Monday 4 July 2016 4:16 pm

Everything you ever wanted to know about Libor (but were too afraid to ask)

It may be hard to believe but, four years since the Libor-rigging scandal first rocked the City, the fallout is still being felt.

Today, the jury on the most recent Libor trial was discharged after reaching guilty verdicts for three of the men involved but being unable to arrive at a verdict for the other two.

However, if you're feeling foggy on what the case was actually about, here's a brief guide to Libor:

What is Libor anyway?

The London interbank offered rate (Libor) is a benchmark rate which is set daily for five major currencies and for seven different borrowing periods, ranging from overnight loans to 12 months.

How important is it?

Libor is used to underpin numerous financial contracts worth hundreds of trillions of dollars. Uses for the benchmark rate include pricing interest-rate swaps in the derivatives market, calculating interest rates on mortgages and other loans and as a general barometer for confidence in the banking sector.

Who is responsible for setting the rate?

At present, the Intercontinental Exchange (ICE) is responsible for collecting rates from the contributor banks, of which there are between 11 and 18 depending on which variant of Libor is being set, which are then put through an averaging process to calculate the final published rate.

The rate has previously been set by the British Bankers’ Association.

What is the Libor question?

Libor submitters at the contributor banks are asked to submit their rate based on their answer to the Libor question: "At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11 am London time?"

Both the Financial Conduct Authority (FCA) and the Serious Fraud Office (SFO) have recently brought actions over Libor. Why has this happened and how have these actions gone so far?

In a very basic nutshell, those involved are accused of breaking so-called Chinese Walls put in place to avoid conflicts between traders and those submitting the rates.

The FCA has previously fined a number of institutions, including Barclays, Deutsche Bank and UBS, over attempts to manipulate the rate. In total, the City watchdog has levied over £757m in fines for Libor and Euribor – the Euro Interbank Offered Rate – manipulation to date. Other regulators in other jurisdictions have also dished out fines of their own.

Meanwhile, the SFO decided in 2012 to launch an investigation into Libor and has so far resulted in five convictions – former Barclays submitters Peter Johnson and Jonathan Mathew, former Barclays traders Jay Merchant and Alex Pabon, and former UBS and Citigroup trader Tom Hayes.