--- title: SOFR First for Non-Linear Derivatives Starts on November 8 description: The last phase of SOFR First will involve exchange-traded derivatives with timing to be determined. image: https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/Mergers-May-12-2022-09-31-32-54-AM.jpg --- ![websites-group](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/new-MMG-01.svg) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-new-marketsmedia-logo.svg)](https://www.marketsmedia.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-traders-redlogo.svg)](https://www.tradersmagazine.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-bestexe-logo.svg)](https://www.bestexecution.net/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-fidesk-logo.svg)](https://www.fixglobal.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-fixglobal-new-logo.svg)](https://www.fixglobal.com/) - [*Facebook*](https://www.facebook.com/MarketsMedia/) - [*Twitter*](https://twitter.com/marketsmedia) - [*Linkedin*](https://www.linkedin.com/company/markets-media-llc) - [Newsletter](https://articles.marketsmedia.com/sofr-first-for-non-linear-derivatives-starts-on-november-8#popup-newsletter) #### Want the latest news on securities markets -- FREE? 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Acting Chairman Rostin Behnam is the sponsor of MRAC. [SOFR First](https://www.cftc.gov/media/6176/MRAC_SOFRFirstSubcommitteeRecommendation071321/download), a market best practice [adopted](https://www.cftc.gov/PressRoom/PressReleases/8409-21) by the MRAC at its July 13, 2021 meeting, is a four-phase initiative that represents a prioritization of interdealer trading in SOFR rather than LIBOR. The first two phases of SOFR First for the transitioning of linear swaps and cross currency swaps occurred on July 26, 2021 and September 21, 2021. SOFR First for non-linear derivatives is the third phase of the initiative and is recommended to occur on November 8, 2021. Specifically, starting November 8, 2021, interdealer brokers are encouraged to change USD non-linear derivative trading conventions to SOFR, and dealers are encouraged to specify** physical **settlement for SOFR-based swaptions **until** a benchmark for SOFR swap rates is published in a tradeable form **and** ISDA publishes updated settlement provisions for the USD SOFR ICE Swap Rate. For SOFR First purposes, USD non-linear derivatives include swaptions, caps and floors. Other products like exotic options, Bermudan options and constant maturity swaps are not included, and may continue trading in the interdealer market after November 8, 2021. SOFR First for non-linear derivatives is focused on the interdealer market only, and therefore does not impact the availability of USD LIBOR non-linear derivatives in dealer-to-client transactions. While dealers may still execute USD LIBOR non-linear derivatives with clients after November 8, 2021, the U.S. banking regulators’ guidance states that dealers should cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021. The fourth and last phase of SOFR First will involve exchange-traded derivatives with timing to be determined.See SOFR First for Non-Linear Derivatives Frequently Asked Questions [here](https://www.cftc.gov/media/6636/MRAC_SOFRFirstTransitionFAQs_NonLinear101521/download). *SOFR First is the work of the MRAC and does not necessarily reflect the views of the Commodity Futures Trading Commission.* Source: CFTC [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/sofr-first-for-non-linear-derivatives-starts-on-november-8) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/sofr-first-for-non-linear-derivatives-starts-on-november-8) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/sofr-first-for-non-linear-derivatives-starts-on-november-8) ![email](https://articles.marketsmedia.com/hubfs/Markets%20Media/email.svg) ### NEWSLETTER SIGN UP And receive exclusive articles on securities markets ### Related articles 1. 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