SOFR is an overnight rate based on the Treasury repo market. It covers multiple segments of this market, including tri-party, dealer-to-dealer and centrally cleared bilateral repos. Based on $ billion in daily transactions, SOFR adheres closely to the standards set out by IOSCO.
To establish SOFR as a widely used benchmark, an entire ecosystem of products needs to be built around it to encourage trading and generate liquidity in SOFR-related products. This work has begun. Futures contracts for SOFR started trading in May, with all primary dealers pledging to support that market.