Cash Market Fallback Methodology Reform
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Individual Reform: Cash Market Fallback Methodology Reform 2026 - 2027

Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

No data available for the deliverable: Transitioning cash market products (loans, bonds, money market instruments) from JIBAR to ZARONIA by defining a fallback methodology: compounded ZARONIA + credit adjustment spread (CAS)

Summary

SARB formally announced JIBAR's permanent discontinuation on 3 December 2025, simultaneously fixing the Credit Adjustment Spread (CAS - a small margin added to ZARONIA to compensate for the economic difference between JIBAR and ZARONIA on legacy contracts). The FSCA and the PA issued Joint Communication 1 of 2026 in March 2026, setting out supervisory expectations, while the regulatory directive requiring no new JIBAR-linked contracts came into formal effect on 1 May 2026. The first ZARONIA-linked bond was issued by Standard Bank and the first ZARONIA-linked trade was executed on the Tradeweb platform with Rand Merchant Bank (RMB) in early 2026. SARB's Market Practitioners Group (MPG - a joint public-private body) published a tax white paper on transition implications, with public comments due 21 May 2026. Full JIBAR cessation is expected by 31 December 2026 after which ZARONIA becomes the primary benchmark from 1 January 2027.

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Is it working?

The transition is on a firm, legally anchored timeline. The 'No New JIBAR' directive (in effect from 1 May 2026) caps growth of new legacy exposure. The first ZARONIA-linked instruments have been issued and traded, confirming the market is accepting the new benchmark. However, approximately R45tn in total financial exposure still references JIBAR and needs to be transitioned before 31 December 2026. Each contract requires individual analysis and often client consent to change.
The MPG tax white paper confirms that the tax treatment of transition mechanics is not yet fully resolved. The Financial Sector Regulation Act amendment for "tough legacy" contracts must be enacted before year-end. Institutions that delay active transition face a genuine operational risk as the deadline approaches.

Actions

Key actions include: JIBAR cessation announced 3 December 2025; Credit Adjustment Spread fixed; FSCA/PA Joint Communication 1 of 2026 issued; 'No New JIBAR' directive in effect from 1 May 2026; Bloomberg publishing daily ZARONIA-plus-CAS rates from April 2025; Financial Sector Regulation Act amendment being prepared for 'tough legacy' contracts.

Are there plans?

SARB MPG published detailed Transition Approach Recommendations in December 2025; these covered: how to transition legacy JIBAR contracts to ZARONIA; fallback language for new contracts; and how to handle "tough legacy" contracts (older contracts without adequate fallback provisions) through an amendment to the Financial Sector Regulation Act. Designated Replacement Rate notices (formal government announcements confirming ZARONIA as JIBAR's replacement for specific contract types) are expected in Q4-26.

Is it on the agenda?

Yes. This reform is actively monitored by SARB, the PA, FSCA and the Cabinet Financial Cluster. The Market Practitioners Group (MPG), a joint public-private body, is the formal implementation vehicle.

Goals

To replace the JIBAR interest rate benchmark (which has been the reference rate for trillions of rands in South African loans, bonds and financial contracts) with the new, more robust ZARONIA benchmark. An interim goal is to manage the transition for all existing contracts that reference JIBAR before it is permanently discontinued on 31 December 2026.

Documents

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: in-progress
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