Letter to The Honorable Michelle W. Bowman regarding Implementation of IOSCO-Aligned Credit Spread Reference Supplements for SOFR which Support Financial Stability, Strengthen U.S. Economic Resilience, and Promote Credit Supply.
SOFR Academy’s CEO, Marcus Burnett, has written a letter to Governor Michelle Bowman regarding ongoing market dialogue and recent independent research concerning the potential role of credit-sensitive supplements to the Secured Overnight Financing Rate (SOFR). The letter outlines outstanding concerns raised by U.S. Regional banks about structural mismatches between their funding costs and SOFR-linked assets—particularly during periods of market stress—and highlights recent academic work suggesting that such mismatches may impair credit availability when it is most needed. It also references the lingering market caution following the withdrawal of other credit sensitive benchmark proposals. As noted in the letter, credit-sensitive benchmarks remain in use across other major financial jurisdictions, including Europe and China. In the absence of a credible domestic alternative, U.S. institutions may find themselves at a structural disadvantage during future periods of volatility.
Read the letter here.
