3-Month SONIA (Sterling Interest Rate) Futures Margin & Contract Specifications

What Is the 3-Month SONIA (Sterling Interest Rate)?

The Sterling Overnight Index Average (SONIA) represents the actual overnight unsecured borrowing rates transacted between banks in the United Kingdom. It is calculated and published daily by the Bank of England (BoE). Similar to the U.S. SOFR, SONIA is one of the most important short-term risk-free rates in the UK financial market and is used to reflect market expectations for the cost of overnight sterling funding over the next three months.

The 3-month SONIA rate represents the market’s expectation of the average daily overnight SONIA rate over the coming three months, calculated as a compounded average. It is quoted on a (100 – interest rate) basis.

Factors Affecting the Price of 3-Month SONIA Futures

1. Bank of England (BoE) Policy Rate

SONIA closely tracks the BoE’s policy rate. If the BoE announces a rate hike or signals a strong tightening bias, prices of 3-month SONIA futures will adjust accordingly.
Speeches by central bank officials and views expressed in meeting minutes about future economic conditions can alter market expectations for the three-month interest rate path and thus affect futures prices.

2. UK Economic Data

Inflation is the BoE’s primary policy concern. If CPI comes in above expectations or employment data is strong, markets tend to expect the BoE to maintain high rates or raise rates further to combat inflation, leading to lower 3-month SONIA futures prices.
When GDP growth is strong, the likelihood of rate cuts diminishes; conversely, if recession risks increase, markets may bet on rate cuts, pushing futures prices higher.

3. Market Liquidity

The 3-month SONIA rate is also influenced by funding liquidity. For example, when excess reserves in the banking system are abundant, SONIA typically trades a few basis points below the policy rate. During periods of financial market stress or tight liquidity, the spread between SONIA and the policy rate may widen, causing futures price volatility.

4. Global Market Spillovers

Policy directions of the U.S. Federal Reserve or the European Central Bank often have spillover effects. For instance, sharp movements in U.S. Treasury yields can influence expectations for BoE policy rates.

5. Risk Sentiment

Major international events—such as geopolitical conflicts or trade sanctions—can trigger risk-off sentiment. Markets may then anticipate economic slowing and lower future interest rates, leading to a rise in 3-month SONIA futures prices.

6. Technical and Seasonal Factors

Three-month SONIA futures are based on the compounded average of daily SONIA rates over a three-month period. As a result, each day’s actual overnight rate during the contract period affects the final settlement price.
At quarter-end or during special holidays such as Christmas, interbank borrowing demand may temporarily shift, causing short-term fluctuations in overnight rates.

Three Month SONIA Index F Margin

How much money is needed to trade futures? At the beginning, the required margin is the initial margin. While holding a position, the margin after deducting floating profits and losses must remain above the maintenance margin; otherwise, a margin call will be issued. For day-trading margin, only half of the margin is required, provided the position is closed before the market closes.

Foreign Futures

Three Month SONIA Index F Contract Specifications

Here is a summary for traders of the contract specifications, exchange, trading hours, minimum price fluctuation, and available trading months for Three Month SONIA Index F Futures.

Three Month SONIA Index FLast Trading Day

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