Transition Milestones in Singapore
Target timeline | LIBOR Currency/Tenor | Milestones |
By 30 June 2021 |
Non-USD LIBOR contracts that mature after end-December 2021, excluding JPY LIBOR derivatives contracts | Cease issuance of new contracts on non-USD LIBOR (excluding JPY LIBOR derivatives contracts) - Applies to all new contracts maturing after end-December 2021. Exceptions allowed for risk management of existing positions. Fallback implementation for new contracts - All new contracts issued before end-June 2021 should have adequate contractual fallback provisions if contracts are maturing after end-December 2021. |
All LIBOR currencies and tenors | System readiness - System readiness to support fallback rates based on alternative reference rates (ARRs) as well as offer products referencing ARRs. |
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By 30 September 2021 |
JPY LIBOR derivatives contracts that mature after end-December 2021 | Cease issuance of new derivatives contracts on JPY LIBOR - Applies to all new contracts maturing after end-December 2021. Exceptions allowed for risk management of existing positions.[1] Fallback implementation for new contracts - All new contracts issued before end-September 2021 should have adequate contractual fallback provisions if contracts are maturing after end-December 2021. |
Non-USD LIBOR contracts that mature after end-December 2021 | Fallback implementation and legacy transition - All outstanding contracts to incorporate adequate contractual fallback provisions or be transitioned to ARRs. Additionally, FIs should identify contracts that will not be successfully remediated by end-December 2021 as soon as possible. Actions should be taken before end-December 2021 to mitigate the risks and impact from these contracts not transiting in time. Such actions should include appropriate client engagements and agreement to address and mitigate these risks. |
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By 31 December 2021 | USD LIBOR |
Cease issuance of new contracts on USD LIBOR - Applies to all new contracts. Exceptions allowed for risk management of existing positions[1] Fallback implementation for new contracts - All new contracts issued before end-December 2021 should have adequate contractual fallback provisions. |
Target timeline | Benchmark | Milestones |
By 28 February 2021 | SORA | Domestic Systemically Important Banks (“D-SIBs”) to offer a full-suite of SORA-based products to their customers. |
By 30 April 2021 |
SORA |
Non-DSIB banks to offer a full-suite of SORA-based products to their customers.
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SOR | All financial institutions and their customers to cease usage of SOR in new loans and securities that mature after 31 December 2021. | |
By 30 September 2021 | SOR | All financial institutions and their customers to cease usage of SOR in new derivatives contracts, except where necessary for risk management and to support the transition from legacy SOR exposures. Banks should reduce their gross SOR derivatives exposures with other financial institutions to 20% |
SIBOR | All financial institutions and customers to also cease usage of SIBOR in new contracts. | |
By 31 March 2023 | SOR | New update as at Jul 22Banks are to ensure reasonable efforts are made to either actively transition out of, or to insert appropriate contractual fallbacks |
Principles of customer engagement
FIs put in place comprehensive communication plans to help their customers with the transition. The potential for disputes and reputational risk was greatly reduced, given the channels available for customers to make enquires and provide feedback.
To this end, FIs’ communication strategy took into account MAS’ Guidelines on Fair Dealing, and adhered to the following principles:
A successful communication plan takes into account varying levels of financial sophistication and employs appropriate communication channels for different customer segments. FIs should provide clear, relevant, adequate and timely information to customers to raise their awareness of the transition and the economic differences between Inter-bank Offered Rates and ARRs. FIs should also provide clear explanations on the impact of the transition on customers’ contracts and the risks that customers may be exposed to.
Circulars
- 1 September 2020: Preparation for LIBOR Discontinuation Enhancing Contractual Robustness
- 23 April 2021: Supervisory Expectations for Benchmarks Transition
- 14 July 2021: Updates and FAQs on Supervisory Expectations for Benchmarks Transition
- 8 November 2021: Clarification of Facility Documentation Clauses for New USD LIBOR Loans
- 25 May 2023: Supervisory Expectations for USD LIBOR and SOR Transition