This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: New Owner, Same Image for Libor

NEW YORK ( The Deal) -- The sale of the tarred Libor to NYSE Euronext will see London lose a benchmark symbolic of its status as a global financial center while the British government tries to restore its credibility.

Several rate-rigging scandals have underscored the vulnerability of the world's most widely used benchmark for short-term interest rates to manipulation by banks, culminating in its sale to the institution synonymous with Wall St.

Symbolically, the deal also comes as London operates against a backdrop where the euro zone is expected to contract 0.6% this year, while the U.S. is on a recovery path -- albeit a sluggish one -- with economic growth projections of 1.7% this year from the International Monetary Fund.

Barclays (BCS) is still smarting from the scandal, for which it was forced to pay $453 million in fines last year over allegations it manipulated the rate between 2005 and 2009 -- an incident that claimed the scalp of ex-Barclays chief Bob Diamond, who can now be seen wandering New York's Park Avenue on his way to work.

Swiss and Scottish banks UBS (UBS) and Royal Bank of Scotland Group (RBS - Get Report) were also fined over rate manipulation.

The transfer of Libor, or London Interbank Offered Rate, administration from the subsidiary of the British Bankers' Association is expected to be complete in early 2014. The deal will give NYSE ownership of a benchmark central to derivatives trading, an activity of increasing importance to global exchanges due to the higher fee revenue it generates compared with share trading.

American officials have acknowledged the task ahead, with the chief executive of NYSE's derivatives arm Finbarr Hutcheson citing the need to restore the "credibility, trust and integrity in Libor as a key global benchmark" as a top priority, ahead of running it as a commercial business.

Critics say the task will not be achieved simply through a cross-border transfer of the benchmark in a bid to create a clean slate -- with key underlying problems of Libor including the use of estimates in its calculation and the inclination of banks to leave their estimate submissions unchanged.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BCS $16.32 -2.57%
RBS $10.65 -3.01%
UBS $21.33 -1.34%
AAPL $129.62 -2.20%
FB $79.34 -1.50%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs