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IBA calls for input on how corporates use Libor

ICE Benchmark Administration (IBA), owned by the Intercontinental Exchange (ICE), an electronic trading platform providing access to capital and derivatives markets, has published a paper setting out the roadmap for the London inter-bank offered rate (Libor) benchmark.

ICE Libor is a benchmark rate produced for five currencies, with seven maturities quoted for each – ranging from overnight to 12 months, producing 35 rates each business day.

The paper – Roadmap for ICE Libor – proposes steps for the evolution of Libor in the wake of the UK government-commissioned Wheatley Review in 2012, which set out a 10-point plan to overhaul the way the Libor market operates.

The Roadmap aims to deliver a “seamless transition to an even more robust rate which will make Libor more sustainable for the long term” and the IBA states this will be done through the following three actions:

  1. The IBA will implement a uniform submission methodology for LIBOR panel banks based on parameters defined by IBA and the LIBOR Oversight Committee
  2. The IBA will publish a single, clear, comprehensive and robust LIBOR definition
  3. Submissions will be non-subjective and fully transaction-based wherever feasible.

The Association of Corporate Treasurers (ACT) writes in a blogpost that, “while there are no plans to discontinue any of the current 35 Libor rates, it may be that certain currency / tenor rates are harder to centrally calculate than others, hence it would be very useful to understand the usage and also the available alternatives and fall-backs for each of the Libor rates.”

The IBA has therefore asked Libor users to complete a questionnaire, by 22 April so that it can gain a better understanding of how the benchmark is being used.

In particular it asks:

  • which LIBOR currencies and tenor rates do you use?
  • What is the nature of usage for each currency and tenor?
  • what are the alternatives if the currency/tenor are not available?

The questionnaire is available here

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