Regulating Sonia

SONIA (Sterling Overnight Index Average) is one of seven benchmarks which will come under FCA regulation from 1 April 2015.

As will be known, currently LIBOR is the only regulated benchmark – MAR 8 contains the rules and guidance applicable to both benchmark submitters and benchmark administrators.

The decision to bring the further benchmarks within the regulatory perimeter was not a unilateral move by the FCA but rather implements recommendations made by HM Treasury arising from the (ongoing) Fair and Effective Markets Review which is led by the Bank of England, the Treasury and FCA.  The regulation of financial benchmarks at EU level is also currently under consideration by the European Parliament and Council, although there is no clear indication of when appropriate European legislation will become a reality.

The FCA’s proposals have been published in CP14/32 (‘Bringing additional benchmarks into the regulatory and supervisory regime’) – Annex 1 of CP14/32 contains a useful description of the seven benchmarks.  Although largely aimed at benchmark administrators, and submitters where applicable, the paper may also be of interest to those firms that use these benchmarks as part of their business operations.


Comments are invited by 30 January.

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