CME - LIBOR Reform. What Will Work?
What index will work as a LIBOR replacement? Consternation over the question of replacing LIBOR continues. For two reasons, there is no guarantee that any choice of LIBOR replacement currently advanced by bank regulators will “work.” Things have not gone well for these replacement candidates. Problems include:
- The failure of the SOFR-based derivatives instruments to gain much traction [for example, the Eurodollar Futures contact at CME Group ((CME)), traded roughly 1.8 million contracts ($1.8 quadrillion) on Tuesday, January 29th; the Secured Overnight Financing Rate ((SOFR)) contract, under 1.2 thousand contracts ($1.2 trillion)].
- The