SOFR phase-in for cash products sparks ‘mismatch’ fears
Official proposal for one-year transition period could lead to basis risk, participants say
A plan to move existing US cash loans from Libor to a new risk-free rate over the course of one year could cause them to diverge from related derivatives products, market participants warn.
The Alternative Reference Rates Committee’s proposal to use a phase-in period for consumer products such as adjustable-rate mortgages and student loans is a departure from existing plans to shift swaps to a
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