CME Group announces initiative to encourage ‘SOFR first’ options trading

To help accelerate the growth of Secured Overnight Financing Rate options trading, CME Group today announced a new “SOFR First for Options” initiative that will kick off in June. The initiative “will help propel successful transition of the exchange-traded options market, one of the last key remaining markets that still needs to shift away from U.S. dollar Libor ahead of its cessation in mid-2023,” according to the Alternate Reference Rates Committee.

Among other things, CME Group will take steps to provide a market-wide fee waiver for SOFR options in June and July, and introduce additional market making incentives to help enhance liquidity. CME Group will also sunset the listing of long-dated quarterly Mid Curve and Eurodollar options that, upon expiration, will be replaced by SOFR options.