A method for calculation of SOFR (secured overnight financing rate)- a type of daily SOFR– that represents a daily weighted average (weights applied for non-working days: weekends and holidays) of daily SOFR over an interest accrual period, that is calculated using compounding. The calculation method uses the overnight SOFR rate, which is then compounded daily during the interest period to determine the applicable interest rate. Rate calculation can be based on various conventions in terms of lookback days or payment delays to account for the differences between a gap between due payment and identified payments.

The broader category of daily SOFR includes daily average SOFR and daily compounded SOFR.