ICE Benchmark Administration Introduces ICE SONIA Indexes to Assist UK Lending Markets Transition to SONIA
March 03 2021 - 8:35AM
Business Wire
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator
of global exchanges and clearing houses and provider of mortgage
technology, data and listings services, today announced that ICE
Benchmark Administration Limited (“IBA”) has launched an initial,
‘beta’ version of ICE SONIA Indexes for information and testing
purposes. IBA has also published a methodology paper introducing
the Indexes.
The ICE SONIA Indexes provide a daily value that represents
accrued compound SONIA interest relative to the first day value of
100 on April 23, 2018, the date when the Bank of England took over
responsibility for SONIA. The ICE SONIA Indexes offer additional
optionality to add a floor and lookbacks. The Indexes have been
developed to support the varying needs of the UK lending market and
are designed to provide a simple method for parties to calculate
SONIA compound interest between any two index dates and agree on
their associated interest accruals.
IBA applies the following operational and economic features to
generate ten possible ICE SONIA Indexes:
- Zero (0)% floor: To address concerns around potential
negative interest rates in the future, the ICE SONIA Indexes can
incorporate a minimum SONIA rate of 0%. If the daily SONIA value
falls below 0%, the ICE SONIA Indexes can be calculated using 0% as
a floor, instead of the actual SONIA value.
- Lookbacks: To help manage cash flows and address
operational issues associated with the determination of repayments
on loans before the end of a loan accrual period or the loan term,
the ICE SONIA Indexes support multiple lookback approaches. IBA
will offer indexes calculated using lags and/or shifts of either
two or five business days, alongside the option of having no
lookback.
To facilitate accounting for loan accruals on reporting dates
that are not business days, all ICE SONIA Indexes will provide
index values for every calendar day. Index values for non-business
days will be published on the next following business day.
“IBA has created the ICE SONIA Indexes to help address the key
operational considerations of lenders and borrowers for SONIA-based
loans,” said Tim Bowler, President of ICE Benchmark Administration.
“The transition to SONIA in the UK lending markets has led to calls
for SONIA indices that can be used to help calculate and process
interest accruals from both a lender’s and borrower’s perspective.
We believe the ICE SONIA Indexes can play an important part in
helping lenders and borrowers as they transition to SONIA.”
Indicative, ‘beta’ SONIA Index values are published on IBA’s ICE
SONIA Indexes webpage. The index values are currently published for
information and testing purposes only and may not be used as a
reference in financial instruments. IBA expects to be able to
launch the ICE SONIA Indexes for use in financial instruments from
April 2021. A paper introducing the ICE SONIA Indexes is available
here.
About ICE Benchmark Administration
ICE Benchmark Administration is authorized and regulated
by the Financial Conduct Authority for the regulated activity of
administering a benchmark, and is authorized as a benchmark
administrator under the UK Benchmarks Regulation. IBA reserves all
rights in the ICE SONIA Indexes webpage.
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500
company and provider of marketplace infrastructure, data services
and technology solutions to a broad range of customers including
financial institutions, corporations and government entities. We
operate regulated marketplaces, including the New York
Stock Exchange, for the listing, trading and clearing of
a broad array of derivatives contracts and financial securities
across major asset classes. Our comprehensive data services
offering supports the trading, investment, risk management and
connectivity needs of customers around the world and across asset
classes. As a leading technology provider for the U.S. residential
mortgage industry, ICE Mortgage Technology provides the
technology and infrastructure to transform and digitize U.S.
residential mortgages, from application and loan origination
through to final settlement.
Trademarks of ICE and/or its affiliates include Intercontinental
Exchange, ICE, ICE block design, NYSE and New York Stock Exchange.
Information regarding additional trademarks and intellectual
property rights of Intercontinental Exchange, Inc. and/or its
affiliates is located here. Key Information Documents for
certain products covered by the EU Packaged Retail and
Insurance-based Investment Products Regulation can be accessed on
the relevant exchange website under the heading “Key Information
Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 -- Statements in this press release regarding
ICE's business that are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion
of additional risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see ICE's Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risk factors in ICE's
Annual Report on Form 10-K for the year ended December 31, 2020, as
filed with the SEC on February 4, 2021.
About SONIA
The "SONIA" mark is used under license from the Bank of England
(the benchmark administrator of SONIA), and the use of such mark
does not imply or express any approval or endorsement by the Bank
of England. "Bank of England" and "SONIA" are registered trademarks
of the Bank of England.
ICE- CORP
Source: Intercontinental Exchange
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ICE Media Contact: Rebecca Mitchell
Rebecca.Mitchell@theice.com +44 7951 057 351 ICE Investor
Contact: Warren Gardiner Warren.Gardiner@theice.com
770-835-0114
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