City regulators to look at Libor overhaul

Regulators in the UK and global banks are considering changing the way that interbank lending rates are regulated and calculated, according to the Financial Times.

The report suggests that regulators are re-examining how to set the rate, following recent reports of alleged manipulation of the London inter-bank offered rate (Libor).

Libor, which is not regulated by the Financial Services Authority, is produced by the British Bankers’ Association each day for ten currencies with 15 maturities, spanning different durations, based on data supplied by banks to Thomson Reuters.

A spokesperson for the British Bankers’ Association, which is responsible for setting the rate, says: “A number of contributing banks met on Monday March 5 to consider future regulatory and market developments, such as the incoming liquidity rules, relevant to the parameters that Libor measures. (article continues below)

“A technical discussion with interested groups, including users of the rate, will commence shortly. It will focus specifically on the most likely future developments. The market will be kept updated as the work progresses. The tripartite will be kept informed throughout the process.”

Libor rates are used by asset managers as a benchmark for a number of funds.