8/12/2019 9NYSE Euronext to Take Over Tainted Libor - ET Dt. 10-07-13

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NYSE Euronext to Take Over Tainted Libor ET dt. 10-07-13

Londons bankers may not wholly welcome the entry of NYSE

The London Interbank Offered Rate, or Libor, long the absolte benchmark for setting dailyinterest rates the world o!er, is being taken o!er by New York" NYSE Erone#t has won the

contract to administer the crcial bank rate, which determines the interest that banks charge each

other to borrow and lend money, and forms the base for trillions of dollars in transactions fromderi!ati!e contracts to home loans" Earlier, the $ritish $ankers %ssociation was res&onsible for

collecting the data, and Thomson Reters calclated the rates" NYSE Erone#t will &ay a token 'to ac(ire the assets of $$% Libor, the com&any res&onsible" This change will &lay a !ital role

in restoring the international credibility of Libor, said $aroness Sarah )ogg, chair of thecommittee tasked with selecting a new administrator for the interest rate, according to a re&ort on

Libor reform &re&ared by *artin +heatley, chief e#ecti!e of the -s .inancial /ondct

%thority, a few months ago"

Is it Nibor Now

$efore e!eryone starts calling it Nibor, the rate will still be set in London, and reglated by the.inancial /ondct %thority" )owe!er, NYSEs entry into the scam0tainted Libor is nlikely to

be ni!ersally welcomed in London, e!en thogh the mo!e has been recommended by a high0

le!el &anel backed by the $ritish go!ernment" %nalysts already &oint ot that a&&ointing NYSEErone#t, which is in the &rocess of being ac(ired by Inter/ontinental E#change, an aggressi!e

S0based '10year0old e#change known for its deri!ati!e trades in energy and commodities, does

not e#actly garantee market confidence" Libor has been nder a clod e!er since a s&ate of

scandals broke ot o!er its mani&lation, and banks like R$S and $arclays were fined millionsby - and S athorities2 the scandal also cost $arclays high0&rofile chief e#ecti!e $ob

3iamond his 4ob" $esides banks, it also hit the credibility of London as a financial centre, and

-s reglators to manage the worlds most widely sed financial benchmark, drawing criticismfrom S and Ero&ean reglators"

ate a!e

The - go!ernment annonced a total o!erhal a few months ago, inclding a newadministrator" Libor, in a system set & after the '567 $ig $ang which o&ened & the /ity of

Londons financial ser!ices to international com&etition, is crrently calclated by a &oll of

&artici&ating ma4or international banks in London, which !olntarily sbmit their ratee#&ectations daily to the $ritish $ankers %ssociation, a trade lobby" The to& and bottom (artile

are re4ected and the rest is a!eraged to arri!e at the daily rate" This left room for bankers to tweak

their e#&ectations of the rate to benefit their own trading floors" The $$% has welcomed themo!e" )owe!er, Londons bankers may not be (ite as effsi!e, seeing this as an a&&easement

of the S reglators which led the charge on Libor en(iries, bt des&ite fining two $ritish

banks has yet to charge any %merican bank" The London Stock E#change, which 4ointly bid withThomson Reters for the contract, lost ot" The new rate0setting body, to be known as NYSE

Erone#t Rate %dministration, will start o&erations in 18'9"%ccording to ./% rles, the

administrator and &artici&ating banks will ha!e to a&&oint a reglator a&&ro!ed &erson to ensrecom&liance"

Sudeshna Sen