The proposed benchmark, the U.S. Dollar ICE Bank Yield Index, would be based on unsecured bank debt over one-, three- and six-month periods, the operator of the New York Stock Exchange said https://bit.ly/2DudOO8 in a report.

"The index has been developed to meet the potential needs of lenders, borrowers and other users of non-derivative or 'cash,' products that have historically referenced short-term interest rate benchmarks, such as LIBOR, in their contracts," ICE said in a statement.

ICE is seeking feedback from market participants on its proposed yield index until March 31. If it decides to proceed, ICE will conduct tests on the new benchmark in the second half of the year.

If it receives a positive market response and encouraging test results, ICE said it would launch the index in the first quarter of 2020.

LIBOR, or the London interbank offered rate, gauges what banks say they would charge each other to borrow dollars. It is the benchmark for $200 trillion (£153 trillion) in dollar-denominated financial products, mostly in interest rate swap contracts.

But LIBOR's reputation as the market standard has been tainted in the wake of rigging scandals by traders, which resulted in billions of fines for major global banks, including Deutsche Bank.

Regulators set LIBOR to be phased out in 2021 and have encouraged alternatives to take its place.

Last April, the New York Federal Reserve and the Office of Financial Research, an independent agency at the U.S. Treasury, launched the Secured Overnight Funding Rate (SOFR) as a LIBOR alternative.

A handful of companies have begun issuing floating-rate bonds using SOFR as a rate reference, and trading of futures based SOFR has increased. But SOFR has not yet been widely adopted.

CME Group, a rival of ICE, said in August it would launch a futures contract linked to Bank of England interest rate meetings.

GRAPHIC-U.S. dollar LIBOR market footprint: http://tmsnrt.rs/2FhaEMp

(Reporting by Bharath Manjesh in Bengaluru and Richard Leong in New York; editing by Arun Koyyur, Diane Craft and G Crosse)