September 28, 2021

Volume XI, Number 271

Advertisement

September 27, 2021

Subscribe to Latest Legal News and Analysis

ARRC Formally Recommends Term SOFR

As expected, on July 282021, the Alternative Reference Rates Committee (ARRC) formally recommended the CME’s SOFR Term Rate.  The SOFR Term Rate is known in advance of the related interest period and provides an indicative, forward-looking measurement of SOFR based on market expectations implied from leading derivatives markets.  In this respect, the SOFR Term Rate functions in a manner similar to today’s LIBOR rates.  In contrast, the Daily Simple SOFR or Daily Compounded SOFR used for interest periods beyond overnight can only be determined in arrears.  The SOFR Term Rate thus facilitates in a significant way the transition away from the current LIBOR markets.

The ARRC’s recommendation of the SOFR Term Rate for derivatives is limited to end-user facing derivatives intended to hedge cash products referencing the SOFR Term Rate.  The ARRC does not support the use of the SOFR Term Rate for the “vast majority” of the derivatives market.

Click here to read the press release.

 

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 214
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Michael O'Brien Bankruptcy Lawyer Sheppard Mullin Chicago Law Firm
Partner

Michael O'Brien is a partner in the Finance and Bankruptcy Practice Group and is based in the firm’s Chicago office. He is also the leader of the Derivatives & Structured Products Team.

Areas of Practice

Michael has more than thirty (30) years’ experience in representing clients in structuring and negotiating complex financing transactions and in protecting and exercising their rights thereunder.  The predominant focus of his practice is in the areas of derivatives & structured products and in the financing or leasing of commercial aircraft and...

312.499.6314
Aaron Levy Bankruptcy Attorney Sheppard Mullin Law Firm
Special Counsel

Aaron Levy is special counsel in the Finance and Bankruptcy Practice Group in the firm's New York office.

Areas of Practice

Aaron represents asset managers, investment funds, major banks, insurance companies, broker-dealers and end-users in a range of derivatives and structured products transactions, including financial and commodity swaps, total return swaps, deal-contingent hedges, tender option bonds and structure repos. Aaron has extensive experience with structuring, documenting and negotiating off-exchange derivatives transactions and advising on...

212.896.0606
Associate

Kevin Ryan is an associate in the Intellectual Property Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Kevin focuses on intellectual property litigation and counseling, including patent litigation and portfolio assessments. He also has experience with general civil and commercial disputes.

202.747.2318
Advertisement
Advertisement
Advertisement