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So Far... and Is SOFR So Good?

Posted by Jacqueline Cook on Jul 30, 2021 3:27:00 PM

By Jacqueline Cook, Senior Knowledge Development Lawyer

Following much anticipation, the Alternative Reference Rate Committee (ARRC) has announced its official recommendation of the CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates (SOFR Term Rates). Market participants should now have "all the tools"[1] needed to transition to US dollar (USD) SOFR.

Earlier this week, ARRC issued two press releases:

  • publishing (a) conventions for SOFR Term Rates and (b) best practice recommendations for the use of SOFR Term Rates, and announcing the SOFR First Convention switch for USD linear swap trading;[2] and
  • recommending CME Group SOFR Term Rates and publishing a factsheet on key steps and milestones for the LIBOR transition.[3]

ARRC’s announcement has been welcomed as "an important milestone for the industry and the continued development of the broader SOFR ecosystem."[4]

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Topics: SOFR, LIBOR, Alternative Reference Rate Committee, SOFR Term Rates

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Ellis Lawson is a partner in the Trade & Export Finance Group in Sullivan's London office. He has extensive experience across a wide range of finance products and geographies, having spent significant portions of his career based both in London and in the Middle East and having advised on transactions across Europe, the Middle East and Africa. Ellis is also a speaker for Sullivan's Trade & Export Finance webinars.

 

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