Financial News

  • 9 July 2013, 20:49

British Bank Body Hands Libor To US Exchange

The administration of the controversial Libor benchmark interest rate will be handed to a US stock exchange under a deal to be announced on Tuesday that will remove it from British oversight.

Sky News understands that NYSE Euronext, owner of the New York Stock Exchange, has seen off competition from financial data providers including Thomson Reuters to win a contract to oversee the scandal-hit benchmarks.

An announcement is expected to be made to the New York Stock Exchange later on Tuesday, according to people familiar with the situation.

The UK Treasury is understood to be co-ordinating the announcement in London.

The buyer is understood to be paying a token sum of 1 to acquire BBA Libor Ltd, the company which has previously had responsibility for administering Libor.

The choice of an American company to oversee the crucial benchmark rates is significant because of the fierce criticism of Libor's oversight by US regulators.

So far, three banks - Barclays, Royal Bank of Scotland and UBS - have been fined more than 1.5bn by regulators for their role in the global rate-rigging scandal, with a queue of others waiting to settle.

A review of the rates by Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), found that the rate was open to manipulation and made a series of recommendations including sharply reducing the number of rates set as part of the process.

The new Libor administrator will still be subject to FCA regulation and supervision, according to a source close to the situation.

The British Bankers' Association and the Treasury were unavailable for comment.