Andrew Hauser of the Bank of England has announced two new initiatives to encourage transition from Sterling LIBOR to SONIA in a speech on 26 February 2020.

Firstly, the Bank is going to publish a daily SONIA Compounded Index from July 2020. This will enable market participants to construct compounded SONIA rates in an easy and consistent way. It is intended to provide a single, trusted, "golden" source for users to calculate compounded rates.

The Bank already publishes overnight SONIA rates daily, but the SONIA Compounded Index will allow users to calculate rates for longer than overnight products using the start and end date of the product. In the US, the Federal Reserve Bank is to publish a similar index for SOFR, the replacement rate for US Dollar LIBOR.  The Bank has also opened a consultation on whether there is sufficient market consensus on the conventions for calculating compounded SONIA for them to produce daily screen rates for specific period averages - e.g. 1/3/6 month compounded SONIA rates.

Secondly, from October 2020 the Bank will increase haircuts on LIBOR-linked collateral it lends against such that by the end of 2021 the haircuts will reach 100%. The haircut reduces the amount of a loan which financial institutions can borrow from the Bank by a given percentage, thus providing protection for the Bank if the collateral falls in value. LIBOR linked loans issued from October 2020 will be ineligible for use at the Bank.

The Bank had previously indicated that it would consider using its regulatory powers to speed up the pace of LIBOR transition in 2020. Hauser commented that "we need to see another decisive acceleration effort in 2020 to ensure risk-free rates are adopted across the full range of sterling business, and LIBOR is left behind for good."