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ICE Benchmark Administration Launches ICE Term SOFR Reference Rates as a Benchmark for use in Financial Instruments
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Rhea-AI Summary
Intercontinental Exchange (NYSE:ICE) announced the launch of ICE Term SOFR Reference Rates, designed as forward-looking benchmarks for financial instruments. The rates will cover one, three, six, and twelve-month periods, based on a Waterfall Methodology using dealer-to-client prices and volume data. Following successful testing, the rates aim to provide businesses with certainty in calculating interest expenses. ICE Term SOFR is published daily around 11:15 AM ET on New York business days and can be licensed for various financial applications.
Positive
Launch of ICE Term SOFR Reference Rates as forward-looking benchmarks enhances market tools for businesses.
Successful testing period indicates strong foundation for future market adoption.
Provides clarity and certainty for interest expense calculations supported by a robust methodology.
Negative
None.
LONDON--(BUSINESS WIRE)--
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that ICE Benchmark Administration Limited (IBA) has launched ICE Term SOFR Reference Rates as a benchmark for use in financial instruments by licensees.
ICE Term SOFR Reference Rates (“ICE Term SOFR”) are designed to measure expected (i.e. forward-looking) SOFR rates over one, three, six and 12-month tenor periods. The rates are based on a Waterfall Methodology, which uses eligible input data for specified SOFR-linked interest rate derivative products. The launch of ICE Term SOFR as a benchmark follows the conclusion of a successful testing period during which IBA made available an indicative, Beta version of ICE Term SOFR for information and feedback purposes.
The ICE Term SOFR Waterfall methodology currently uses dealer-to-client prices and volumes for eligible SOFR-linked interest rate swaps available on Tradeweb’s institutional platform to generate ICE Term SOFR settings. If there is insufficient eligible dealer-to-client data, the ICE Term SOFR settings are calculated using ICE’s SOFR-linked futures contract data. As market liquidity increases, IBA expects to also use tradeable bid and offer prices and volumes for eligible SOFR-linked interest rate swaps available on the central limit order books of regulated, electronic trading venues to generate ICE Term SOFR settings.
“By launching ICE Term SOFR as a benchmark, we are providing financial markets with an additional tool to support benchmark transition,” said Tim Bowler, President of ICE Benchmark Administration. “ICE Term SOFR is designed to help businesses, borrowers and lenders who value having forward-looking term rates in order to provide certainty when calculating their interest expenses and other contractual payments in advance.”
ICE Term SOFR settings are published daily at or around 11:15am Eastern Time on applicable New York business days and are available here on a daily basis.
Further information on ICE Term SOFR can be found on IBA’s ICE Term Rates webpage, together with indicative, Beta Tradeweb ICE Constant Maturity Treasury rates, which are designed to provide a daily overview of U.S.Treasury yields for standard maturities, based on transactions or quotes for U.S.Treasury securities on the Tradeweb institutional platform.
Prospective users of ICE Term SOFR settings should contact IBA’s licensing team at IBA-Licensing@ice.com for information on licensing ICE Term SOFR for use in financial instruments.
About ICE Benchmark Administration
ICE Benchmark Administrationis authorized and regulated by the Financial Conduct Authority for the regulated activity of administering a benchmark, and is authorized as a benchmark administrator under the UK Benchmarks Regulation. IBA reserves all rights in the ICE Term SOFR methodology, and in the ICE Term SOFR settings. ICE Benchmark Administration is a registered trademark of IBA and/or its affiliates. IBA is not affiliated with the New York Fed. The New York Fed does not sanction, endorse, or recommend any products or services offered by IBA.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 3, 2022.
ICE Term SOFR Reference Rates are forward-looking benchmarks designed to measure expected SOFR rates over one, three, six, and twelve-month periods, enhancing financial instruments.
When are ICE Term SOFR rates published?
ICE Term SOFR settings are published daily around 11:15 AM ET on New York business days.
What methodology is used to calculate ICE Term SOFR rates?
The rates are calculated using the Waterfall Methodology, which relies on dealer-to-client prices and volumes for eligible SOFR-linked interest rate derivatives.
How can I license ICE Term SOFR for financial instruments?
Prospective users can contact ICE Benchmark Administration's licensing team at IBA-Licensing@ice.com for information on licensing ICE Term SOFR.
What benefits do ICE Term SOFR rates provide for businesses?
They offer businesses clarity and certainty in calculating interest expenses and other contractual payments in advance.
