Refinitiv has launched a prototype Term SONIA Reference Rate, which will leverage the firm's experience in administering benchmarks to create a GBP forward-looking term risk-free rate that is published daily.

The rate will be available in one-month, three-month and six-month tenors, and Refinitiv expects to launch a regulated version of the rate towards the end of 2020.

LIBOR underpins hundreds of trillions of dollars of financial instruments and contracts, making it one of the most widely used benchmarks in the world, but at the end of 2020 banks will no longer be compelled to submit to LIBOR.

Refinitiv takes data from executable bids and offers taken from TP ICAP's i-Swap and Tradition's Trad-X electronic platforms, before the firm calculates a mid-price based on clearing a predetermined notional amount. A secondary source of data is streaming bids and offers from Tradeweb's institutional electronic swaps platform. The rate also has an integrated fallback that applies the change in compounded SONIA in advance to the previous day's rate.

Shirley Barrow, Global Head Benchmarks & Indices, Refinitiv, said: "As the global financial markets migrate away from LIBOR the need for accurate, robust and trusted alternative rates becomes ever more important. As a regulated benchmark administrator and provider of key benchmark rates, Refinitiv is delighted to use our many years of experience to create the Term SONIA Reference Rate prototype to support the industry."

Sang Lee, Managing Partner at Aite Group said: "With LIBOR deeply embedded within most financial institutions the Term SONIA Reference Rate is an essential tool to facilitate transition away from LIBOR prior to the end of next year. Now more than ever the industry requires a rate that is administered by an experienced provider and subject to the highest regulatory standards, so markets can continue to function even during periods of stress."