Bank of America Corp. and JPMorgan Chase & Co. struck the first swaps trade tied to the Bloomberg Short Term Bank Yield (BSBY) index Friday, as Wall Street tests new benchmarks meant to help replace LIBOR.

The banks entered into a $250 million one-year basis swap with one side tied to the BSBY reference rate. The benchmark is constructed using aggregated and anonymized data based on transactions of commercial paper, certificates of deposit, U.S. dollar bank deposits, and short-term bank bond trades, reflecting banks' marginal funding costs. The other side of the swap is linked to the Secured Overnight Financing Rate (SOFR).

Banks, barred from entering into new contracts tied to LIBOR beginning next year, have ramped up their efforts to prepare for its demise. While they're planning to lean heavily on SOFR—the Federal Reserve's preferred replacement rate—as an alternative benchmark for floating-rate instruments, market watchers say there's room for others, particularly ones that include a credit component, which SOFR lacks.