Farewell Libor: scandalised banking rate heads across the pond

The Treasury has decided to send supervision of Libor to NYSE Euronext amid protests.

by Gabriella Griffith
Last Updated: 25 Sep 2013
Well, they did it. We reported a month ago that the control of the London inter-bank offered exchange rate (or Libor to its friends) was ear-marked for a move elsewhere. Today we find that from early 2014, it will be landing in the apparently more capable hands of New York-based NYSE Euronext, the transatlantic exchanges operator.

NYSE won the right to administer the lending rate, beating off bids from others including the London Stock Exchange. A Treasury committee lead by Baroness Hogg, chairman of the Financial Reporting Council, who took control of the tender back in April (incidentally, her daughter Charlotte has just been appointed as Mark Carney's right-hand woman at the Bank of England. Talented family).

The move is unlikely to be a popular one in the City but hardly comes as a surprise given the transgressions of last year when Barclays, RBS and UBS were fined for fixing submissions to the rate.

But the question remains whether this system will be substantially less susceptible to minipulation than the old one.

'We had a ‘fox guarding the henhouse’ issue here, and we should learn from that,' said Bart Chilton, a member of the US Commodity Futures Trading Commission.

 'I firmly believe that having a truly neutral third-party administrator would be the best alternative, and I’m not sure that an exchange is the proper choice.'

He makes a good point. Will putting control into the hands of yet another financial body with something to gain from the odd rig mean we’re doomed to repeat scandal's past?

Perhaps. What MT also really wants to know is, are we now calling it NYIBOR? Pronouncing that is no mean feat...


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