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ARTICLE · 08 SEPTEMBER 2021

Start Of A New Term: ARRC Recommends CME Group's Term SOFR

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On July 29, 2021, the Alternative Reference Rates Committee (the "ARRC") formally recommended the forward-looking Secured Overnight Financing Rate ("SOFR") term rates ("Term SOFR") developed by the ...

CanadaFinance and Banking
Kathy Martin
Kathy Martin
Maria Sagan
Maria Sagan
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On July 29, 2021, the Alternative Reference Rates Committee (the "ARRC") formally recommended the forward-looking Secured Overnight Financing Rate ("SOFR") term rates ("Term SOFR") developed by the CME Group ("CME Term SOFR"), a leading derivatives market operator.1 This is an important juncture in the transition from the US dollar ("USD") London Interbank Offered Rate ("LIBOR") to an alternative risk-free rate ("RFR") because it offers market participants an RFR that works similar to LIBOR. In this bulletin, we discuss the ARRC's announcement, the characteristics of CME Term SOFR, the types of contracts that should reference Term SOFR, and the ARRC's conventions for Term SOFR.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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