A type of SOFR (secured overnight financing rate) that calculate the compounded average of SOFR over a specific (usually customized) time period. Economically speaking, it is a daily index that measures the cumulative impact of compounding the SOFR on a unit of investment (funds lent and borrowed) over time.

In addition to SOFR averages, the SOFR index can be easily referenced by market participants who seek to adopt and implement SOFR-based contracts.

An example of a SOFR index is an index based on a 30-day compounded average of SOFR.