South Africa’s financial markets are undergoing a foundational transformation as the country transitions from the Johannesburg Interbank Average Rate (JIBAR) to the South African Rand Overnight Index Average (ZARONIA). This shift, part of a global movement toward more transparent and transaction-based reference rates, is reshaping how interest rates are calculated, contracts are structured and risk is managed across the financial system.
While the South African Reserve Bank (SARB) is guiding the transition, its success depends on the readiness and leadership of market participants. Among these, STANLIB Asset Management stands out – not only for its early adoption of ZARONIA-linked instruments but also for its role as the largest private fixed income asset manager in South Africa. STANLIB’s leadership is both influential and instructive.
From JIBAR to ZARONIA: A shift towards more transparency
ZARONIA is a near risk-free rate derived from actual overnight funding transactions with all deposit-taking institutions in the South African money market. It will replace JIBAR, which was based on indicative quotes from the big five banks only. This change addresses long-standing concerns about transparency, potential manipulation and limited market representativeness.
The transition mirrors global reforms such as the replacement of LIBOR with SONIA in the UK and SOFR in the US. These reforms aim to enhance market integrity by anchoring benchmark rates in observable market activity rather than subjective estimates.
ZARONIA offers more transparency, more credibility and more alignment with international standards – key attributes for a modern financial system.
Market leadership in action
In May 2025, STANLIB Asset Management traded two first-of-their-kind transactions in the South African market: the first ZARONIA-linked money market instrument and the first ZARONIA-linked listed bond, both with two local banks as counterparties. These transactions are significant not only for their pioneering nature but also because they help establish the liquidity and pricing benchmarks necessary for broader market adoption.
Insights from the front lines
Eulali Gouws, head of money market at STANLIB Asset Management and a member of the SARB’s ZARONIA sub-working group, recently shared her perspective on the transition’s implications for asset managers. “Currently, the valuation impact is being assessed by asset managers to determine how the transition will impact instruments that need to be converted from JIBAR to ZARONIA. A ZARONIA curve has not been established yet, which means new ZARONIA-linked instruments will still be valued off the JSE Swap Curve.”
This highlights a key transitional challenge: while ZARONIA is operational, the supporting infrastructure – such as a fully developed yield curve – is still evolving. In the interim, asset managers must navigate valuation complexities while maintaining portfolio integrity.
From a risk management perspective, Gouws noted that ZARONIA’s overnight nature introduces a more immediate sensitivity to repo rate changes: “ZARONIA-linked instruments will track changes in the repo rate immediately, unlike JIBAR, which anticipates changes. This will have to be considered when managing interest rate risk in portfolios.”
Operational and compliance considerations
The transition also presents operational and compliance challenges. Systems must be upgraded to accommodate backward-looking interest accruals and ensure accurate valuation methodologies. Compliance teams must integrate new benchmark conventions into reporting and governance frameworks.
Yet these challenges also present an opportunity to invest in more robust systems, more automation, and more accurate data – investments that will yield long-term benefits beyond the transition itself.
Enhancing investor confidence
One of the most important benefits of ZARONIA is its transparency. Because it is based on actual transactions across a wide range of deposit-taking institutions, it offers a more accurate reflection of market conditions than JIBAR, which relied on quotes from just five banks.
“ZARONIA is an actual risk-free rate, based on actual market transactions,” Gouws emphasised. “The chance for manipulation is minimal and investors can be confident that they are earning a yield over a market representative risk-free rate.”
This transparency is especially valuable in fixed income and money market products, where benchmark integrity directly affects investor outcomes.
Looking ahead
The SARB has outlined a phased transition plan, with JIBAR expected to be fully phased out by the end of 2026. Key milestones include the adoption of ZARONIA for linear derivatives from April 2025 and a formal cessation announcement in Q4 2025.
As the transition progresses, the role of institutional leadership will remain critical. By engaging early, investing in operational readiness, and contributing to market development, firms like STANLIB are helping to ensure that the shift to ZARONIA is not only smooth but also strengthens the foundations of South Africa’s financial system.
In a time of change, STANLIB’s approach reflects a broader philosophy: to Invest in More – more transparency, more innovation, more resilience and more confidence in the future of the South African investment industry.
About STANLIB Asset Management
STANLIB Asset Management is one of South Africa’s leading investment managers, with more than R550bn in assets under management as of December 2024. As the institutional asset manager within the Standard Bank Group’s Standard Investment & Asset Management business unit, STANLIB is focused on delivering consistent investment returns. To fulfil this fiduciary duty, it leverages progressive investment strategies and best-in-class, transparent partnerships, including its collaboration with J.P. Morgan Asset Management. This partnership provides clients with more access to global insights and forward-looking strategies.
STANLIB offers a core range of unit trust funds and manages a diverse array of bespoke institutional portfolios across various disciplines and asset classes, including fixed income, multi-asset, listed property, equity, and alternatives. Visit STANLIB.com.
Disclaimer
STANLIB Asset Management (Pty) Ltd, an authorised financial services provider (FSP) under the Financial Advisory and Intermediary Services Act (FAIS), Act No. 37 of 2002 (Licence No. 719).
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