Traders pin Sonia derivative woes on UK’s local difficulties

Market participants say BoE forecasts and mini-budget help explain RFR products’ lack of liquidity

Credit: montage

In the global quest to shunt markets away from Libor and on to risk-free rates, sterling has been heralded as a success. The UK’s currency was one of the first to make the move back in December 2021, and its transition to an RFR has been largely hitch-free. Yet one area is still lagging: listed rates products.

Liquidity in futures and options linked to the sterling overnight index average (Sonia) still falls short of the liquidity for short-term interest rate futures, or short sterling – the

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