Meaning
SOFR is a crucial benchmark interest rate used in financial markets globally.Definition
The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities.Basis and Calculation
It’s based on actual transactions in the Treasury repurchase (repo) market, reflecting low-risk overnight borrowing.Role as a Benchmark
SOFR serves as a key benchmark for various financial products, replacing LIBOR in many contracts due to its robust, transaction-based nature.Author
