News

Law

Asset Management

Investment Banking

Wealth

Hedge Funds

People

Newsletters

Events

Lists

Trading

Banks turn to new derivatives to shift short-term borrowing

Increased trading in derivatives tied to SOFR has eased some worries about the transition away from Libor

Investors are starting to trade complex derivatives tied to the Federal Reserve’s preferred replacement for the London interbank offered rate, a sign the financial industry is coalescing around a new benchmark for short-term interest rates.

Banks and exchanges are expanding a market for secondary financial products tied to this rate — the secured overnight financing rate, or SOFR — easing worries that lenders and other financial institutions remain underprepared for the shift.

WSJ Logo