TEHRAN, April 03 -The New York Federal Reserve will launch a benchmark U.S. rate on Tuesday to potentially replace Libor, and market participants hope it will prove more reliable after a long and complex switchover.
TEHRAN, Young Journalists Club (YJC)-The New York Federal Reserve will launch a benchmark U.S. rate on Tuesday to potentially replace Libor, and market participants hope it will prove more reliable after a long and complex switchover.
The New York Fed will begin publishing the Secured Overnight Financing Rate (SOFR), the first step in a multi-year plan to transition more derivatives away from the London interbank offered rate (Libor), which regulators say poses systemic risks if it ceases publication.
Analysts have struggled to explain a recent jump in Libor, which has reached nine-year highs USD3MFSR=X even as bank credit quality is seen as solid.
Increased short-term Treasury issuance and declining demand for credit due to tax reforms are deemed the most likely factors. A decline in interbank lending has reduced the robustness of the rate, which is sometimes estimated rather than based on actual transactions.
Source:Reuters
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