NYSE Euronext to look after scandal-hit Libor

Accounts-Paperwork-Financial-Corporate-Business-700x450.jpg

The owner of the New York Stock Exchange has won the contract for setting the scandal-hit London Interbank Offered Rate.

NYSE Euronext will take control of Libor through a new rate-setting body, to be known as NYSE Euronext Rate Administration, early next year. The body will be based in the UK and regulated by the Financial Conduct Authority.

Libor, which is used to set trillions of dollars of financial contracts ranging from mortgages to complex financial transactions, came under scrutiny when it was revealed that banks had been manipulating the rate.

Barclays, UBS and Royal Bank of Scotland have all been fined over the scandal.

FCA chief executive Martin Wheatley, who authored a report on reform of the interest rate for the Government, says: “Today marks a significant step in implementing the recommendations in my review of Libor.

“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.”

The rate is currently calculated by Thomson Reuters for the British Bankers’ Association and is based on estimates received from 16 major banks based in London of how much they pay to borrow cash from other banks.

BBA chief executive Anthony Browne says: “We have been working hard with regulatory authorities and the Government to put in place much-needed reforms to the system. The new administrator will take over a benchmark with better regulatory oversight and improved governance.

“We are pleased that NYSE Euronext Rate Administration have been successful in their bid and look forward to working with them in the transition period before they take over full administration of the benchmark.”