ICE Buys American Financial Exchange to Unify Bank Lending Market

Intercontinental Exchange (NYSE:ICE) has completed a strategic acquisition of the American Financial Exchange (AFX) from 7RIDGE, securing 100% ownership of the electronic exchange platform for direct lending and borrowing among American banks and financial institutions.

Key Details of American Financial Exchange Acquisition

• Acquisition Scope: 100% ownership of AFX from 7RIDGE

• Platform Focus: Direct lending and borrowing for American financial institutions

• Network Reach: Over 1,000 American banks and financial institutions

• Financial Impact: No material impact expected on ICE's 2025 financial results

The acquisition aligns with ICE's existing mortgage technology network and global index business.

AFX and AMERIBOR® Rate

AFX connects over 1,000 American financial institutions, representing approximately 25% of the U.S. banking sector's total assets.

• Regional banks

• Midsize banks

• Community banks

• Minority-owned banks

AFX operates the AMERIBOR® rate, a credit-sensitive benchmark determined daily based on unsecured interbank loans.

Will this acquisition affect ICE's financial performance?

No material impact is expected on ICE's 2025 financial results. For context

• As of September 2024, ICE manages:

• Approximately $670 billion in passively managed products

• Around $2 trillion in combined active and passive strategies

What is AMERIBOR® and why is it important?

AMERIBOR® is a credit-sensitive benchmark rate operated by AFX. It's determined daily based on actual unsecured interbank loans, providing a more accurate reflection of real borrowing costs for regional and community banks.

Unlike traditional benchmarks such as LIBOR and SOFR, AMERIBOR® is specifically designed to reflect funding rates for smaller and regional banks, offering a more granular view of actual unsecured borrowing costs.

American Financial Exchange Acquisition Impact on Lenders

The acquisition is expected to bring several operational improvements:

• Enhanced digital infrastructure for interbank lending

• More sophisticated credit assessment technologies

• Automated workflows that may reduce transaction costs

• Increased transparency in borrowing rates through AMERIBOR®

Lenders can expect new opportunities such as:

• Direct access to a broader network of American banks

• More accurate credit-sensitive rate benchmarking

• Improved capital allocation efficiency

• Enhanced risk management capabilities through advanced data analytics

The integration will likely bring technological changes for lenders such as:

• Advanced data analytics for credit scoring

• Automated lending workflows

• Enhanced risk assessment platforms

• More sophisticated credit assessment methodologies

Lenders must be prepared to evaluate current technology infrastructure, assess risk management capabilities, plan for potential compliance updates and consider strategic partnerships within the expanded network.

The acquisition is expected to drive long-term market transformations

• Increased transparency in interbank lending

• More competitive rates for smaller financial institutions

• Enhanced risk management capabilities

• More efficient capital allocation across diverse banking segments

While specific requirements are yet to be announced, lenders should prepare for new compliance measures such as:

• Enhanced transparency requirements in lending practices

• More sophisticated risk management infrastructure

• Potential adjustments to credit assessment protocols

• Updated regulatory reporting frameworks

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