Trading begins today on the new American Financial Exchange (AFX), an overnight market for interbank loans.
The startup exchange seeks to create a market in a new financial index, Ameribor.
AFX hopes to establish its patented American Interbank Offering Rate as a commonly used benchmark interest rate for loans and trading products. The rate would be established through a market auction of banks making bids and offers through the AFX on loans from other banks. The benchmark and exchange are targeted to the approximately 6,000 small and mid-sized banks in the United States.
The current benchmark for interbank loans is the widely used and reported London Interbank Offered Rate (Libor). Libor is determined by a survey of the rates used by the largest banks for interbank lending and has come under increasing fire over the past decade for rate fixing among survey banks.
Benchmark interest rates have been created in other markets, including Europe and China, in recent years. “The world’s largest market does not have a rate,” said Dr. Richard Sandor, AFX chairman and CEO. Dr. Sandor spoke Thursday Dec. 10 at the third annual Options Alliance conference in Chicago.
OPTION TRADING GOES RETAIL
The Options Alliance conference ended with a startup showcase, where two firms focused on the market for professional traders specializing in options announced products designed to bring options trading to retail traders.
WhatsTrading.com launches today to bring the TradeAlert derivatives market intelligence used by financial professionals to retail traders.
RB Technologies brings its RBTrader as a more easily understandable version of its professional options data, analytics, and trading tools.