SBI executes inter-bank money market transactions linked to SOFR

State Bank of India said it has executed two inter-bank short term money market transactions with pricing linked to secured overnight financing rate (SOFR)

State Bank of India on Wednesday said it has executed two inter-bank short term money market transactions with pricing linked to secured overnight financing rate (SOFR).

SOFR is an identified replacement for USD LIBOR (London Inter-Bank Offered Rate) which is expected to be phased out at the end of 2021.

The transactions were executed by the bank through its Hong Kong branch, a release said.

"The transaction demonstrates SBI's progress in aligning its systems and processes to embrace Alternate Reference Rates (ARRs).

"LIBOR transition is a significant financial event for international financial markets, and these transactions by the country's largest bank, will set the pace for smooth transition of financial markets in ARR mechanism," its deputy managing director (international banking group) C Venkat Nageswar said in the release.

The sunset for LIBOR has been triggered by the decision of Financial Conduct Authority (FCA) in the UK not to compel contributing banks for LIBOR calculation after December 2021.