The U.K. financial services regulator confirmed all 20 banks have agreed to support the London interbank offered rate until 2021 and will work towards developing an alternative benchmark.
The Financial Conduct Authority has been working with the banks to finalize an agreement for them to remain on the panels they currently submit to until the end of 2021, it said in a statement Friday.
The regulator decided to phase out the key interest-rate indicator by the end of 2021 after it became clear there wasn't enough meaningful data to sustain the benchmark that underpins more than $350 trillion in securities, Andrew Bailey, the head of the regulator, said in a speech in July.
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The end of the London interbank offered rate, or Libor, is welcome on many levels for regulators. It was linked to some of the banking industry's largest scandals, leading to about $9 billion in fines and the conviction of several bankers for manipulating the rate.
The benchmark is the average rate a group of 20 banks estimate they'd be able to borrow funds from each other in five different currencies across seven time periods, submitted by a panel of lenders every morning.
As part of the agreement announced today, Societe Generale will cease submissions to the U.S. dollar panel while Credit Agricole will stop submitting for the yen, while the two banks will continue to contribute to the other Libor benchmarks.
From: Bloomberg News
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