The Sterling Overnight Index Average, abbreviated as SONIA, is the principal risk-free interest rate benchmark for sterling markets, administered by the Bank of England and published each London business day at 09:00 UK time for the previous day’s transactions. Introduced in and transferred to Bank of England administration in , SONIA was reformed with a transactions-based methodology effective 23 April 2018. It is calculated as the trimmed mean of eligible unsecured overnight sterling deposit rates, based on the central 50% of the volume-weighted distribution, and is accompanied by the SONIA Compounded Index (from 3 August 2020) to support compounded-in-arrears conventions.
History
SONIA was launched in by the Wholesale Markets Brokers’ Association as a measure of unsecured overnight sterling borrowing costs between financial institutions.
Methodology and governance
Calculation and eligibility
SONIA measures the rate paid on eligible sterling overnight unsecured deposit transactions. It is calculated each London business day as the trimmed mean of rates from the central 50% of the volume-weighted distribution, rounded to four decimal places.
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External links
- WMBA - Wholesale Markets Brokers' Association
- BBA Guide to SONIA