ICE Launches New Suite of Indices for Australian Residential Mortgage-Backed Securities Market

Rhea-AI Summary

Intercontinental Exchange (NYSE: ICE) has launched a new suite of indices for the Australian residential mortgage-backed securities (RMBS) market. These indices are designed to provide comprehensive and transparent benchmarks for tracking the performance of AUD-denominated RMBS. The suite includes five indices:

• ICE Australian RMBS Composite Index (ARMBS)
• ICE AAA Australian RMBS Index (ARMBSAAA)
• ICE BBB and Lower Australian RMBS Index (ARMBLOW)
• ICE AAA Prime Core Australian RMBS Index (ARMBSA3P)
• ICE AAA-AA Prime Australian RMBS Index (APRMBHI)

These market cap weighted indices are accessible through ICE's Custom Index Tool, enabling various applications such as research, benchmark construction, and designing new financial products. The launch aims to provide greater transparency and performance evaluation for the Australian RMBS market.

Positive

• Launch of new suite of indices for Australian RMBS market, expanding ICE's indexing and benchmarking solutions
• Indices accessible through ICE's Custom Index Tool, enabling various applications for clients
• Potential for increased market transparency and performance evaluation in the Australian RMBS market
• Leverages ICE's extensive experience in fixed income pricing and reference data

Negative

• None.

Insights

Financial Analyst

The launch of ICE's new suite of indices for the Australian RMBS market is a significant development for investors and market participants. These indices provide enhanced transparency and benchmarking tools for a market that has shown resilience amid global economic uncertainty. The inclusion of various sub-indices targeting different credit ratings and loan types offers granular insights into market segments.

From an investor's perspective, these indices could potentially facilitate the creation of new financial products such as ETFs or structured products tied to Australian RMBS performance. This may increase liquidity and attract more capital to the market. However, it's important to note that while improved benchmarking can enhance market efficiency, it doesn't necessarily guarantee better returns or lower risk for investors.

The move also strengthens ICE's position in the global fixed income data services market, potentially driving revenue growth in their index and data business segments. This expansion into the Australian market demonstrates ICE's strategy to diversify geographically and capitalize on growing markets.

Market Research Analyst

The introduction of these indices reflects the growing importance of the Australian RMBS market on the global stage. With over $100 trillion in debt tracked across ICE's fixed income indices, the addition of Australian RMBS benchmarks signals potential for significant market growth.

The launch is timely, considering the resilience of the Australian housing market despite global economic challenges. This could attract increased international investment into Australian RMBS, as global investors seek diversification and yield in a low-interest-rate environment.

The variety of indices, including those focused on prime loans and different credit ratings, allows for more nuanced analysis and investment strategies. This granularity could lead to more efficient pricing and potentially increased issuance in the Australian RMBS market. However, investors should be cautious as increased attention and capital flows could also lead to heightened volatility or potential overvaluation in this market segment.

ATLANTA, NEW YORK, & SYDNEY--(BUSINESS WIRE)-- Intercontinental Exchange (NYSE: ICE), a leading global provider of technology and data, today announced the launch of a suite of indices for the Australian residential mortgage-backed securities (RMBS) market.

These indices, which are administered by ICE Data Indices, LLC, are accessible in ICE’s Custom Index Tool, which provides a variety of ways to prototype and back test strategies for multiple use cases, including research, benchmark construction, designing new financial products such as ETFs or enabling services such as direct indexing.

This new suite of indices is designed to provide comprehensive and transparent benchmarks for tracking the performance of AUD-denominated residential mortgage-backed securities (RMBS). The new index family includes:

• ICE Australian RMBS Composite Index (ARMBS). Tracks the performance of RMBS.
• ICE AAA Australian RMBS Index (ARMBSAAA). Tracks the performance of RMBS rated AAA.
• ICE BBB and Lower Australian RMBS Index (ARMBLOW). Tracks the performance of RMBS rated BBB1 or lower.
• ICE AAA Prime Core Australian RMBS Index (ARMBSA3P). Tracks the performance of RMBS comprised solely of prime loans rated AAA.
• ICE AAA-AA Prime Australian RMBS Index (APRMBHI). Tracks the performance of RMBS comprised solely of prime loans rated AAA through AA3.

Each index is market cap weighted, accrues interest assuming next-day settlement, retains cash flows from bond payments until the end of the month, and is rebalanced on the last calendar day of the month.

“These indices provide a new set of benchmarking options for customers investing in the Australian residential MBS market,” said Varun Pawar, Chief Product Officer at ICE Data Services. “As we continue to expand our diverse set of indexing and benchmarking solutions, this launch represents a significant advancement in providing greater transparency and performance evaluation for markets globally.”

“Despite ongoing global economic uncertainty, the Australian residential MBS market has demonstrated impressive resilience and a promising outlook for growth and new issuance," said Magnus Cattan, Head of APAC Client Development at ICE Data Services. "With the introduction of these new indices, we look forward to supporting our clients across the global fixed income ecosystem and enhancing their investment strategies.”

The Australian RMBS index family leverages ICE’s extensive experience in fixed income pricing and reference data, and the companies deep global product coverage. Our fixed income index offering includes over 6,000 standard indices tracking more than $100 trillion in debt spanning the global bond markets, with debt represented across 43 currencies.

For more information about ICE indices, visit https://www.ice.com/fixed-income-data-services/index-solutions/fixed-income-indices.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds, and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges -- including the New York Stock Exchange -- and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines, and automates 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, 2023, as filed with the SEC on February 8, 2024.

ICE Data Indices, LLC (“IDI”), its affiliates and its third-party suppliers (collectively, “ICE Data and its Suppliers”) make no representations or warranties regarding the advisability of investing in securities generally, in any financial product or the ability of any index to track general market performance. Past performance of an index is not an indicator of or a guarantee of future results. For important information (including the methodologies), limitations, and disclaimers regarding the indices, please visit indices.ice.com.

Category: Fixed Income and Data Services

SOURCE: Intercontinental Exchange

ICE-CORP

View source version on businesswire.com: https://www.businesswire.com/news/home/20240902126513/en/

ICE Media Contact:

Isabella Bezzone

isabella.bezzone@ice.com

(212) 748-3948

media@ice.com

ICE Investor Contact:

Katia Gonzalez

katia.gonzalez@ice.com

(678) 981-3882

Source: Intercontinental Exchange

FAQ

What new indices has ICE launched for the Australian RMBS market?

ICE has launched five new indices: ICE Australian RMBS Composite Index (ARMBS), ICE AAA Australian RMBS Index (ARMBSAAA), ICE BBB and Lower Australian RMBS Index (ARMBLOW), ICE AAA Prime Core Australian RMBS Index (ARMBSA3P), and ICE AAA-AA Prime Australian RMBS Index (APRMBHI).

How are the new ICE Australian RMBS indices weighted and rebalanced?

The indices are market cap weighted, accrue interest assuming next-day settlement, retain cash flows from bond payments until the end of the month, and are rebalanced on the last calendar day of the month.

What tool can be used to access ICE's new Australian RMBS indices?

The new Australian RMBS indices are accessible through ICE's Custom Index Tool, which provides various ways to prototype and back test strategies for multiple use cases.

What is the purpose of ICE's new Australian RMBS indices?

The new indices are designed to provide comprehensive and transparent benchmarks for tracking the performance of AUD-denominated residential mortgage-backed securities (RMBS) and to enhance transparency and performance evaluation in the Australian RMBS market.