Private sector lender Axis Bank today announced its first derivative transaction linked to SOFR (Secured Overnight Financing Rate).
SOFR is the recommended US Dollar interest rate benchmark that is expected to replace LIBOR at the end of 2021.
Commenting on the transaction, Neeraj Gambhir, group executive & head of treasury, markets & wholesale banking products at Axis Bank said, "The global financial markets are witnessing a significant structural change because of LIBOR transition. This affects all market participants including banks in India. We are excited to be one of the first banks in India to have achieved this milestone.”
On Thursday, the Reserve Bank on Thursday had asked banks and financial institutions to use any widely accepted alternative reference rate (AAR) instead of LIBOR as the reference rate for entering into new financial contracts.
Given its far-reaching impact, LIBOR transition is a well flagged event in the global derivatives markets and has kept banks, benchmark administrators, regulators and other market participants engaged over the last year or more, Axis Bank said in the release.