On 25 July 2018, the Bank of England (BoE) published its statement of compliance (as at 14 May 2018) with the International Organization of Securities Commission (IOSCO) principles for financial benchmarks.
The IOSCO principles, which the statement shows BoE in compliance with, ensure international best practice in the BoE’s administration of the Sterling Overnight Index Average (SONIA) interest rate benchmark. The BoE has been the administrator of the SONIA benchmark since April 2016.
The BoE has commented on the statement, noting that compliance plays an important role in the transition from reliance on the London Interbank Offered Rate (LIBOR). The BoE has also referred to the June 2018 meeting of the Financial Policy Committee (FPC) at which the FPC noted that continued reliance on LIBOR posed a risk to financial stability and suggested a transition to alternative rates. In the BoE’s view, the statement of compliance provides transparency over the administration of SONIA to the expanding set of SONIA users.