleared products to our members and their clients to facilitate increased efficiencies.”

LCH announcement is a vital step

Standard Chartered was the first bank to clear the SORA swaps at LCH. Daniel Koh, Global Head, Treasury Markets, Standard Chartered and Chair of the Derivatives Sub-Group of the Steering Committee on SGD Swap Offer Rate (SOR) transition to SORA (SC-STS) added: “Standard Chartered is delighted to clear the first SORA swaps at LCH and to contribute to building Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term in this product.

“Clearing this product is a vital step in the transition to broader adoption of SORA across the Singapore market, and we are in turn pleased to be able to offer SORA swaps to our clients for hedging.”