A cash settled short-term interest rate (STIR) futures contracts in which the underlying is the average sterling overnight index average (SONIA). SONIA is a collective measure of overnight funding rates in the sterling unsecured market. It is an interest rate benchmark (overnight rate) published by Bank of England based on actual transactions in reflection of the average of the interest rates that banks pay to borrow sterling (currency) overnight from other financial institutions and other institutional investors. SONIA is a risk-free rate (RFR), where no bank credit risk is involved (at least virtually).

Sterling-denominated SONIA futures add to the market’s spread trading and margin offset opportunities, in addition to existing instruments such as Eurodollar futures, Fed fund futures, and SOFR futures.

SONIA futures can be used as part of sterling-denominated interest rate portfolios which may also include gilt futures and  short sterling futures.