The Financial Accounting Standards Board’s
decision to allow the overnight index swap (OIS) based on
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.
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.
"If FASB had not approved
Sofr OIS as a benchmark, there would have been more
hesitation for the entire market to start using Sofr
"The Fasb approving Sofr OIS is a big step to the market
accepting it as a replacement to Libor," said...