ARRC Welcomes CME Group’s SOFR First for Options Announcement

  • Sources: tradersmagazine.com and Federal Reserve Bank of New York

Treliant Takeaway:

Treliant helps global banking institutions manage the transition away from LIBOR settings, which ended for Sterling, Swiss franc, Japanese yen, and euro on December 31, 2021. The transition continues for U.S. dollar LIBOR to its replacement rate Secured Overnight Financing Rate (“SOFR”) ahead of its cessation in mid-2023. Our consultant team has deep experience helping our global banking clients prepare for and manage the complexity of regulatory change.

Highlights:

The Alternative Reference Rates Committee (“ARRC”) has issued a statement applauding the CME Group’s announcement regarding its SOFR First for Options initiative. The initiative seeks to encourage the transition away from Eurodollar options to SOFR options and is set for June and July of this year.

Specifically, the CME Group announced the following incentives and actions:

  • Exchange trading fees waived in June and July
  • Enhanced liquidity provisions
  • Sunsetting of Eurodollar Options Contracts

In the statement issued by the ARRC John C. Williams, President of the Feral Reserve Bank of New York and Co-Chair of the Financial Stability Board’s Official Sector Steering Group, said, “Moving exchange-traded options to robust reference rates like SOFR is essential to accomplishing a successful transition away from U.S. dollar Libor”

Author

Elizabeth Legg

Elizabeth Legg, is a Principal Consultant in Treliant’s Capital Markets Regulatory Change Management practice, specializing in navigating global banks through significant regulatory reform initiatives and the end-to-end delivery of complex transformation programs. Elizabeth’s expertise spans operations, IT, and front office to deliver global and cross functional transformation. At Treliant and…