Contributors were selected by ISDA on the basis of reputation among dealers, credit standing, scale of activity in the relevant market and expertise in the currency concerned. Dealers that consistently fail to provide rates or provide rates that are off the market will be replaced.
ISDAFIX was developed to facilitate the determination of exercise values for cash-settled swap options. The existence of such a benchmark provides a transparent, readily available value and settlement rate. Without such a benchmark, it might be necessary to go through the process of calling a number of active dealers for quotes in order to settle transactions. The 2006 ISDA Definitions refer specifically to ISDAFIX rates as a means of settlement of OTC derivatives transactions. ISDAFIX is also used as a reference rate for cash settlement in connection with early terminations of swap transactions. In addition, dealers often use ISDAFIX as an input when marking their swap portfolios to market.
Beyond their use in settling OTC transactions, ISDAFIX rates are also used as a rate or curve source in various exchange-traded products. ICE Futures Europe, for example, uses ISDAFIX as the source for the swap curve in calculating the settlement price of its Swapnote® futures contract, and in the U.S., the Federal Reserve uses ISDAFIX as the source for USD swap rates in its H.15 Statistical Release.