The Bank of England will take on the end-to-end administration of the SONIA interest rate benchmark, an alternative to the discredited London Interbank Offered Rate from April 2018.
The central bank outlined reforms to the Sterling Overnight Index Average, or SONIA, which the Wholesale Markets Brokers' Association will calculate and publish using the current methodology for the last time April 20, 2018.
After that, the end-to-end administration of the benchmark, including its calculation and publication, will fall to the central bank. The BoE will begin publishing SONIA using the reformed methodology at 9 a.m. London time April 24, 2018.
SONIA's coverage will be broadened to include overnight unsecured transactions negotiated bilaterally, as well as transactions arranged through brokers, using the BoE's sterling money market data collection as the data source.
The BoE said the reformed SONIA has continued to be around 1.3 basis points below the current SONIA over the last six months. The reformed benchmark was calculated on average daily volumes of about £46 billion, over 3x larger than those underlying the current benchmark.
SONIA is considered as a preferred alternative to LIBOR, which was at the center of a manipulation scandal.