A reference rate reset is the event at which the interest rate on a floating-rate instrument is updated for the next interest period. The contract names a benchmark, such as SOFR or another floating rate index, a margin over it, and a reset frequency, commonly every one, three or six months. On each reset date a calculation agent reads the benchmark from the agreed source and the new rate applies until the next reset.
With term rates, the fixing is taken shortly before the period begins, so the payment is known in advance. With overnight risk-free rates, which replaced LIBOR in most markets, the rate is usually compounded daily over the period and known only near its end, so contracts use lookbacks or similar conventions. Operations teams must capture each fixing, recalculate accruals and notify counterparties. Resets expose borrowers to interest rate risk, and their timing drives a bank's repricing profile. For bonds, see coupon reset.