BBA cedes Libor role – who will replace them?

The government may want a place in the process.

The British Bankers Association has voted to cede its role in the setting of Libor, the benchmark of borrowing costs which lay at the centre of the Barclays rate-fixing scandal.

The BBA, the professional body of the banking industry in Britain, voted to cede its role last week, at the request of officials who, according to the Financial Times (£) plan to announce a replacement process on Friday.

The managing director of the Financial Services Authority, Martin Wheatley, is chairing the review of the reference rates, and the BBA has said in a statement that it:

Seeks to work with the Wheatley review team as they complete their consultation on the future of Libor. If Mr Wheatley’s recommendations include a change of responsibility for Libor, the BBA will support that.

While the BBA has ceded its role, the organisation which sets Libor's sibling rate, Euribor, has no such plans. Even though Euribor was also subject to attempted manipulation by Barclays, the European Banking Federation, which controls it, told the FT that:

There is no comparison with the Libor case. Our stakeholders are national associations and not the banks themselves, this prevents any potential conflict of interest in hosting the governance of benchmarks.

The big question remaining to be answered is what recommendations Wheatley will offer. There have been no shortage of inventive solutions as to how to set Libor in a non-manipulable way.

In July, Frank Portnoy suggested what remains the most ingenious possibility:

The teeth of the new regulation would be a rule requiring the bank that submitted the lowest Libor estimate to lend a significant amount of money, say $1bn, to the Libor Trust at its submitted low rate. Conversely, the bank submitting the highest Libor estimate would be required to borrow the same amount from the Libor Trust, in the relevant currency for the specified period of time, at its submitted high rate.

But as Reviews tend to be less "inventive" and more "gut wrenchingly predictable", it seems more likely he will hew closer to Nils Pratley's suggestion in the Guardian:

A mass of technical issues remain for Martin Wheatley, the Financial Services Authority official leading the inquiry, to address in his report on Friday. For example: how do you switch to surer benchmarks based on actual lending if there are no transactions on a given day in some of the markets? Remember, there is no single Libor rate; instead there are benchmarks covering 15 borrowing periods in 10 different currencies.

That's one detailed puzzle for Wheatley to solve. But his main proposal should be easy: make it a criminal act to try to manipulate Libor.

Expect more legislation, more intervention, and a lot of locking of stable doors when the horse is nowhere to be found.

Buildings in the City. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Election 2017: The 50 Labour MPs most at risk of losing their seats

Dozens of Labour MPs are at risk of losing their seats on June 8. Here are the 50 sitting MPs most at risk. 

Labour MPs representing marginal seats are at risk of losing their seats should their party's low polling numbers translate into electoral reality. Here's a full list of the 50 sitting MPs with the smallest majorities. 

Chris Matheson – City of Chester
Majority: 93 (0.2 per cent of total turnout)
Second place in 2015: Conservatives

Rupa Huq – Ealing Central & Acton
Majority: 274 (0.5 per cent)
Second place in 2015: Conservatives

Albert Owen – Ynys Mon
Majority: 229 (0.6 per cent)
Second place in 2015: Plaid Cymru

Ruth Cadbury – Brentford & Isleworth
Majority: 465 (0.9 per cent)
Second place in 2015: Conservatives

Margaret Greenwood – Wirral West
Majority: 417 (0.9 per cent)
Second place in 2015: Conservatives

Holly Lynch – Halifax
Majority: 428 (1 per cent)
Second place in 2015: Conservatives

Daniel Zeichner – Cambridge
Majority: 599 (1.1 per cent)
Second place in 2015: Liberal Democrats

Wes Streeting – Ilford North
Majority: 589 (1.2 per cent)
Second place in 2015: Conservatives

Paul Farrelly – Newcastle-under-Lyme
Majority: 650 (1.5 per cent)
Second place in 2015: Conservatives

John Woodcock – Barrow & Furness
Majority: 795 (1.8 per cent)
Second place in 2015: Conservatives

Tulip Siddiq – Hampstead & Kilburn
Majority: 1138 (2.1 per cent)
Second place in 2015: Conservatives

Joan Ryan – Enfield North
Majority: 1086 (2.3 per cent)
Second place in 2015: Conservatives

Peter Kyle – Hove
Majority: 1236 (2.4 per cent)
Second place in 2015: Conservatives

Paula Sheriff – Dewsbury
Majority: 1451 (2.3 per cent)
Second place in 2015: Conservatives

Cat Smith – Lancaster & Fleetwood
Majority: 1265 (3.1 per cent)
Second place in 2015: Conservatives

Natascha Engel - North East Derbyshire
Majority: 1883 (3.9 per cent)
Second place in 2015: Conservatives

Gareth Thomas – Harrow West
Majority: 2208 (4.8 per cent)
Second place in 2015: Conservatives

Madeleine Moon – Bridgend
Majority: 1927 (4.9 per cent)
Second place in 2015: Conservatives

Karen Buck – Westminster North
Majority: 1977 (5 per cent)
Second place in 2015: Conservatives

Iain Murray – Edinburgh South
Majority: 2637 (5.3 per cent)
Second place in 2015: SNP

Rosena Allin-Khan – Tooting
Majority: 2842 (5.3 per cent)
Second place in 2015: Conservatives

Ian Lucas – Wrexham
Majority: 1831 (5.6 per cent)
Second place in 2015: Conservatives

Richard Burden – Birmingham Northfield
Majority: 2509 (5.9 per cent)
Second place in 2015: Conservatives

Mary Creagh – Wakefield
Majority: 2613 (6.1 per cent)
Second place in 2015: Conservatives
 

Vernon Coaker – Gedling
Majority: 2986 (6.2 per cent)
Second place in 2015: Conservatives

Clive Efford – Eltham
Majority: 2693 (6.2 per cent)
Second place in 2015: Conservatives

Rob Flello - Stoke-on-Trent South
Majority: 2539 (6.5 per cent)
Second place in 2015: Conservatives

Susan Jones – Clwyd South
Majority: 2402 (6.8 per cent)
Second place in 2015: Conservatives

Jim Cunningham – Coventry South
Majority: 3188 (7.3 per cent)
Second place in 2015: Conservatives

Jenny Chapman – Darlington
Majority: 3024 (7.6 per cent)
Second place in 2015: Conservatives

David Hanson – Delyn
Majority: 2930 (7.7 per cent)
Second place in 2015: Conservatives

Gordon Marsden – Blackpool South
Majority: 2585 (8 per cent)
Second place in 2015: Conservatives

Julie Cooper – Burnley
Majority: 3244 (8.1 per cent)
Second place in 2015: Liberal Democrats

Mark Tami – Alyn & Deeside
Majority: 3343 (8.1 per cent)
Second place in 2015: Conservatives

Nic Dakin – Scunthorpe
Majority: 3134 (8.5 per cent)
Second place in 2015: Conservatives

Kerry McCarthy – Bristol East
Majority: 3980 (8.6 per cent)
Second place in 2015: Conservatives

Paul Flynn – Newport West
Majority: 3510 (8.7 per cent)
Second place in 2015: Conservatives

Alan Whitehead - Southampton Test
Majority: 3810 (8.8 per cent)
Second place in 2015: Conservatives

Neil Coyle – Bermondsey & Old Southwark
Majority: 4489 (8.8 per cent)
Second place in 2015: Liberal Democrats

Lindsay Hoyle (Deputy speaker) – Chorley
Majority: 4530 (8.8 per cent)
Second place in 2015: Conservatives

Helen Goodman – Bishop Auckland
Majority: 3508 (8.9 per cent)
Second place in 2015: Conservatives

Thangam Debbonaire – Bristol West
Majority: 5673 (8.9 per cent)
Second place in 2015: Green

Geoffrey Robinson – Coventry North West
Majority: 4509 (10 per cent)
Second place in 2015: Conservative

Graham Jones – Hyndburn
Majority: 4400 (10.2 per cent)
Second place in 2015: Conservatives

David Crausby – Bolton North East
Majority: 4377 (10.2 per cent)
Second place in 2015: Conservatives

Ivan Lewis - Bury South
Majority: 3508 (8.9 per cent)
Second place in 2015: Conservatives

Liz McInnes – Heywood & Middleton
Majority: 5299 (10.9 per cent)
Second place in 2015: Ukip

Alison McGovern – Wirral South
Majority: 4599 (11 per cent)
Second place in 2015: Conservatives

Alan Meale – Mansfield
Majority: 5135 (11.3 per cent)
Second place in 2015: Conservatives

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