The British Bankers' Association (BBA), the lobby group thatoversees Libor, proposed cutting the number of currencies andmaturities included in the benchmark within the next five monthsfollowing the rate-rigging scandal.

The lobby group plans to end quoting rates in Australian and NewZealand dollars at the end of February, and the Canadian dollar,Danish kroner and Swedish kronor rates the following month, theLondon-based BBA said in a statement today. The group also proposedto stop publishing “interim maturities” such as the two-week,two-month and nine-month tenors for all currencies by the end ofJanuary.

The announcement follows a regulator's review of the Londoninterbank offered rate after Barclays Plc was fined a record 290million pounds ($463 million) for rigging the benchmark. MartinWheatley, a managing director at the Financial Services Authority,recommended cutting the number of quoted rates to as few as 20 from150, because the lack of trades in some currencies and maturitiesmakes it almost impossible for the banks that contribute to therate to state their borrowing costs accurately.

The BBA also proposed stopping quotes for the sterlingrepurchase agreement, or repo, at the end of next month. Thereductions will leave 30 Libor rates spread across five currenciesand six maturities. The group plans to continue quoting overnight,one-week, one-month, three-month, six-month and 12-month Liborrates in dollars, euros, pounds, yen and Swiss francs. The lobbygroup is inviting feedback on the proposals within the next 30days.

Wheatley also proposed stripping the BBA of responsibility forthe rate and adopting criminal penalties for interest-ratemanipulation.

“In the event that oversight of Libor is transferred away fromthe BBA prior to these proposals being fully implemented, anychanges should be open to ongoing review by the new administrativebody,” the BBA said. “However, based on initial feedback fromstakeholders, the BBA feels that the time-frame proposed in thispaper should be achievable.”

Libor is calculated by a poll carried out daily by ThomsonReuters Corp. on behalf of the BBA that asks firms to estimate howmuch it would cost to borrow from each other for different periodsand in different currencies. The top and bottom quartiles of quotesare excluded, and those left are averaged and published forindividual currencies before noon in London.

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