Easing of trading curbs is no quick fix for term SOFR swaps

ARRC’s new guidelines will do little to improve liquidity, but may keep a lid on spiralling basis

The relaxation of restrictions on trading swaps linked to a term version of the secured overnight financing rate (SOFR) may not do much to close the basis with overnight equivalents – though it could prevent the pricing discrepancy from spiralling out of control.

Last month, the Alternative Reference Rates Committee – the Federal Reserve-backed group tasked with steering markets away from US dollar Libor – caved to market pressure and permitted dealers to trade term SOFR basis swaps with

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