Arvest Bank of Fayetteville is a founding participant in the American Financial Exchange (AFX), an electronic marketplace for member banks to lend and borrow short-term funds.
AFX, which launched in December, focuses on 1,740 small- to mid-size banks with between $500 million and $125 billion in assets.
Other founding participants who consulted in developing the exchange are Frost Bank (San Antonio), MB Financial (Chicago), Old National Bank (Evansville, Indiana), Brookline Bank (Brookline, Massachusetts) and ServisFirst Bank (Birmingham, Alabama).
Arvest Bank officials say the marketplace was designed to create an active and transparent daily marketplace for short-term funds lending and borrowing among member banks by bringing the benefits of exchange trading to what historically has been an individually negotiated transaction between two banks.
“We believe an active daily market for overnight and short-term funds offers advantages to exchange participants in knowing and achieving market rates of interest on both loans and borrowings,” Arvest Bank chief investment officer Scott Phillips said in a statement. “Being a founding participant in AFX shows our support for transparent and efficient financial markets that not only help achieve market returns, but also can provide a safe and sound environment for lending to other members.”
The exchange was created by Environmental Financial Products LLC (EFP) and CBOE Holdings Inc. (CBOE), which operates the daily exchange. Northern Trust is the provider of treasury management services for AFX. All three entities are based in Chicago.
EFP is a prominent, successful exchange incubator headed by chairman and CEO Richard Sandor, who also is chairman and CEO of AFX.
“Mid-sized U.S. banks are disproportionately responsible for lending to small businesses, directly contributing to job creation and economic growth in the real economy,” Sandor said. “An efficient and transparent market can benefit participants and the economy as a whole by providing an efficient way to borrow and lend money, as well as generating indices that truly reflect the bank’s cost of funds.”