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 small and midsized banks — mainly those with about $1 billion to $50 billion in assets — can lend and borrow short-term funds. It allows smaller 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 141 members across the U.S. AFX has a presence in 35 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 small- to mid-sized banks. AFX publishes its Ameribor rate on the website www.ameribor.net.

AFX is an effort on Sandor's part to bring standardization and transparency to interbank lending while reducing transaction costs through an electronic market.[1]

CBOE hosts, operates and provides surveillance for the market, and Chicago-based Northern Trust acts as a settlement bank. CBOE Holdings CEO Edward T. Tilly serves as an AFX director.

On its first day of trading on Friday, December 11, 2015, a total value of $15 million was transacted, which the exchange said had exceeded expectations.[2]

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.[3]

AFX membership grew to 68 institutions (60 banks and 8 non-banks) as of December 12, 2017, and 80 members (70 banks and 10 institutions) on March 9, 2017. It posted a record trading day on March 15, 2018 across AFX products of $700 million, and a record week that week with $2.5 billion worth of trades.[4]

Products and Services

AFX currently provides the following categories of products:[5]

  • 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 mid-sized American banks based on actual transactions and a proprietary calculation methodology.

Key People

References

  1. CBOE, Northern Trust and Sandor team on new financial exchange. Crain's Chicago Business.
  2. American Financial Exchange (AFX) Announces Results Of Its First Day Of Trading And Future Plans. press release via Mondovisione.
  3. American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights. American Financial Exchange.
  4. 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.
  5. About AFX. AFX.