Currently, the MMS is working on a review of the South African Benchmark Overnight Rate on deposits (SABOR) and will report back to the FMLG its findings and recommendations. This work will feed into another project being undertaken by the Fixed Income & Derivatives subcommittee of the FMLG, namely, the development of the South African Overnight Index Swap1 (rand OIS).
A well-developed rand OIS market would have many risk management benefits. Market participants predominantly use the OIS market for hedging activities, to hedge either their funding costs or their exposure to short-term interest rate movements, and to alter the term structure of a portfolio.