It's one of the most confounding questions facing regulators in the fight to phase out the London interbank offered rate (LIBOR): How do you wean everyone from asset managers and traders to corporate treasurers off derivatives that are so ubiquitous, they've become part of the fabric of the financial system?

For the better part of three years, U.S. officials have been preaching patience. LIBOR-based interest-rate swaps, futures, and options—among the most liquid markets in the world—would gradually give way to new securities tied to new benchmarks, they said, including the Secured Overnight Financing Rate (SOFR), anointed successor to dollar LIBOR.

Yet activity in those markets isn't disappearing. What's more, acceptance of alternative products has been slow. While some headway has been made, average open interest in three-month SOFR futures barely topped 5 percent that of eurodollar contracts last month. And recent high-profile milestones in the LIBOR transition that were expected to jumpstart trading in the new instruments have delivered relatively modest boosts so far.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.