British Bankers Association (BBA) has agreed to transfer of the administration of scandal-tarred benchmark, Libor, to NYSE Euronext Rates Administration, the bidder recommended by the Hogg Tendering Advisory Committee.
The appointment of this new administrator is one of the key recommendations of the Wheatley Review which was set up following the revelations of attempts to manipulate LIBOR.
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Since its inception in the 1980s, Libor has been run by the BBA, but the rate has been engulfed in scandal in recent years, due to attempts by a number of banks to manipulate the rate for their own financial gain.
Barclays, Royal Bank of Scotland (RBS) and UBS have so far been fined US$2.6-billion for manipulating Libor and similar benchmark rates.
As a part of the deal, Libor will be relocating from the City of London to Wall Street.
The new Libor-setting group will be known as NYSE Euronext Rate Administration and will be based in the UK and regulated by the Financial Conduct Authority (FCA).
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By GlobalDataFor NYSE, the deal will help them to develop new business opportunities in the derivatives markets. The switchover comes as NYSE Euronext itself prepares to be taken over by InterContinental Exchange.
NYSE Euronext is expected to continue the current process for calculating Libor, basing the rate on daily estimates from banks about how much it would cost them to borrow money from other banks, according to a UK Treasury official.
BBA chief executive, Anthony Browne, said: "Restoring confidence in LIBOR has been an absolute priority for the BBA since I took over as chief executive last year. 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," Browne added.
