Important information regarding the transition from JIBAR to ZARONIA9 April 2025 | READ TIME: 2 MIN
      What is changing?

      The South African financial markets are transitioning from the Johannesburg Interbank Average Rate (JIBAR) to the South African Overnight Index Average (ZARONIA). This change was endorsed by the South African Reserve Bank (SARB) on 3 November 2023.

      What is JIBAR and ZARONIA?

      JIBAR is the average interest rate used by South African banks since 1999 for short-term lending to each other. It is a key benchmark for pricing loans, bonds, and other financial instruments.

      The ZARONIA is a new overnight reference rate based on unsecured overnight call deposits placed with commercial banks, which are classified as deposit-taking institutions in the Banks Act 94 of 1990. ZARONIA will be available for use from April 2025.

      The rationale for the change

      The transition from JIBAR to ZARONIA is to improve transparency and reliability in South African financial markets.

      JIBAR, like other global interbank rates, is based on estimations, making it vulnerable to inaccuracies and potential manipulation, especially during market stress. JIBAR is not underpinned by a large number of transactions, which is a desirable and essential characteristic of a benchmark interest rate.

      ZARONIA uses actual transaction data and provides a more robust and accurate reflection of real borrowing costs, aligning South Africa with international best practices and reducing risks associated with estimated rates.

      Essentially, JIBAR looks forward and is based on predictions, while ZARONIA looks back and reflects the real cost of daily borrowing.

      The transition timelines

      The transition will happen in phases to ensure a smooth change process.

      Our readiness for this change

      We understand that transitions like these can raise concerns, but we want to assure you that this change is intended to be as seamless as possible. We are actively integrating ZARONIA into our ecosystem to ensure a smooth transition for our clients.

      Systems

      We are working closely with vendors to incorporate ZARONIA rates and functionality into our trading and investment accounting systems so that we are "ready to trade" in line with internal project timelines.

      Contracts
      • New contracts will include appropriate fallback language.
      • Existing contracts maturing before the JIBAR cessation will not be affected.
      • Contracts maturing after the cessation will include a Credit Adjustment Spread (CAS)
      • Tough legacy contracts may require a synthetic JIBAR solution, handled case-by-case.
      Mandates

      Mandates referencing benchmarks like STeFI and other JIBAR-linked indices may require updates. Market consensus on whether replacement benchmarks are required is still pending.

      Action required

      There is no action required from your side.

      Please contact your relationship manager or client director if you have any questions or require further clarification.

      Useful links with guides are available here.