Libor Transition Reaches Key U.S. Milestone With SOFR Term Rate

Officials overseeing the U.S. transition away from the London interbank offered rate have formally endorsed a series of forward-looking term benchmarks tied to the Secured Overnight Financing Rate, a move many anticipate will propel its wider adoption across markets.

The Federal Reserve-backed Alternative Reference Rates Committee on Thursday ratified CME Group Inc.’s term rates for one-, three- and six-month tenors based on SOFR futures traded. The recommendation comes following the completion of a key change in interdealer trading conventions on July 26, the first phase under the ‘SOFR First’ initiative.

The announcement is expected to pave the way for SOFR’s ...