The British Bankers’ Association will hand over the administration of the scandal-plagued London inter-bank offered rate to global stock exchange business NYSE Euronext, after it was chosen as successor by a government-appointed advisory committee.
Last year Martin Wheatley, chief executive of the Financial Conduct Authority, recommended Libor oversight be given up by the BBA after it emerged that several high street banks had manipulated the rate, allegedly in some cases to benefit traders’ positions.
The scandal emerged after Barclays was hit with around £290m in fines by regulators on both sides of the Atlantic after it admitted it had ‘lowballed’ submissions used to calculate the rate. Other fines followed, including close to £1bn in global action against Swiss banking group UBS.
NYSE Euronext was selected by the Hogg Tendering Advisory Committee, which was appointed by the Financial Conduct Authority and HM Treasury to supervise the selection of a new Libor administrator and to present its recommendation to the BBA.
NYSE Euronext will administer the rate through a subsidiary, NYSE Euronext Rate Administration Ltd, and will initially use the same process based on submissions from banks. It is expected to review this process following the changeover, which is expected by early 2014.
NYSE Euronext said in a statement that it is “uniquely placed to restore the international credibility of Libor”.
Mr Wheatley said: “Benchmarks are an important tool that enable a wide range of markets to function effectively. The selection of a new administrator, who will need to be authorised and then subject to on-going scrutiny by the FCA, is an important step in enhancing the integrity of Libor.”