The ‘SOFR First’ Initiative will help promote liquidity in SOFR linked markets which in turn supports a smooth transition from LIBOR as well as reliance on the markets that once underpinned it.
NEW YORK: SOFR Academy LLC, a U.S. based education technology firm and data provider having reached more than 36,000 individuals globally since inception, today released the following statement on the Commodity Futures Trading Commission’s (CFTC) Market Risk Advisory Committee’s (MRAC) Interest Rate Benchmark Reform Subcommittee vote to recommend a market best practice for switching interdealer trading conventions from LIBOR to the Secured Overnight Financing Rate (SOFR) for U.S. Dollar linear interest rate swaps.
“This ‘SOFR First’ initiative represents an important step in building SOFR-linked liquidity in the interdealer market. We are supportive of actions that help to accelerate SOFR trading activity which in turn will help to facilitate a smooth transition away from LIBOR and reliance on the markets that once underpinned it” said Marcus Burnett, Chief Executive of SOFR Academy. “Market participants in major geographic jurisdictions outside of the United States who transact in U.S. Dollar derivatives should also take note of this initiative”.
Specifically, the Subcommittee recommends that on July 26, 2021 and thereafter, interdealer brokers replace trading of LIBOR linear swaps with trading of SOFR linear swaps. This MRAC Subcommittee initiative, referred to as “SOFR First,” is the third recommendation that the Subcommittee has referred to the MRAC for consideration in connection with the transition of USD derivatives and related contracts away from LIBOR. Acting Chairman Rostin Behnam is the sponsor of MRAC.
About SOFR Academy
SOFR Academy LLC is a leading financial education technology firm and data provider. SOFR Academy’s panel of advisors include academics from Harvard University, MIT Sloan School of Management, UC Berkeley, New York University and Tsinghua University, as well as experienced financial services professionals. SOFR Academy provides financial education services to corporations, financial institutions, governments and individuals. The firm is headquartered in New York.
Jorge A. Cosano-Martinez
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