American Financial Exchange (AFX)

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American Financial Exchange
AFX-m-logo.png
Founded 2015
Headquarters Chicago, IL
Key People Richard Sandor, Chairman and CEO
Website http://theafex.com/

The American Financial Exchange is an electronic marketplace created by Dr. Richard Sandor where U.S. banks can lend and borrow short-term funds. It allows banks to trade directly with each other in a forum that discloses bid and ask prices, but allows users to remain anonymous. The exchange, which launched on December 11, 2015, offers a daily market for overnight and 30-day loans.

Currently, the AFX has 163 members across the U.S., with a presence in 50 states and Puerto Rico, representing financial institutions with under $150 billion in assets.

It also has created a new STIR benchmark called the "AMERIBOR," a transaction-based interest rate benchmark for U.S. banks. AFX publishes its AMERIBOR rate on the website www.ameribor.net. A futures contract on the benchmark was launched on AFX's partner exchange Cboe Futures Exchange on August 16, 2019, which also was the 42nd anniversary of the launch of Treasury bond futures.[1]

AFX is designed to bring standardization and transparency to interbank lending while reducing transaction costs through an electronic market.[2]

CBOE hosts, operates and provides surveillance for the market, and Chicago-based Northern Trust acts as a settlement bank.

On its first day of trading on Friday, December 11, 2015, a total value of $15 million was transacted, which the exchange said exceeded expectations.[3]

History

AFX opened on December 11, 2015, with six banks as members and extended its membership beyond banks to also include broker-dealers, private equity firms, business development corporations, hedge funds, futures commission merchants, insurance companies, asset managers and finance companies.[4]

AFX membership has since grown to 163 members, which includes 133 banks. More than 1,000 correspondent bank participants are able to conduct loan transactions through their respective AFX member banks. In addition, membership includes 30 nonbanks, comprising broker dealers, private equity firms, business development corporations, hedge funds, futures commission merchants, insurance companies, asset managers and finance companies. As of October 11, 2019, active AFX markets included overnight, 30-day and 3-month unsecured loans, and 7-day secured loans.

The AFX posted a record trading day on September 19, 2019, of $3.035 billion across AFX products, and a record week that week with $13.017 billion worth of trades for the week of September 16-20, 2019. More than $600 billion in interbank lending and borrowing has traded on the platform since its launch in 2015.[5][6]

In addition, AFX's AMERIBOR is in alignment with all 19 Principles for Financial Benchmarks set forth by the International Organization of Securities Commissions (IOSCO).

Products and Services

AFX currently provides the following categories of products:[7]

  • AMERIBOR Futures: cash-settled 3-month and 7-day contracts based on the compounded daily annualized AMERIBOR interest, or average simple daily annualized AMERIBOR interest.
  • AFX Unsecured Loan Market: a loan market where members commit to lend and borrow short-term funds electronically based on standardized contract specifications.
  • AFX Secured Loan Market:a loan market where members commit to lend and borrow short-term collateralized funds electronically based on standardized contract specifications.
  • AFX Deposit Market: a demand deposit market where members commit to place demand deposits in banks electronically based on standardized contract specifications.

It also offers the AMERIBOR Interest Rate Benchmark: The establishment, through a market auction, of a transaction-based short-term benchmark interest rate called "AMERIBOR," specifically designed for the needs of midsize American banks based on actual transactions and a proprietary calculation methodology.

Key People

References

  1. Cboe Futures Exchange and American Financial Exchange Announce Planned Launch of AMERIBOR® Futures. Press Release.
  2. CBOE, Northern Trust and Sandor team on new financial exchange. Crain's Chicago Business.
  3. American Financial Exchange (AFX) Announces Results Of Its First Day Of Trading And Future Plans. press release via Mondovisione.
  4. American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights. American Financial Exchange.
  5. The American Financial Exchange (AFX) Announces Record Day & Week: Eighty members and membership representing a record of over $1 Trillion in assets. American Financial Exchange.
  6. American Financial Exchange Reaches Record Volume Levels on AMERIBOR Benchmark, Trading More Than a Half-Trillion Dollars in Value Since Inception. American Financial Exchange.
  7. About AFX. AFX.