This document provides a guide for leading Asset Managers on how to utilize IOSCO-aligned credit-spread reference benchmarks AXI and FXI which work with SOFR, particularly in the context of the post-LIBOR financial environment.
On January 30, 2025, H. Rodgin Cohen (Senior Chair of Sullivan & Cromwell LLP) hosted an industry discussion regarding the implementation of AXI & FXI which was attended by certain large Asset Managers underscoring the need for further discussion regarding the application of these reference credit spreads for non-bank financial institutions which in part prompted the development of this document.
AXI and FXI are versatile tools that can significantly enhance asset management practices, especially as the industry adjusts to a post-LIBOR world. From improving risk management through credit spread hedging to enhancing the benchmarking and performance evaluation process, these indices offer real-time, transaction-based data that can provide more accurate insights into credit conditions across different sectors. By incorporating AXI and FXI into investment strategies, Asset Managers can make more informed decisions, better manage risk, and enhance the performance of credit-sensitive portfolios.
We encourage market participants to provide feedback on the integration of AXI and FXI into asset management operations and to share insights on additional use cases that could further enhance their applicability in the evolving financial environment.
Download Integrating AXI & FXI in Asset Management: A Practical Guide.
Share your feedback at [email protected] to contribute to this ongoing discussion.
