CBOE Holdings, Inc. CBOE recently entered into an agreement with Environmental Financial Products, LLC (“EFP”) to form and launch American Financial Exchange (“AFX”). AFX is an electronic marketplace that will allow small and mid-sized banks to borrow and lend short-term funds.
AFX was designed to draw benefits of exchange trading – including transparency, standardization and rules-based process – and at the same time lower transaction costs.
Based on the proprietary calculation methodology, EFP-developed Ameribor (an interest rate standard) will allow AFX to respond to the complex requirements for an interest rate measure on the basis of transactions through weekly auctions for U.S inter-bank lending’s new benchmark rate. AFX will cater to 1,740 community and regional banks having assets valued in the range of $500 to $125 billion, totaling $4.7 trillion in assets. AFX is hence expected to facilitate transparent and efficient borrowing and lending of funds. This in turn, will also boost the businesses of both Environmental Financial and CBOE Holdings.
Meanwhile, CBOE Holdings is the first and largest U.S. options exchange and creator of the listed options. The company also excels in the options and volatility trading through product innovation, investor education and improving trading technology. The latest offering adds a new dimension to CBOE Holdings’ business lines and lends it an opportunity to bring about price efficiency, transparency and transaction-based benchmarks in inter-bank lending, boding well for the company’s core strength and values. Apart from this, CBOE Holdings will operate the secure, web-accessible, electronic trade matching engine and will support membership services and surveillance.
CBOE Holdings presently carries a Zacks Rank #2 (Buy). Some other key players in the finance sector are American Capital, Ltd. ACAS, AeroCentury Corp. ACY and CME Group Inc. CME. While American Capital and AeroCentury sport a Zacks Rank #1 (Strong Buy), CME Group carries the same Zacks Rank as CBOE Holdings.
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