Interbank rates, including prominent examples such as LIBOR and SOFR, are critical benchmarks in the financial industry that influence the valuation and utility of interest rate options and other financial instruments.
SOFR (Secured Overnight Financing Rate) is a benchmark interest rate for dollar-denominated derivatives and loans that reflects the cost of borrowing cash overnight collateralized by U.S. Treasury securities, providing a stable and tamper-resistant alternative to LIBOR.
