CME Group, the world's leading and most diverse derivatives marketplace, today issued the following statement in response to the Alternative Reference Rates Committee's (ARRC) formal recommendation of CME Term SOFR Reference Rates for use based on their previously outlined best practices:
CME Group's (CME) Q2 results reflect higher market data and information services and lower expenses as well as increase in average daily volume in four of the six products lines.
A group of banks and investors overseeing the shift of trillions of dollars to the new benchmark U.S. interest rate SOFR said on Thursday that they are recommending the use of the CME Group’s term SOFR rates in a move that should boost the move away from Libor. “This formal recommendation of SOFR Term Rates is an achievement for the USD LIBOR transition specifically and for financial stability overall,” said Tom Wipf, the Alternative Reference Rates Committee (ARRC) chairman and vice chairman of institutional securities at Morgan Stanley, in a statement. Investors are facing a year-end deadline to stop basing new loans and trades on Libor, the London Interbank Offered Rate, which is being phased out due to concerns about the amount of derivatives using the rate, which in many cases is based on assumptions about their borrowing costs and not actual trades.