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Why SONIA Kept Its Name While EONIA Transitioned to €STR

Article Quant Q&A · Author: Peaceful
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Summary

The document answers why SONIA retained its name after reform while EONIA was replaced by the euro short-term rate, €STR. It clarifies that both benchmarks were reformed; the distinction is chiefly one of naming. The reformed sterling benchmark continued under the SONIA name, whereas the reformed euro benchmark took the €STR name.

EONIA continued temporarily to support a smoother transition to €STR, with the answer pointing to the larger estimated impact of its reform: about 9 basis points, compared with about 1.5 basis points for SONIA. This is a concise explanation rather than a full account of benchmark methodology, governance, or transition arrangements. It gives a rationale tied to the relative reform impacts but does not detail how the transition was implemented or address later benchmark developments.

Key ideas

  • Both SONIA and EONIA underwent reform, but only SONIA retained its existing name.
  • The reformed euro benchmark became known as €STR.
  • EONIA continued temporarily to support transition to €STR.
  • The answer attributes the differing transition approach partly to a larger estimated reform impact for EONIA.

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Fixed incomeUS marketsMulti-asset
Full text
# Libor reform: why SONIA stays, but EONIA is to be replaced by ESTER


# Libor reform: why SONIA stays, but EONIA is to be replaced by ESTER












what is the reason that why SONIA stays, but EONIA is to be replaced by ESTER

## Answer by Magic is in the chain (score 3, accepted)

https://quant.stackexchange.com/a/49615

Both have been reformed, but the reformed version of SONIA retains its name, whereas the reformed EONIA is called €STR. EONIA has been kept alive to allow for 'smooth' transition to the new RFR (€STR), most likely because of the relatively large impact of the EONIA reform (circa 9 basis points compared to 1.5 basis points for SONIA). Please see further discussion in the comments below.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.