Giancarlo, others praise Ameribor as one “choice” for new post-Libor benchmark

Sarah Rudolph

Sarah Rudolph

Editor-in-Chief

SOFR is not the only Libor-replacement game in town. At a press briefing given last week by American Financial Exchange (AFX), the exchange that introduced the Ameribor benchmark, former CFTC Chairman Chris Giancarlo said that with the U.S.’s diverse economy, more than one benchmark is needed to replace the Libor, and Ameribor may be more appropriate for small, medium-sized and regional banks. Tom Broughton, an AFX member and the CEO of ServisFirst Bank, said Ameribor was “the only benchmark appropriate for a bank,” adding, “We looked at SOFR as a benchmark – it’s just not appropriate for a bank of any size.” He said the transition at ServisFirst from Libor to Ameribor was “seamless.” Barbara Novick, one of the co-founders of BlackRock, said that “with the two types of rates out there, you have to look at the use case, the composition and construction…Ameribor is transaction based and very transparent.”

Last week the Alternative Reference Rates Committee (ARRC) backed the term rate created by CME Group based on SOFR to replace Libor. But Giancarlo, who is an independent director at AFX, wrote an opinion piece recently for American Banker titled “Libor is dead. Long live choice,” in which he said that Ameribor, created by Richard Sandor, the AFX’s chairman and chief executive, should be one of the alternatives to the “irredeemably tarnished” Libor. In the opinion piece, Giancarlo wrote, “For many banks big and small, a credit-sensitive benchmark like Ameribor can play a crucial role in ensuring fair pricing on credit and increasing transparency and liquidity in unsecured debt.” 

He added in the press briefing that there is bipartisan support in both the House and Senate for choice in moving away from Libor. 

“Libor suffered from lack of depth but more from lack of breadth, which led to manipulation. Ameribor has remarkable breadth, and its depth is growing, too.”

There is a difference between the role of regional banks and that of the large Wall Street banks, Giancarlo said. “So we need a different type of benchmark diversity.”

AFX members have been talking to their representatives in Congress to make sure they understand the importance of choice in replacement benchmarks, Giancarlo added. 

You can watch the entire AFX press briefing, “Ask a Banker: Countdown to LIBOR’s End” with Novick, Giancarlo and Broughton, moderated by Dr. Richard Sandor, here.

Correction: An earlier version of this article mistakenly quoted Chris Giancarlo as having said Ameribor was recommended by the Alternative Reference Rates Committee and is preferred by large primary dealers of U.S. Treasury securities. In fact Mr. Giancarlo correctly said that it was SOFR that was recommended by the ARRC and is preferred by large U.S. Treasury securities dealers. JLN apologizes for the error.

 

The curious case of rising stocks in the night-time

The curious case of rising stocks in the night-time

First Read Hits & Takes John Lothian & JLN Staff Congratulations to uber journalist Jacob Bunge on being promoted to the role of Chicago deputy bureau chief for The Wall Street Journal. Bunge has been with the Journal since 2008, when he came over from...

We visit more than 100 financial news websites daily (Would YOU do that?)

The Spread

Stock Market Selloff Worries Investors & Regulators; Adam Dell Launches Domain Money; ​​CME Group Announces Records

Alex Perry Author John Lothian News ALEX PERRY’S OPTIONSTOPIA: Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: Regulators Crack Down on Trading apps; Adam Dell Launches Domain Money; The ​​CME Group Announces New Options Records

John Lothian Publisher John Lothian News JOHN’S TAKE: John talks with Henry Schwartz, president of Trade Alert LLC, for “John’s Take”

Tom Jarck Term of the week John Lothian News TERM OF THE WEEK: What is The VIX Index Anyway? with Russell Rhoads

read more

Now Read This

The History Behind SGX; An Interview with Rama Pillai for The History of Financial Futures – a JLN Interview Series

The History Behind SGX; An Interview with Rama Pillai for The History of Financial Futures – a JLN Interview Series

In 1978, the Gold Exchange of Singapore (GES) was created by some Singaporean bullion dealers. Then in the early 1980s, the Monetary Authority of Singapore and financial community leaders sent teams around the world to examine different market structures. One was sent to Chiago to examine the Chicago Mercantile Exchange, Pillai said. The Singaporean team sent to Chicago liked the CME model and felt it would work well in Singapore. This led to the creation of the Singapore International Monetary Exchange or SIMEX.

Calvin F. Williams Jr is Using His Business to Close the Wealth Gap

Calvin F. Williams Jr is Using His Business to Close the Wealth Gap

From creating investment management strategies to expanding financial education, Calvin F. Williams Jr. runs his business with one clear goal in mind: to close the racial wealth gap. Since age 12 when he first started his own lawn care service, he understood the value of building wealth, yet he also understood that many people lack the financial resources to do that. 

Pin It on Pinterest

Share This Story