Secured Overnight Financing Rate
a.k.a. SOFR
The main US benchmark for overnight borrowing costs, based on real repo trades backed by Treasuries. It replaced LIBOR.
The Secured Overnight Financing Rate (SOFR) measures what it costs to borrow cash overnight using US Treasury bonds as collateral. It is calculated from a huge volume of actual repo transactions and published each business day by the New York Fed.
It replaced LIBOR as the main dollar benchmark after LIBOR was hit by a rate-rigging scandal. Because SOFR comes from real trades rather than banks' estimates, it is much harder to manipulate. Trillions of dollars of loans and derivatives are now priced off it.
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