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Libor interest rate 'to be controlled by NYSE Euronext' Libor interest rate to be controlled by NYSE Euronext
(35 minutes later)
The owner of the New York Stock Exchange is set to take control of a key scandal-hit bank interest rate, the BBC has learnt. The owner of the New York Stock Exchange is set to take control of a key scandal-hit bank interest rate.
NYSE Euronext has won the contract for setting the Libor interbank lending rate, sources confirmed to BBC News. NYSE Euronext has won the contract for setting the Libor interbank lending rate, the UK Treasury announced.
The Libor rate is used to set trillions of dollars of financial contracts. The London Inter-bank Offered Rate is used to set trillions of dollars of financial contracts.
The UK Treasury is expected to make an announcement shortly. It follows the revelation that banks had been manipulating the rate. The move follows the revelation that banks had been manipulating the rate. Barclays, UBS and RBS have all been fined for their roles in the scandal.
Barclays, UBS and RBS have all been fined for their roles in the scandal.
They were found to have colluded in fixing the Libor setting in order to boost the profits of traders in the run-up to the financial crisis.They were found to have colluded in fixing the Libor setting in order to boost the profits of traders in the run-up to the financial crisis.
The London Inter-bank Offered Rate (Libor) is currently set in London and is meant to reflect the average rate that banks pay to lend to each other. The new rate-setting body, to be known as NYSE Euronext Rate Administration, will be based in the UK and regulated by the Financial Conduct Authority (FCA).
'Libor integrity'
"This change will play a vital role in restoring the international credibility of Libor," said Baroness Hogg, chair of the committee tasked with selecting a new administrator for the interest rate.
"Today marks a significant step in implementing the recommendations in my review of Libor," said Martin Wheatley, chief executive of the FCA and author of a report for the government on how the interest rate should be reformed.
"The selection of a new administrator, who will need to be authorised, and then subject to ongoing scrutiny by the FCA, is an important step in enhancing the integrity of Libor."
Libor is set in London and is meant to reflect the average rate that banks pay to lend to each other.
It is used to benchmark everything from car loans and mortgages to complex financial transactions around the world.It is used to benchmark everything from car loans and mortgages to complex financial transactions around the world.
At the moment, it is calculated by Thomson Reuters for the British Bankers' Association, based on estimates received from 16 major international banks in London of how much they must pay in order to borrow cash from other banks.At the moment, it is calculated by Thomson Reuters for the British Bankers' Association, based on estimates received from 16 major international banks in London of how much they must pay in order to borrow cash from other banks.
The new administrators are expected to take over the running of Libor by the beginning of next year. In the interim, Thomson Reuters will continue to make the calculations.