Environmental Financial Products, LLC (EFP) and CBOE Holdings, Inc. (CBOE) today announced plans to launch the American Financial Exchange (AFX), an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds, on December 11. The interbank loan market’s initial contract will be for an overnight loan.
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 $4.7 trillion in assets.
“AFX was designed to bring the exchange model of standardization, transparency and a rules-based process, to interbank lending, while helping to reduce transaction costs through an electronic market,” said Dr. Richard Sandor, chairman of the board and CEO of the exchange. “We look forward to working with CBOE Holdings, our founding banks and directors as we advance this market in the coming years.”
CBOE will operate the web-accessible, secure, electronic trade matching engine and will also support surveillance and membership services. Northern Trust will serve as the settlement bank. CBOE Holdings CEO Edward T. Tilly will serve as an AFX director.
“CBOE is pleased to host and operate AFX, Chicago’s newest exchange. We look forward to continued collaboration with AFX and to leveraging CBOE’s expertise in market innovation and development to further advance this truly innovative marketplace,” said Tilly.
In addition to setting a launch date, AFX announced the appointment of two independent directors to its board, the Honorable Carole L. Brookins and Arthur L. Kelly.
Brookins served from 2001 to 2005 as the U.S. executive director to the World Bank in Washington, D.C. An international consultant, she is currently managing director of Public Capital Advisors, LLC (PCA), as well as a director on corporate and non-profit boards.
Kelly is managing partner and CEO of KEL Enterprises, L.P., a Chicago-based private equity firm. He is a former lead director of Northern Trust and a former member of the board of directors at A.T. Kearney, Inc., where he also served as a senior partner and member of the management committee.