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American Financial ExchangeSM (AFXSM), an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds, announced today the results of its first day of trading on Friday, December 11, 2015. Exceeding expectations, a total value of $15 million was transacted on the first day of operations.
The first transaction for an overnight, unsecured loan in the AFX was executed by Frost Bank of San Antonio, Texas and Associated Bank of Green Bay, Wisconsin, for $5 million at 27 basis points. Other early trades were done by MB Financial of Chicago, Illinois, and Old National Bank of Evansville, Indiana. Other AFX founding participants include Arvest Bank of Arkansas, Brookline Bank of Massachusetts and ServisFirst Bank of Alabama. Founding participants are spread throughout the United States.
“We at Frost Bank are very proud to have been a participant in the first trade on the new American Financial Exchange. This facility has already introduced us to new counter parties and as it grows it will vastly expand the opportunities to profitably employ our excess reserves,” said William H. Sirakos, Senior Executive Vice President of Frost Bank. “The AFX product is unique in its simplicity; a bank just needs to have its credit people approve lines of credit for other banks who are members of the exchange. Once that is done, you simply post a rate at which you would be comfortable buying or selling funds from or to those approved counter parties. The rest is just an electronic matchup of those buyers and sellers."
“Associated Bank has a very optimistic outlook about the start of AFX and we were proud to have been a part of the first transaction on this new exchange,” said R. Timothy Watson, Executive Vice President and Corporate Treasurer of Associated Bank. “We believe that the ease of access and efficiency of the platform is a benefit to banks at a time when there is a need for additional sources of liquidity.”
Based on the success of the first day and given the smooth performance of the exchange infrastructure, AFX is expected to announce in January 2016 the start of its 30-day, unsecured loan product, as well as other new product announcements.
“We are very pleased with the opening day results and the support of our founding banks. These banks represent the backbone of lending in America and we hope that the efficiency and transparency of this market can have direct benefits to them and their customers,” said Dr. Richard Sandor, Chairman and CEO of AFX.
The exchange opened at 8.30 a.m. (CT) on Friday with a special bell-ringing ceremony held on the floor of the Chicago Board Options Exchange (CBOE), with the presence of Steven Koch, Deputy Mayor of the City of Chicago, Dr. Richard L. Sandor, Chairman and CEO of AFX; Edward T. Tilly, CEO of CBOE Holdings, Inc.; R. Timothy Watson, Executive Vice President and Corporate Treasurer of Associated Bank; David E. Greiwe, Senior Vice President and Treasurer of MB Financial Bank; William H. Sirakos, Senior Executive Vice President of Frost Bank; and Jim Schmidt, Senior Vice President and Assistant Treasurer of Old National Bank. Watch the ceremony here.
AFX was developed by Environmental Financial Products, LLC (EFP), a prominent exchange incubator headed by Dr. Richard Sandor, universally recognized as the “father of financial futures,” and CBOE, the creator of the listed options market and numerous other market and product innovations, including securities index options and the CBOE Volatility Indexâ (VIXâ Index).
AFX was created to bring 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. Importantly, AFX expects to respond to the critical need for a transaction-based interest rate benchmark through weekly auctions of a new benchmark rate for U.S. interbank lending, called AmeriborTM.
Designed with the input of participating banks, AFX will focus on 1,740 community and regional banks with between $500 million and $125 billion in assets, which hold a combined total of approximately $4.7 trillion in assets.
