DBS and Standard Chartered have executed the industry’s first interbank option trade referencing the Singapore Overnight Rate Average (SORA).

In a joint press statement dated May 28, the banks disclosed that the interbank option trade was done on behalf of a global real estate group to manage the potential market risk arising from a SORA interest rate option.

The SORA interest rate option is designed to help clients which have loan facilities referencing SORA mitigate their downside risk in the event the compounded daily SORA rate turns negative.

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