SOFR Academy Calls for Congressional Support to Advance Credit Spread Supplements for SOFR which can Promote U.S. Economic Growth, Strengthen Financial Stability, Bolster Banks’ Lending Capacity, and Help Ensure U.S. Global Competitiveness.
SOFR Academy has submitted a letter to Chairmen and Ranking Members of the Committee on Financial Services, U.S. House of Representatives, requesting Congressional support to advance a Controlled Pilot Program for the implementation of transaction-based credit spread supplements for the Secured Overnight Financing Rate (SOFR), known as AXI and FXI.
This proposal directly supports the Committee’s legislative priorities as articulated in the Financial Services Innovation Act of 2024 (H.R. 7440) by promoting supervised, market-led financial innovation that enhances systemic resilience and broadens credit access while operating under appropriate regulatory oversight.
The AXI and FXI benchmarks, independently reviewed and validated for alignment with relevant IOSCO Principles for Financial Benchmarks (IBM Promontory, 2024), are designed to address well-documented limitations of a SOFR-only environment by:
- Enabling banks to better manage funding mismatches that emerge during periods of financial stress;
- Supporting continued credit provision by regional and mid-sized banks that are critical to the U.S. economy;
- Preserving a diverse, competitive, and resilient banking system across all market cycles;
- Providing robust, transparent credit spread benchmarks that improve pricing accuracy for loans, derivatives, and credit-linked instruments;
- Maintaining U.S. competitiveness relative to major global markets—including the Eurozone and China—which continue to rely on credit-sensitive benchmarks.
The AXI & FXI Controlled Pilot Program offers policymakers and market participants a carefully managed path to test and refine these credit spread supplements in real-world conditions, providing valuable supervisory insight while helping safeguard the flow of credit during future periods of economic uncertainty which supports U.S. economic growth.
This note is provided for informational purposes by SOFR Academy, Inc. (Sofr.org), a financial engineering firm that develops tools to support global financial market participants and public institutions. The firm’s products are designed to complement (near) risk-free rates and promote well-functioning credit markets. Headquartered in New York, SOFR Academy works with market participants, academics, and regulators to strengthen financial system resilience and transparency. SOFR Academy’s backers include 8VC, and former Goldman Sachs partner Robert Litterman who developed the Black–Litterman model together with Fischer Black in 1990. For more information, please visit www.SOFR.org.
This note is not designed to be taken as advice or a recommendation for any investment decision or strategy. Readers should make an independent assessment of relevant economic, legal, regulatory, tax, credit, and accounting considerations and determine, together with their own professionals and advisers, if the use of any index is appropriate to their goals. Neither the USD Across-the-Curve Credit Spread Index (AXI), nor the USD Financial Conditions Credit Spread Index (FXI) are associated with or sponsored by the Federal Reserve Bank of New York or any regulatory authority.
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