Some market participants question a US plan to replace the London Interbank Offered Rate with the Secured Overnight Financing Rate, which is based on repo trading, while others think it could stabilize the market. “Repo is already the most important building block of the financial market, but if swaps were to trade tomorrow using the new SOFR benchmark, it would expand repo’s influence even further and increase the connectivity between the two markets,” said Edward Fisher of BNY Mellon.
