SONIA (interest rate) (Ofer Abarbanel online library)

SONIA (Sterling Over Night Index Average) is the effective reference for overnight indexed swaps for unsecured transactions in the Sterling market. The SONIA iteself is a risk-free rate.[1]


It was launched in March 1997 by the WMBA, and is endorsed by the British Bankers Association (BBA).

The Bank of England took on administration of rate in April 2016. Two years later, in April 2018, the rate underwent a number of reforms.[1] In the same year efforts to promote SONIA as the standard Sterling interest rate benchmark for loans, derivatives and bonds were stepped up.[2][3]

Technical details

On each London business day, SONIA is measured as the trimmed mean, rounded to four decimal places, of interest rates paid on eligible sterling denominated deposit transactions.The trimmed mean is calculated as the volume-weighted mean rate, based on the central 50% of the volume-weighted distribution of rates.[4]

Eligible transactions are[4]:

  • reported to the Bank’s Sterling Money Market daily data collection, in accordance with the effective version of the ‘Reporting Instructions for Form SMMD’;
  • unsecured and of one business day maturity;
  • executed between 00:00 hours and 18:00 hours UK time and settled that same-day; and
  • greater than or equal to £25 million in value.

The rate conventions are: annualised rate, act/365, four decimal places.[citation needed]

In 2018, SONIA (floating rate) bonds accounted for 20.7 per cent share of UK issuance compared to 48.1 per cent share of IBOR (floating rate) bonds.


  1. ^ Jump up to:ab “SONIA interest rate benchmark”.
  2. ^“Transition to sterling risk-free rates from Libor”.
  3. ^“China discusses ways to stabilize market expectations: central bank”. September 3, 2018 – via
  4. ^ Jump up to:ab “SONIA Key features and policies”. Retrieved 2019-11-20.

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