South African regulators set JIBAR transition expectations
The Prudential Authority and the Financial Sector Conduct Authority have issued new supervisory guidance for the transition from JIBAR to ZARONIA. Financial institutions are expected to stop initiating new JIBAR transactions from 1 May 2026.
Phasing out JIBAR by May 2026
The Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA) have issued joint guidance, building on previous supervisory expectations for the transition from the Johannesburg Interbank Average Rate (JIBAR) to the South African Rand Overnight Index Average (ZARONIA).
This communication expands on the 'Recommendations for a No-new-Jibar Initiative', which sets a target date of 1 May 2026.
From this date, financial institutions are expected to cease entering into new JIBAR-referenced transactions, issuing new JIBAR products, or creating new JIBAR exposures across all applicable tenors.
The initiative aims to limit the build-up of new JIBAR exposure, facilitate an orderly transition, and reduce residual legacy exposure before JIBAR's cessation at the end of 2026.
This approach aligns with international best practices for benchmark reform.
Supervisory rules for the transition
From 1 May 2026, financial institutions must avoid new JIBAR-referenced transactions and products, unless explicitly covered by defined dispensations.
New offerings should instead reference ZARONIA or an appropriate alternative.
Existing JIBAR exposures must not be expanded beyond operational needs.
Any exception activity must be demonstrably risk-reducing or essential for orderly management of pre-initiative exposures, ensuring no new JIBAR risk is created.
Robust governance and oversight are required to meet the initiative's goals and JIBAR's cessation by year-end.
The PA and FSCA will evaluate this guidance during their 2026 supervisory examinations.