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Murex, the global leader in trading, risk and processing solutions for capital markets, powered an overnight indexed swap derivatives transaction for KBank based on THOR, the new Thai reference rate. KBank successfully completed the first such transaction referencing THOR on August 31.
The interest rate swap transaction based on THOR represents a critical inaugural step—it sets the stage for new markets for THOR-linked derivatives and cash products.
KBank, also known as KASIKORNBANK, executed the transaction after bespoke THOR mechanisms and configuration facilitated by Murex, a long-term technology partner to the Thai bank. KBank is Thailand’s largest lender by assets and has 70 years of experience in the country.
“This is a remarkable moment and an important milestone for KBank history and the local financial community to create a robust interest rate derivatives market based on THOR,” said KBank Capital Markets Business Division Head Thiti Tantikulanan. “The KBank team is excited to have been a part of this transaction. Our close collaboration with various stakeholders in Thailand, including the Bank of Thailand and the Murex teams, will contribute to the development of a liquid derivatives market based on the new benchmark rate after the LIBOR discontinuation at the end of 2021.”
In 2019, the Bank of Thailand, with inputs from the Thai Bankers’ Association and the Association of International Banks, established a Steering Committee on Commercial Banks’ Preparedness on LIBOR Discontinuation.
KBank was an active part of the committee, whose tasks included proposing the replacement rate for the Thai Baht Interest Rate Fixing contract (THBFIX), which LIBOR cessation puts at risk. That replacement rate is THOR, which was finalized in April.
“We’re very proud to have been an advising financial institution to the Thai central bank in this critical initiative,” said Thiti Tantikulanan. “To have completed the first transaction using this rate is a great feather in our cap. It is also an important milestone for THOR.”
Murex was thrilled to deliver the core technology to KBank, according to Guy Otayek, CEO of Murex APAC.
“Collaborating with KBank has always resulted in innovative solutions,” said Guy Otayek. “Though we’ve been working with them for many years—KBank has more than 500 active users of MX.3—this transition project represents a longstanding commitment to bringing innovative solutions in Thailand and Southeast Asia. This first transaction powered by MX.3 is another great illustration of our unique expertise to help our client community transition away from LIBOR on data, analytics, operations and accounting, and provide them with the mechanisms to easily adopt new RFRs. This first transaction proves that Murex is the right partner to serve the capital markets here in Thailand.”
