NYSE Euronext wins bid to take control of Libor

Tim Wallace
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LIBOR will be taken over by NYSE Euronext, the group that runs the New York Stock Exchange and the London futures exchange, officials announced yesterday, taking the scandal-hit interest rate benchmark off the hands of the British Bankers’ Association (BBA).

Despite the group’s US and Dutch links, the rate will still be administered in the City – it will be run from Liffe, the futures exchange.

Contracts worth hundreds of trillions of dollars worldwide are based on the key interbank lending rate, but last year it was discovered bankers tried to influence the benchmark, sometimes for traders’ own gain.

That manipulation has led to fines for Barclays, UBS and RBS so far.

Regulators stepped in to simplify the system, cutting down the number of currencies covered, as well as the terms of the loans included. They also cracked down on how data is submitted to the system, in an effort to prevent manipulation occurring again.

A committee headed by ex-3i chairman Baroness Hogg ran the tendering process to find the new administrator.

A new subsidiary called NYSE Euronext Rate Administration will run the rate once it has received regulatory approval from the Financial Conduct Authority. It is also set to take the rate’s calculation in-house, work currently done by Thomson Reuters.

Libor brought in around £2m per year for the BBA. The rate is believed to have been sold for £1 to NYSE Euronext, which will consider which rates and maturities are viable, among other possible reforms.

“We are pleased that NYSE Euronext 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,” said BBA chief Anthony Browne.

“We have been working hard with regulatory authorities and the government to put in place much-needed reforms to the system.”