The Alternative Reference Rates Committee ("ARRC") formally recommended CME Group's forward-looking Secured Overnight Financing Rate term rates ("Term SOFR") following the changes in trading conventions on July 26, 2021 under the "SOFR First Initiative."

ARRC Chair Tom Wipf stated that the formal recommendation concludes the ARRC's  Paced Transition Plan, meaning market participants "now have all the tools they need as we enter the transition's homestretch." Federal Reserve Board Vice Chair for Supervision Randal K. Quarles concurred, stating that "all firms should be moving quickly to meet our supervisory guidance advising them to end new use of LIBOR this year."

In a related fact sheet, the ARRC outlined past milestones making this recommendation possible, and explained that SOFR is "the best replacement" for USD LIBOR because it (i) will not dry up during market stress, (ii) is resilient to market evolution and (iii) cannot be easily manipulated, as it is entirely transaction-based.

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