SARB sets May 1 deadline for new JIBAR transactions
The South African Reserve Bank's Prudential Authority and Financial Sector Conduct Authority have issued new supervisory guidance for the transition from JIBAR to ZARONIA. Financial institutions must cease new JIBAR transactions and products from May 1, 2026, as part of benchmark reform.
Limiting new JIBAR exposures
The 'No new JIBAR initiative' sets a target date of May 1, 2026, from which financial institutions should generally stop initiating new JIBAR transactions, products, and exposures.
This applies across all JIBAR tenors and aims to prevent the build-up of new JIBAR-referenced activity.
The objective is to support an orderly transition and minimise residual legacy exposure ahead of the JIBAR benchmark publication's cessation at the end of 2026.
This approach aligns with international best practices for benchmark reform, which advocate for reducing reliance on benchmarks expected to cease or become non-representative, even while they remain technically available.
The guidance builds on previous communications regarding preparedness for the shift to the South African Rand Overnight Index Average (ZARONIA) rate.
Supervisory expectations from May 1
From May 1, 2026, financial institutions are expected to refrain from entering new JIBAR-referencing transactions or products, except for defined dispensations.
All new products should instead reference ZARONIA or another suitable alternative rate.
For existing JIBAR exposures, institutions must not expand or increase these positions beyond operational necessities.
Any permitted exceptional activity must be demonstrably risk-reducing or essential for the orderly management of pre-May 1 exposures, ensuring it does not create new JIBAR risk.
This includes material amendments like increasing notional amounts or extending maturities.
Robust governance and oversight are crucial to meet the initiative's objectives and the ultimate cessation of JIBAR by year-end.
A necessary, complex transition
The 'No new JIBAR initiative' represents a crucial step towards ensuring a smooth and well-managed transition to ZARONIA.
While the directive is clear, the operational adjustments required for financial institutions are substantial and complex.
Success will hinge on accelerated implementation plans and effective communication to all stakeholders, mitigating potential market disruptions from this significant benchmark reform.