The effort to eradicate U.S. dollar LIBOR is showing results in the derivatives market, where trading volume in options on the main successor rate surged to a record Tuesday.

According to CME Group Inc., which lists the derivatives, 89,700 options on three-month futures referencing the Secured Overnight Financing Rate (SOFR) changed hands on February 1. While that still pales in comparison with CME's options on LIBOR-settled eurodollar futures, it was more than half the volume from January, which totaled about 163,000 for the entire month. The momentum ebbed Wednesday, with volume of about 14,000 at around noon in New York.

The transition to futures and options linked to SOFR, which is designated to succeed LIBOR in eurodollar settlement, is unfolding at a critical time in the economic cycle. The Federal Reserve is expected to raise its policy rate next month for the first time in years, and futures are being used to project the rate's path from there.