Intercontinental Exchange, Inc., commonly known as ICE, has announced its shift of the American Interbank Offered Rate, now rebranded as ICE AMERIBOR, to the supervision of ICE Data Indices, LLC. This development marks a significant transition in how this credit-sensitive benchmark, which gauges the borrowing costs for small, medium, and regional banks throughout the United States, will be managed.
AMERIBOR serves as an important indicator of the interest rates associated with fully-funded overnight unsecured loans on the AFX Marketplace. Its volume-weighted calculation offers a transparent and market-driven perspective on prevailing credit conditions, which is crucial for financial decision-making.
The benchmark is integral to over 1,000 financial institutions, including banks, providing a range of rates like rolling averages, as well as 30- and 90-day term benchmarks. These rates help to illustrate funding conditions over both short and longer terms, making them essential for participants in the financial market. The methodology for calculating AMERIBOR and its daily published rates can be accessed via the ICE website, ensuring transparency.
According to the Chief Product Officer at ICE, the AMERIBOR accurately represents the real funding costs associated with U.S. community and regional banks. It works in tandem with the Secured Overnight Financing Rate (SOFR) to create a competitive environment for banks as they navigate a changing lending landscape. The incorporation of AMERIBOR into the suite of ICE Indices is seen as a strategic enhancement, given that these indices underpin more than $2 trillion in assets under management.
Earlier this year, ICE acquired AFX, the previous administrator responsible for AMERIBOR. The recent transition allows ICE Data Indices to take charge of AMERIBOR’s governance, production, and publication processes. This adjustment aims to bolster the services provided to institutions that also benefit from ICE’s mortgage technology network.
ICE boasts significant expertise in the administration and publication of indices that are widely utilized across global markets. With over $2 trillion in assets linked to ICE Indices, the organization maintains 7,000 indices covering various sectors including fixed income, equity, currency, commodity, and mortgage markets. This extensive track record, spanning over five decades, underlines ICE’s reliability and status as a trusted provider in the finance industry.
As the landscape of lending continues to evolve, the impact of AMERIBOR under the ICE banner is poised to be substantial, potentially enhancing the financial positioning of smaller banks and providing them with the necessary tools to thrive amid competitive pressures. The addition of AMERIBOR to the ICE portfolio signals a commitment to supporting the health of community and regional financial institutions in their efforts to better serve their clients and adapt to ongoing market shifts.