what is the sterling overnight interbank average sonia rate 
the sterling overnight index average sonia rate is an interest rate benchmark used in the united kingdom it is the effective overnight interest rate paid by banks for unsecured transactions in the british sterling market administered by the bank of england boe sonia is used to fund trades that occur overnight during off hours as such it represents the depth of overnight business in the marketplace understanding the sterling overnight interbank average sonia ratethe sterling overnight interbank average rate is a benchmark interest rate used in the united kingdom and operated by the boe it represents the average interest rate banks use when they borrow british currency from others including financial institutions and large institutional investors calculated each business day in london sonia fixing is the weighted average rate of unsecured overnight sterling transactions that are brokered by members of the wholesale markets brokers association the daily sonia rate as of june 15 2023 was 4 42840 1the eligibility criteria for transactions to qualify for sonia include sonia provides up front certainty of the amount of interest due at the end of the interest period 3 the rate also encouraged the formulation of the overnight index swap ois market and the sterling money markets in great britain sonia is a widely used benchmark for many financial transactions among which is the reference rate for the sterling ois market according to the boe the rate is used to value around 30 trillion of assets each year 4calculating the sonia ratehere s how sonia is calculated once all of these steps are completed the boe publishes the rate history of the sonia ratesonia was established in 1997 by the wmba in the united kingdom the financial conduct authority fca in the u k regulated the wmba as a calculation and publication agent the wmba had no sterling overnight funding rate before sonia this created volatility in the country s overnight interest rates the creation of sonia brought stability to overnight rates 5the rate is managed and operated by the boe the country s central bank which took control of the rate in april 2016 45 the central bank made changes to the way it calculates sonia in april 2018 and began publishing the sonia compounded index on a daily basis in august 2020 2in april 2017 the working group on sterling risk free reference rates which is a group of active influential dealers in the sterling interest rate swap market announced sonia would be its preferred near risk free interest rate benchmark this change impacted sterling derivatives and related financial contracts it also provided an alternative interest rate to the dominant london interbank offered rate libor to that end the fca announced it would no longer require banks to submit libor quotes after 2021 sonia provided traders and financial institutions with an alternative to the libor as a benchmark for short term financial transactions all contracts using libor are to be wrapped up by june 30 2023 6 libor will be replaced by the secured overnight financing rate sofr the bank of england reported several changes that became valid as of april 2018 