ABS and SFEMC propose to terminate 12-month SIBOR

ABS and SFEMC propose to terminate 12-month SIBOR

They also want to change SIBOR computation based on market transactions and expert judgment.

ABS Benchmarks Administration Co Pte Ltd and the Singapore Foreign Exchange Market Committee (ABS-SFEMC) launched a consultation for the enhancement of the Singapore Interbank Offered Rate (SIBOR).

According to a press release, the proposals aim to anchor SIBOR to market transactions to the extent possible and will enhance the robustness and integrity of SIBOR.

Part of the proposed enhancements is to anchor reliance on market transactions by calculating SIBOR using transactions in the underlying market, transactions in related markets, and expert judgment.

"This will provide greater clarity and facilitate consistency across panel banks that submit input for the calculation of SIBOR," ABS-SFEMC said.

Another proposal is to expand the underlying reference market from interbank to include other wholesale funding transactions.

"Given that SIBOR is intended to reflect banks’ unsecured funding costs, the inclusion reflects the structural shift in banks’ funding sources after the Global Financial Crisis," ABS-SFEMC added.

The third proposal is to discontinue the 12-month SIBOR due to "a lack of underlying market transactions and as this benchmark tenor is not widely referenced."

Moreover, ABS-SFEMC will continue to explore longer-term alternatives to the SIBOR which would involve efforts to further develop the breadth and depth of the SGD money markets.  

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