Guess who bought LIBOR?

[Octafish]

Last edited Wed Jul 10, 2013, 01:41 PM - Edit history (1)

The London Inter-Bank Official Rate



The swells who own the New York Stock Exchange.

NYSE body to run Libor as City attempts to put scandal behind it

Move follows decision to strip BBA of its association with benchmark rate, which will be run by a London-based subsidiary

by Jill Treanor
The Guardian, Tuesday 9 July 2013 11.10 EDT

Libor might stand for the London interbank offered rate, but from next year the scandal-hit benchmark rate will be set by the body that runs the New York Stock Exchange in the latest attempt to clean up the City.

Libor, which is used to price $300tn (£192tn) of financial products around the world, has been overseen until now by the British Bankers' Association (BBA). But its integrity has been questioned after banks and other financial firms were found to have rigged the rate.

The contract to run the process of setting the rate was put out to tender in April after Martin Wheatley, the boss of new City regulator the Financial Conduct Authority (FCA), concluded in a report that the BBA should be stripped of its long-running association with Libor. It is not clear if the Libor name will survive in the long term.

NYSE Euronext, which runs the New York Stock exchange and the London futures exchange and is itself in the throes of being taken over by a rival, is setting up a new London-based subsidiary to run Libor. NYSE Euronext Rate Administration Ltd will be regulated by the FCA, which is being given formal oversight of the rate amid the ongoing investigation into the way Libor was rigged in the past. It is thought to have paid £1 to take over the rate-setting function.

CONTINUED...

http://www.guardian.co.uk/business/2013/jul/09/nyse-body-libor-city-scandal

While it would be really tempting to, uh, jiggle the numbers, seeing how the interest rates can affect their holdings, I'm told not to worry. The U.S. taxpayer stands ready to bail out any Bankster, which explains why Mayor Bloomberg's company was in on the bidding.

Here's why LIBOR is important to the rest of us in the 99-percent:

Meet the Unseen Bullwhip of the New Slavemasters

[liberal_at_heart]

1. put politicians in office who will prosecute these bastards!

[Octafish]

3. Not So Fast, Libor Manipulation Still A Threat Under NYSE Euronext Takeover

Libor Explained: How Manipulated Rates Could Be Hurting (Or Helping) You

by Halah Touryalai, Forbes Staff

EXCERPT...

Whether or not the NYSE is independent enough is debatable but whether or not it plans to base Libor on actual transactions is more important. Right now it’s unclear if the NYSE will require banks to submit all data based on actual transactions.

Under the BBA banks were simply asked to estimate what they would charge one another to borrow money. Their submissions could be made up and that’s precisely the weakness in the previous Libor rate setting process.

James Angel, associate professor of finance at Georgetown University says, “The real question is how the rates will be determined. Historically, there’s been no consequences for wild guesses made by banks when submitting their rates.”

SNIP...

Angel says its likely banks will use so-called matrix pricing in those situations. “A bank may not have borrowed today but maybe yesterday it borrowed at 10 basis points higher than Treasuries. If Treasuries haven’t moved since then then 10 basis points above Treasuries would still be accurate,” he says.

The key is how NYSE plans to ensure those kinds of estimates are backed by real transactions. Those details will have to be made clear to Wheatley’s Financial Conduct Authority which will oversee the NYSE in its Libor duties.

CONTINUED...

http://www.forbes.com/sites/halahtouryalai/2013/07/09/not-so-fast-libor-manipulation-still-a-threat-under-nyse-euronext-takeover/

PS: You are absolutely correct, liberal_at_heart. We need leaders with integrity. This go-along to get-along stuff has gotten us to the point of collapse.

[Laelth]

2. k&r for exposure. n/t

-Laelth

[Octafish]

4. Libor's New Manager Has Its Own Conflicts

By Paula Dwyer Jul 9, 2013 4:19 PM ET

EXCERPT...

That strikes me as problematic. NYSE Euronext operates Liffe, Europe's second-largest derivatives exchange. Its interest-rate futures and other derivative instruments, some of which use Libor and related benchmarks as a component, are among the most heavily traded in the world.

Handing off the benchmark to owners whose profitability depends on Libor's continued credibility isn't necessarily a bad idea. But it does give Libor's new owner a billion reasons not to upset the status quo, and the status quo isn't right.

SNIP...

The system depended heavily on self-reported estimates from banks that had huge incentives to manipulate rates. For now, the new owners plan to keep this system, with some additional safeguards, including subjecting banks' rate reporters to internal compliance rules.

What is needed, though, is a whole new way of calculating Libor. As Bloomberg View has advocated, a more transparent system would have banks report actual borrowing transactions, against which the public could check the truthfulness of the banks' estimates. (Full disclosure: Bloomberg LP, parent of Bloomberg News, proposed a Libor alternative, while Thomson Reuters proposed taking it over. Both were rejected in favor of NYSE Euronext.)

Creating a new method would be costly, time-consuming and controversial. If you run derivatives exchanges that trade instruments that depend on the continuation of the existing method, your resistance to change will be enormous. And that's one reason why you shouldn't expect to see improvements to Libor anytime soon.

http://www.bloomberg.com/news/2013-07-09/libor-s-new-manager-has-its-own-conflicts-.html

CONTINUED...


PS: Thank you, Laelth! The dismal science needs a healthy dose of forensic science...and criminal justice.

[Laelth]

8. My pleasure (and a bonus kick). n/t

-Laelth

[CK_John]

5. Wasn't the NYSE sold recently to a London firm?

[KamaAina]

6. "and is itself in the throes of being taken over by a rival,"

Who might that be?

[KamaAina]

7. Ah, here we go

http://en.wikipedia.org/wiki/IntercontinentalExchange

IntercontinentalExchange, Inc. is an American commodity exchange. It operates regulated exchanges and clearing houses for agricultural, credit, currency, emissions, energy and equity index products. It is headquartered in Atlanta, Georgia with offices in New York, London, Chicago, Houston, Winnipeg, Calgary, Washington, D.C. and Singapore....

In December 2012, ICE announced it would buy NYSE Euronext for $8 billion, pending regulatory approval. Jeffrey Sprecher will retain his position as Chairman and CEO. The boards of directors of both ICE and NYSE Euronext approved the acquisition....

In a timely response to US financial crisis in 2008, Sprecher formed ICE US Trust based in New York, now called ICE Clear Credit LLC, to serve as a limited-purpose bank, a clearing house for credit default swaps. Sprecher worked closely with the Federal Reserve to serve as its over-the-counter (OTC) derivatives clearing house. The principal backers for ICE US Trust are the same financial institutions most affected by the crisis, the top ten of the world's largest banks (Goldman Sachs, Morgan Stanley, Bank of America, Citi, Credit Suisse, Deutsche Bank, JPMorgan, Merrill Lynch, Morgan Stanley and UBS). Sprecher's clearing house cleared their global credit default swaps (CDS) in exchange for sharing profits with them (Weitzman Financial Times 2008-10-31, Terhune 2010-07-29).By 2010, Intercontinental Exchange had cleared more than $10 trillion.

What could go wrong?