The Bank of England's SONIA Stakeholder Advisory Group (SSAG) convened on 25 September to assess the structural implications of the Bank's ambition to move Real Time Gross Settlement (RTGS) and CHAPS towards a near 24-hour, seven-day operating model. The discussion centred on how extended settlement hours would interact with the mechanics of the Sterling Overnight Index Average (SONIA), the primary benchmark for sterling money markets underpinning an estimated £30 trillion in financial contracts globally.
Key Takeaways
- Bank of England targeting Q1 2027 for next steps on near 24/7 RTGS and CHAPS settlement extension.
- SSAG strongly prefers preserving 09:00 SONIA publication; later fix risks operational disruption across £30tn+ in contracts.
- Weekend CHAPS opening raises unresolved questions on whether SONIA publishes a weekend fix or rolls activity into weekday data.
- Bank and HM Treasury reviewing statutory data collection powers to ensure SONIA coverage amid evolving market structure.
- Unsecured overnight market stable: £55bn daily volumes, 1.9bp spread to Bank Rate, £15bn MMF inflows YTD.
Executive Intelligence Brief
Retrospective Market Stability Confirmed
The unsecured overnight market remained stable in the period reviewed, with daily volumes averaging approximately £55 billion and the spread to Bank Rate fluctuating close to 1.9 basis points. Money-market funds recorded collective inflows of roughly £15 billion since the start of the year, increasing allocation to the overnight tenor following updated liquidity guidance and heightened geopolitical tensions. Repo-market volatility and month-end spikes were notably lower than in the previous year, indicating resilient short-term funding conditions.
Extended Settlement Hours Challenge SONIA Architecture
The Bank consulted over the summer on extending RTGS and CHAPS hours and intends to return to industry in the first quarter of 2027 with themes from the responses. Under one scenario analysed, CHAPS settlement could close at 18:00 with the next day's session opening at 20:00, creating a two-hour window (20:00–00:00) where the CHAPS value date diverges from the calendar date. This discrepancy raises immediate questions for SONIA's definition, which currently relies on a clear value-date framework.
Participants noted that firms may accelerate or delay booking decisions to manage interest calculations under timestamp-based conventions. Crucially, the Sterling Money Market Data (SMMD) reporting deadline remains 07:00 to support the 09:00 SONIA publication. The Group expressed a strong preference to preserve the current 09:00 publication time, warning that a later fix would disrupt processing and fulfilment of SONIA-referenced products, including derivatives, floating-rate notes, and mortgages.
Weekend Trading and Data Collection Powers Under Review
The proposed Sunday and potential full-weekend CHAPS opening introduced debate over whether weekend activity would exhibit structurally different volumes and rates compared to weekdays. The Group discussed whether SONIA should publish a separate weekend fix or incorporate weekend transactions into the subsequent weekday calculation. No consensus was reached.
Separately, the Bank and HM Treasury are reviewing the statutory powers used to collect sterling money market information. The review aims to ensure sufficient coverage of market activity as structures evolve, including potential changes in booking locations or regulatory perimeters. The Bank may seek powers to collect data on material sterling money market activity within group entities to preserve SONIA's representativeness.
Forward Outlook and Operational Dependencies
The Bank continues its analysis of extended-hours scenarios and will publish consultation feedback themes in Q1 2027. Market participants highlighted the critical importance of retaining the ability to resubmit or regenerate prior-day SMMD data, given that many reporting workflows are automated. Concurrently, the Group discussed the Office for National Statistics consultation on release times for market-sensitive economic statistics, which were moved to 07:00 during the Covid period but now intersect with extended futures and gilt trading hours.
