Fed Gov. Quarles: Efforts to Implement SOFR Ahead of Schedule

In just three months since the secured overnight financing rate was published, the number of transactions underlying SOFR on a daily basis has already surpassed the amount of those underlying Libor, Federal Reserve Vice Chairman for Supervision Randal Quarles said during taped remarks at a public roundtable hosted by the Alternative Reference Rates Committee today. He added that SOFR reflects more than $700 billion in overnight repurchase agreement transactions each day.

“One of the many benefits of using a rate so firmly anchored in a market of this depth is that no one can question whether SOFR is representative,” Quarles said. “It clearly is.”

Quarles praised the ongoing effort to move from the Libor to SOFR, noting that the transition is moving ahead of schedule and encouraging both the public and private sectors to continue taking steps to foster the development of SOFR markets. “It is important that we find ways to make it as easy as possible to use SOFR because the risks to Libor are, at this stage, quite considerable,” he said.