General TradingS

Secured Overnight Financing Rate (SOFR)

A benchmark interest rate for dollar-denominated derivatives, loans, and securities based on the cost of borrowing cash overnight using U.S. Treasury securities as collateral. SOFR replaced LIBOR as the preferred reference rate.

Example

“After LIBOR was phased out, the bank switched its adjustable-rate mortgage products to reference SOFR, which stood at 5.3% at the time of the transition.”