FASB decision important step for Sofr uptake

Author: John Crabb | Published: 14 Nov 2018

The Financial Accounting Standards Board’s (FASB) decision to allow the overnight index swap (OIS) based on the secured overnight financing rate (Sofr) to its recognised list of benchmarks in the US is a crucial step in the rate’s quest for market acceptance.

"If FASB had not approved Sofr OIS as a benchmark, there would have been more hesitation for the entire market to start using Sofr more broadly"

The decision is welcome by members of the hedge accounting sector and across the entire financial system in the US. Sources suggest that had the organisation not approved the rate it would have been a very significant blow as it looks to replace the US dollar London interbank offered rate (Libor) when it eventually expires at the end of 2021.

"The Fasb approving Sofr OIS is a big step to the market accepting it as a replacement to Libor," said...