RFR Adoption in Cleared Rates Swaps – 2025 Update

Key Takeaways

• 62% of cleared swaps use RFR indexes in 2025
• GBP, JPY, CAD transitions largely complete
• USD OIS split: 156T SOFR, rest FedFunds
• Non‑OIS volumes fell 94% in transitioned currencies
• Hypothetical cessations could reduce IBOR trades to 2.2%

Pulse Analysis

The cleared rates‑swap landscape in 2025 provides a granular barometer of the broader risk‑free rate (RFR) transition. While the aggregate RFR share exceeds 60%, the distribution is uneven: the United Kingdom, Japan and Canada have effectively migrated their overnight index swaps (OIS) to SONIA, TONA and CORRA, respectively, delivering robust market depth and tighter spreads. In contrast, the United States remains bifurcated, with $156 trillion of SOFR OIS coexisting alongside a substantial FedFunds OIS segment, underscoring the inertia of legacy benchmarks and the operational challenges of a full switch.

Beyond OIS, the contraction of non‑OIS swap volumes in transitioned economies signals a reallocation of trading activity toward simpler, more transparent instruments. The $14.9 trillion remaining non‑OIS notional in these markets represents a 94% decline from 2020, reflecting both the cessation of IBOR‑linked products and the market’s preference for RFR‑based structures. Conversely, non‑transitioned regions—particularly the euro area and Australia—have seen non‑OIS volumes more than double, driven by continued reliance on Euribor and BBSW, which sustains legacy pricing conventions and complicates cross‑border hedging.

Looking ahead, policy‑driven cessations of residual IBORs could accelerate convergence toward a near‑universal RFR framework. Modeling suggests that eliminating the remaining Euribor, FedFunds, and BBSW benchmarks would shrink IBOR‑linked cleared trades to roughly 2% of total volumes, dramatically reducing basis‑risk exposure and simplifying collateral management. Market participants, regulators, and infrastructure providers must therefore coordinate on data standards, fallback language, and liquidity provisioning to ensure that the final phase of the transition proceeds without market disruption, unlocking the efficiency gains promised by the RFR paradigm.