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The global shift away from interbank offered rates and move towards the adoption of alternative, nearly risk-free benchmark rates is commonly known as Interest Rate Benchmark Reform (IBOR Reform). In Singapore, Singapore Overnight Rate Average (SORA) will replace Swap Offer Rate (SOR) and Singapore Interbank Offered Rate (SIBOR) as the alternative interest rate benchmark by 2024. This will affect all existing Singapore dollar-denominated financial products referencing SOR or SIBOR in their contracts.
FRB 9 was issued on 14 October 2021 to address the accounting implications arising from the IBOR Reform in Singapore and contains:
- An overview of the IBOR Reform, including changes in interest rate benchmark rates used in Singapore;
- A summary of the accounting reliefs provided under SFRS(I) 9 Financial Instruments, SFRS(I) 1-39 Financial Instruments: Recognition and Measurement and SFRS(I) 7 Financial Instruments: Disclosures, in relation to the IBOR Reform;
- Accounting considerations on specific matters to assist entities in their understanding of the accounting for financial instruments and hedge accounting which are affected by the replacement of interest rate benchmarks within these contracts.
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