It’s Bring Your Own Benchmark time for financial markets.

Efforts to replace Libor — the interbank lending rate off which trillions of dollars worth of financial assets are famously priced — are still ongoing more than a decade after the financial crisis. And while SOFR (the Secured Overnight Funding Rate) has emerged as a frontrunner and the preferred option of the Alternative Reference Rates Committee — the battle for benchmark supremacy is far from over.

In fact, the number of alternative rates continues to multiply, with available options now including the Bloomberg Short Term Bank Yield Index (BSBY), the ICE Bank Yield Index (IBYI), the Across-the-Curve Funding Index (AXI), as well as Ameribor. There’s a huge irony in the race to create alternative rates. While regulators want to move on to something that avoids the weaknesses of the original rate, market participants have been doing their best to recreate Libor as closely as possible, with credit-sensitive rates like BSBY, BYI and Ameribor tracking bank funding costs.

There’s now a distinct possibility that the market will end up with a hodgepodge of benchmarks rather than a dominant Libor replacement. In fact, a recent survey by TD Securities suggests this is becoming the base case, with a sizable chunk of respondents now expecting a “multi-benchmark world.”

— Tracy Alloway (Bloomberg Mercury)