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 is based on actual transactions in the repurchase agreement (repo) market, where financial institutions lend and borrow money using these securities as collateral. SOFR was introduced as an alternative to the London Interbank Offered Rate (LIBOR) and is considered more reliable due to its foundation in real market activity. It is published daily by the Federal Reserve Bank of New York and is used in various financial products, including loans and derivatives.