The American Financial Exchange and University of Chicago’s law school recently convened leading figures in law and economics and international finance to discuss how the new benchmark will affect rate-setting by banks, mortgage lenders, credit cards companies and other financial institutions—and the impact on hundreds of millions of consumers. The law shool’s Coase-Sandor Institute of Law and Economics co-sponsored the April 3 symposium to begin a discussion on the transition to LIBOR alternatives being introduced, like SOFR. Ameribor, created by the American Financial Exchange, reflects the borrowing costs of US small-and mid-sized banks using a 30-day rolling average of the weighted average daily volume in the AFX overnight unsecured market.
AFX is an electronic exchange for direct interbank lending and borrowing for American financial institutions, and recently announced a record month of trading, with $11.75 billion traded across all products. The month of March had already seen a record day (with $735 million traded) and a record week (with $3.5 billion traded). AFX facilitates the determination of Ameribor, a transaction-based interest rate benchmark for financial institutions via its electronic trading platform. CBOE has played a key role in the development of AFX by bringing the benefits of exchange trading—including standardization, transparency and a rules-based process—to interbank lending, while substantially reducing transaction costs through an electronic market. Cboe operates the web-accessible, secure, electronic trade matching engine and supports surveillance and membership services.