The Market Practitioners Group (MPG), established by the South African Reserve Bank (SARB) to oversee the transition from JIBAR to the South African Overnight Index Average (ZARONIA), has published updated guidance recommending that 1 May 2026 be adopted as the effective date for the ‘No new JIBAR’ milestone (instead of the initially proposed end March 2026).
Importantly, the MPG has recommended that the SARB issue a formal regulatory directive to give effect to this milestone, confirming the full scope of JIBAR tenors prohibited for new use, setting an unambiguous effective date and defining what constitutes ‘new’ use consistent with offshore regulatory practice.
Once the directive is issued, market participants would no longer be permitted to enter into new financial contracts referencing JIBAR (including loans, floating rate notes and money market instruments) except in limited, narrowly defined circumstances. JIBAR itself will cease to be published at the end of December 2026.
The MPG has recommended a broad definition of ‘new’: it captures renewals, refinancings, rollovers, reopenings, re-issuances and material amendments that create additional JIBAR risk. The MPG has also recommended limited dispensations and exceptions to address specific risk management and operational needs. These include:
- Defined exceptions for existing JIBAR exposures: examples given were market-making to support client activity related to pre-milestone transactions and associated hedges, hedging or reducing pre-milestone JIBAR exposure, novation and resets of pre-milestone JIBAR trades, central clearing counterparty (CCP) auction participation and associated hedges, physical delivery of options (including swaptions) executed before the milestone, and JIBAR-linked cash market instruments with robust, hardwired contractual fallback language.
- Trade finance: trade finance transactions that require a known interest rate at the start of the interest period, including working capital loans, supply chain finance and invoice discounting, letter of credit discounting and financing, receivables discounting, trade loans between banks and fixed-term working capital loans.
- Retail and property finance: a regulatory dispensation for JIBAR-linked retail home loans, related funding transactions and commercial property finance in securitisation; these may continue to reference JIBAR until cessation.
- Securitisations: JIBAR-linked securitisations that meet certain criteria. For example, where the underlying assets rely on a forward-looking term rate, where active transition would be onerous or costly, or where transitioning to ZARONIA compounded in arrears would weaken the credit structure due to structural impediments or basis risk.
- Offshore-aligned exceptions: use of defined exceptions aligned to offshore best practices.
The legislative safety net
The SARB is working on amendments to the Financial Sector Regulation Act 9 of 2017 to designate replacement benchmarks for legacy contracts without adequate fallback provisions, including statutory safe harbours from liability. However, institutions should not view this as a ‘silver bullet’ — different replacement rates may be designated for different product classes, and proactive transition planning remains essential.
The full MPG publications and recommendations are available on the SARB MPG webpage.
