SOFR Academy, Inc., today announced the appointment of former United States Secretary of the Treasury, Lawrence H. Summers, as Special Advisor to the firm.
One of the world’s leading economists, Summers served as the 71st Secretary of the Treasury in President Bill Clinton’s administration and was the Director of the White House National Economic Council under President Barack Obama. He has previously served as the President of Harvard University and as the Chief Economist of the World Bank. Dr. Summers is currently the Charles W. Eliot University Professor and President Emeritus of Harvard University where he directs the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government.
In response to the discontinuation of LIBOR, SOFR Academy has operationalized new benchmark credit spreads USD Across-the-Curve Credit Spread Index (“USD-AXI”) and its extension the USD Financial Conditions Credit Spread Index (“USD-FXI”) which can be used in conjunction with the Secured Overnight Financing Rate (“SOFR”) to form a credit sensitive interest rate benchmark in loans and other products. These credit spreads were first discussed at the New York Fed’s Credit Sensitivity Workshops and conceived by academics from the Stanford Graduate School of Business and the Australian National University. An independent review by IBM Promontory concluded that relevant International Organization of Securities Commissions’ Principles for Financial Benchmarks appeared to be fully implemented. SOFR Academy is developing AXI’s and/or FXI’s in other major currency jurisdictions that will work in conjunction with their respective local risk-free rates, including for China (WIND tickers: CNAXI.WI & CNFXI.WI), Europe, Japan, India, Brazil, South Korea and Mexico.
Lawrence H. Summers said, “I am delighted to advise the team at SOFR Academy as they introduce their new benchmark credit spreads AXI and FXI.”
Marcus Burnett, CEO of SOFR Academy, said, “Larry is a giant of global economics. His deep experience across academia, government, and the private sector makes him perfectly suited to advise our firm. Larry’s involvement demonstrates the importance of the introduction of our benchmark credit spreads into the financial system.”
Recent work by Harry Cooperman, Darrell Duffie, Stephan Luck, Zachry Wang and Yilin (David) Yang utilized data from the Federal Reserve’s FR2052a report and Y14Q data collection to show that usage of a credit sensitive element such as USD-AXI and USD-FXI will enhance the efficiency, transparency, and stability of U.S. financial markets (Cooperman, Duffie, Luck, Wang & Yang (2023)).
USD-AXI and USD-FXI are calculated and published each business day at approximately 9 AM ET, using the prior day’s transaction data. The indices are accessible via Bloomberg (tickers: AXIIUNS & FXIXUNS) and LSEG Data & Analytics (RICs: .IIAXI & .IIFXI).
About SOFR Academy, Inc.
SOFR Academy is a member of the American Economic Association, the Loan Syndications and Trading Association, the International Swaps and Derivatives Association, the Asia Pacific Loan Market Association, the Bankers Association for Finance and Trade which is a wholly owned subsidiary of the American Bankers Association and the U.S. Chamber of Commerce. SOFR Academy’s backers include 8VC, and former Goldman Sachs partner Robert Litterman who developed the Black–Litterman model together with Fischer Black in 1990. For more information, please visit www.SOFR.org.
About 8VC
8VC is a leading technology investment firm, backing visionary teams and industry-transforming companies. The partners have an extensive track record as founders, builders, and operators of companies including Palantir, Addepar, Resilience, and OpenGov. 8VC manages over $6 billion in committed capital, investing primarily in smart enterprise platforms, healthcare, logistics, Bio-IT, and defense. For more information, visit https://8vc.com.
About the Secured Overnight Financing Rate
SOFR is published by the Federal Reserve Bank of New York and is subject to The New York Fed’s Terms of Use. The New York Fed has no liability for your use of the data. Neither USD-AXI or USD-FXI are associated with, endorsed, or sponsored by The New York Fed or the Federal Reserve System.
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