News & Insights

ARRC formally recommends the CME Group’s forward-looking SOFR Term Rates

On 29 July 2021, the Alternative Reference Rates Committee (ARRC), a group of private-market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York in 2014 to lead the LIBOR transition in the United States, announced its decision formally to recommend CME Group’s forward-looking Secured Overnight Financing rate (SOFR) and term rates (SOFR Term Rates).

As regards the recommended use case scenarios for SOFR Term Rates, the ARRC announced in July that it:

(a) supports the use of SOFR Term Rates for business loan activities given adapting to an overnight rate could be more difficult for the loan market; 
(b) does not support the use of SOFR Term Rates for the vast majority of the derivatives markets, except for end users to hedge cash products using the SOFR Term Rates; and 
(c) continues to recommend using other forms of overnight and averages of SOFR where possible.

The recent announcements by the ARRC represent a major step towards market preparedness for transitioning away from LIBOR settings (all but 1-month, 3-month, 6-month and 12-month USD Libor) by 31 December 2021.

For more details on the formal recommendation of SOFR Term Rates by the ARRC, please see here.

Key Contacts

Simon Deane

Consultant | Banking and Finance

Email or call +852 2825 9209

Related Services and Sectors:

Banking and Finance

Portfolio Builder

Select the legal services that you would like to download or add to the portfolio

Download    Add to portfolio   
Title Type CV Email

Remove All


Click here to share this shortlist.
(It will expire after 30 days.)