LONDON – A panel of banks including Goldman Sachs, Barclays and Deutsche Bank voted to recommend an alternative to Libor for use in sterling derivatives.
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A group of the world's biggest banks backed an alternative to Libor – reducing 'opportunities for misconduct'
A Bank of England working group approved SONIA – which stands for the Sterling Overnight Index Average – as its preferred short-term interest rate benchmark.
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A Bank of England working group approved SONIA – which stands for the Sterling Overnight Index Average – as its preferred short-term interest rate benchmark, the central bank said.
The Libor manipulation scandal, which hit four years after the 2008 financial crisis, risked breaking trust in London's ability to function as a financial centre.
Libor, a benchmark underpinning more than $300 trillion in loans and derivatives, was set by a panel of banks that submitted short-term borrowing rates to the British Bankers' Association at the time of the scandal.
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Regulators found that traders and rate-setters had colluded to shift the rate, benefiting the traders' positions and leading to billions of pounds in fines from US and UK regulators. Libor has since been reformed, and is no longer compiled by the BBA.
The FSB, which is chaired by BoE Governor Mark Carney, started to reform interest rate benchmarks in 2014, and the BoE set up its working group on Libor alternatives in 2015.
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