Lending markets

ICE Benchmark Administration presents ICE SONIA indices to facilitate the transition of UK credit markets to SONIA

LONDON–(COMMERCIAL THREAD) – Intercontinental Exchange, Inc. (NYSE: ICE), a leading global exchange and clearinghouse operators and provider of mortgage technology, data and quotation services, today announced that ICE Benchmark Administration Limited (“IBA”) has launched a first, “beta” version of the ICE SONIA indexes for information and testing purposes. IBA has also published a methodological document presenting the indices.

The ICE SONIA indices provide a daily value which represents the compounded SONIA interest accrued over the first day value of 100 on April 23, 2018, when the Bank of England took over responsibility for SONIA. ICE SONIA indices offer an additional option to add a floor and retrospectives. The indices have been developed to meet the different needs of the UK loan market and are designed to provide parties with a simple method of calculating SONIA compound interest between two index dates and agreeing on their associated accrued interest.

IBA applies the following operational and economic characteristics to generate ten possible ICE SONIA indices:

  • Zero (0)% floor: To address concerns about potential negative interest rates in the future, the ICE SONIA indices may incorporate a minimum SONIA rate of 0%. If the daily SONIA value falls below 0%, the ICE SONIA indices can be calculated using 0% as a floor, instead of the actual SONIA value.
  • Retrospective: To help manage cash flow and resolve operational issues associated with determining loan repayments before the end of a loan accumulation period or the term of the loan, ICE SONIA indices support several retrospective approaches. . IBA will offer indices calculated using lags and / or lags of two or five working days, as well as the possibility of not having a retrospective.

To facilitate the recognition of loan accumulations on reporting dates that are not working days, all ICE SONIA indices will provide index values ​​for each calendar day. The index values ​​for non-working days will be published on the following working day.

“IBA created the ICE SONIA indices to help address 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 credit markets has led to calls for SONIA indices which can be used to help calculate and process accrued interest from a lender and borrower perspective. We believe that the ICE SONIA indices can play an important role in assisting lenders and borrowers in their transition to SONIA.

The indicative “beta” values ​​of the SONIA index are published on the IBA ICE SONIA indices web page. Index values ​​are currently published for information and testing purposes only and may not be used as a benchmark in financial instruments. IBA expects to be able to launch the ICE SONIA indices for use in financial instruments from April 2021. A document presenting the ICE SONIA indices 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 Regulations. IBA reserves all rights to the ICE SONIA Indexes web page.

About the intercontinental exchange

Intercontinental exchange (NYSE: ICE) is a Fortune 500 company and a provider of market infrastructure, data services, and technology solutions to a wide variety of clients, including financial institutions, businesses, and government entities. We operate regulated markets, including the New York Stock Exchange, for listing, trading and clearing a wide range of derivative contracts and financial securities in the main asset classes. Our complete data services The offering supports the trading, investment, risk management and connectivity needs of clients around the world and across all asset classes. As a leading technology provider to the U.S. residential mortgage industry, ICE Mortgage Technology provides the technology and infrastructure to transform and digitize residential mortgages in the United States, from loan application and 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 trademarks and additional intellectual property rights of Intercontinental Exchange, Inc. and / or its affiliates can be found here. The key information documents for certain products covered by the EU Retail and Insurance Investment Products Regulation can be accessed on the website of the relevant exchange 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 risk and uncertainties. For a discussion of the additional risks and uncertainties, which could cause actual results to differ from those contained in forward-looking statements, see documents filed by the Securities and Exchange Commission (SEC) of ICE, including, but not limited to be limited to the risk factors in ICE’s annual report. Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on February 4, 2021.

About SONIA

The trademark “SONIA” is used under license from the Bank of England (the principal administrator of SONIA), and use of any such mark does not imply or express any endorsement 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