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US swap market may become multi-rate world, say dealers

If alternative rates gain traction in cash market, traders say users will want hedges linked to them

Choice-of-alternative-benchmarks

Dealers believe the US interest rate swap market will move into a multi-benchmark world, with instruments being pegged not only to regulator-approved risk-free rates, but also term and credit-sensitive rates.

The US Alternative Reference Rates Committee has recommended the use of a backward-looking, compounded version of the secured overnight financing rate (SOFR) as the replacement for US dollar

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