DBS: and Standard Chartered execute the first interbank options transaction referenced by SORA in Singapore

Singapore, May 28, 2021 – DBS and Standard Chartered today announced the successful execution of the industry’s first interbank options transaction referencing the Singapore Overnight Rate Average (SORA).

This interbank transaction was carried out on behalf of a global real estate group in order to manage the potential market risk arising from a SORA interest rate option. The SORA interest rate option[1], another industry first, is designed to help clients with loan facilities referencing SORA mitigate their downside risk in the event the SORA compound daily rate becomes negative.

The execution of these innovative facilities marks an important milestone in Singapore’s transition to SORA as the primary benchmark for interest rates, as corporate clients are now able to use a wider range of instruments to facilitate their adoption. of financing solutions based on SORA. It also signifies the continued maturity of Singapore SORA markets as industry adoption grows and liquidity deepens. In addition, the development of an active interest rate options market allows the creation of structured products to better serve asset and institutional investors.

Andrew Ng, Group Head of Treasury & Markets at DBS, said: “What we accomplished today marks an important step in expanding the range of SORA derivatives needed for a solid and liquid benchmark. As more companies turn to SORA-based markets, customers increasingly look to DBS for inventive ways to ease the transition to the new benchmark. By gradually offering more types of SORA derivatives, DBS is committed to ensuring a successful industry transition to SORA.

Daniel Koh, Global Head of Treasury Markets at Standard Chartered, said: “With this execution of the first interbank SORA options transaction in Singapore, Standard Chartered has taken another major step in market adoption of SORA products. . We are proud to offer various industry firsts and to contribute to a more dynamic and active SORA derivatives market. We will continue to work with our peers to develop more innovative financial products that can support our clients ‘smooth transition to SORA and meet industry deadlines.’

With the impending end of benchmark interest rates such as the London Interbank Offered Rate (LIBOR), DBS is partnering with its clients to achieve a smooth and smooth transition to other risk-free benchmarks.[2] (RFRs), including SORA for the Singapore cash and derivatives market. In Singapore, all financial institutions have stopped offering new loan products that refer to the existing SOR since the end of April 2021. In addition, the Singapore Interbank Offered Rate (SIBOR) will cease to be used in new loan products. by the end of September 2021.

Since 2020, DBS has innovated, in particular by fixing the price of Singapore’s first SORA-referenced variable rate note, by concluding the first SORA club loan coupled with a currency swap and by launching the first commercial real estate mortgage in Singapore referring to SORA. SORA-indexed loans now represent one-third of all new SME loans issued by DBS.

Standard Chartered offers a full range of SORA related products across all of its businesses and actively engages with its clients to encourage adoption of RFRs. It is one of the pioneers to launch innovative solutions based on SORA. In November 2019, Standard Chartered completed Singapore’s first Overnight Indexed Swap (OIS) derivative transaction using SORA as the benchmark interest rate with OCBC. In February 2020, he registered the first SGD SORA and USD Secured Overnight Financing Rate (SOFR) currency swaps with OCBC. In May 2020, when LCH launched the central clearing of OTC SORA instruments, it cleared the first SORA swaps between Standard Chartered and OCBC, helping to catalyze activity between SORA derivatives brokers. Standard Chartered was also among the first to book SORA Bilateral Interest Rate Swaps (IRS) exchanges on MarkitWire when the platform began supporting SORA derivatives in May 2020.

[1] Interest rate options, in the form of caps and defloors, allow companies to better hedge their risks.
[2] Risk-free benchmarks are generally derived from overnight deposit rates, based on a large number of observable transactions.

About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Based and listed in Singapore, DBS is present in the three main areas of growth in Asia: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognized for its global leadership, DBS has been named ‘The best bank in the world ‘by Euromoney,’World Bank of the Year‘by the banker and’Best Bank in the World ”by Global Finance. The bank is at the forefront of using digital technology to shape the future of banking, having been named ‘World’s Best Digital Bank ‘by Euromoney. In addition, DBS received the ‘Safest Bank in Asia prize awarded by Global Finance for 12 consecutive years from 2009 to 2020.

DBS offers a full range of banking services for individuals, SMEs and businesses. As a bank born and raised in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with its customers and making a positive impact on communities by supporting social enterprises, as it operates the Asian way. It also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.

With its extensive network of operations in Asia and its focus on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com

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