• The secured overnight financing rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London interbank offered rate (LIBOR).
• Interest rate swaps on more than $80 trillion in notional debt switched to the SOFR in October 2020.
• This transition is expected to increase long-term liquidity but also result in substantial short-term trading volatility in derivatives.

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• The secured overnight financing rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London interbank    offered rate (LIBOR).
• SOFR is based on transactions in the Treasury repurchase market and is seen as preferable to LIBOR since it is based on data from observable transactions rather than on estimated borrowing rates.