The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate that reflects the cost of borrowing cash overnight, secured by U.S. Treasury securities. It was introduced by the Federal Reserve Bank of New York in 2018 as an alternative to the London Interbank Offered Rate (LIBOR), which was phased out due to manipulation scandals. SOFR is based on actual transactions in the repurchase agreement (repo) market, making it a reliable and transparent measure. It is used by financial institutions and businesses to set interest rates on loans, derivatives, and other financial products, promoting stability in the financial system.