American Financial Exchange (AFX) Case Study

The Client

The American Financial Exchange (AFX) is a self-regulated exchange that provides a transparent, centralized, and rules-based electronic platform for direct interbank lending and borrowing for American financial institutions.

AFX was launched in 2015 and offers a suite of products — such as overnight and 30-day unsecured loans, 7-day secured loans, and demand deposits — that improve transparency and efficiency in the interbank loans marketplace. The exchange has more than 150 members in 49 U.S. states and territories and several hundred additional participants through the correspondent bank market.

The Challenge

AFX, as an early-stage startup, needed a technology partner that could deliver a production-ready, secure exchange platform within constraints of time, budget, and evolving requirements.

While AFX had a solid understanding of its vision and strategy, it required help in focusing that vision into an actionable, “get-to-the-first-trade” plan. Connamara’s twenty years of experience in capital markets software delivery and nearly ten years of experience designing and building customizable matching engine and exchange solutions made us a definitive choice during AFX’s vendor selection process.

The Solution

During an initial engagement with the AFX product team, Connamara was able to bring that experience to the forefront and implement a strategy that included the requirements for a minimally viable exchange platform, road map for further enhancements, and a post-launch support and maintenance program.

Key to any successful implementation is clarity in the features and requirement for the initial deployment. AFX engaged Connamara to articulate the features and requirements that the exchange platform would need in order to launch. The two teams collaborated on defining and documenting those features, and Connamara delivered several artifacts, including a prioritized feature list focusing on the launch. A Product Roadmap was created that listed delivery milestones — complete with time and cost estimates — to be accomplished leading up to the launch, as well as milestones to be implemented once there were customers on the exchange and trading.

With the plan in place, Connamara began implementing the solution using a combination of new custom-built components and modifications to existing Connamara proprietary software. The solution was implemented with Connamara’s agile development methodologies, including utilization of test-driven development, automated testing, and continuous integration. Connamara continuously monitored the team’s velocity and communicated the project status with AFX by calculating the release date for the milestone under development. This method of using team velocity allowed Connamara to determine the final “go-live” release date. Calculating and updating the completion dates upon each iteration provided the transparency and certainty AFX needed to design its marketing and customer onboarding campaigns prior to the exchange going live.

Connamara successfully delivered the AFX exchange platform, ready for launch, in December 2015, and continues to provide ongoing engineering and platform support for the exchange.

The Results

Connamara, through its experience and technology, helped AFX achieve its two strategic objectives:

  • Establishing an organized, centralized marketplace that enables efficient “price discovery” of interbank lending rates while minimizing transaction costs.
  • Establishing new interest rate benchmarks relevant to the unique needs of the small, medium, and regional banks across America.

From the launch of the AFX on December 11, 2015, to today, transaction volume and membership have grown rapidly. AFX has successfully transacted more than $750 billion since inception and AFX Membership now represents combined total assets in excess of $1.5 trillion. The weighted average interest rate of each day’s transactions in the overnight unsecured loans market is used to calculate AFX’s new interest rate benchmark, AMERIBOR®. Visit www.ameribor.net for further information.