Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
There is a move to transaction-based benchmarks for calculating LIBOR rates. Saaman Pourghadiri, barrister at Outer Temple Chambers, questions whether this change in methodology is likely to lead to frustration in current contracts.
What are the current plans to overhaul LIBOR or create alternative reference rates?
Following the regulatory findings made in relation to the manipulation of LIBOR in June 2012 and thereafter, a series of reviews into benchmarks were instigated by global bodies such as the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB). In July 2014 the FSB published recommendations for the reform of interbank unsecured lending markets (IBORs), including LIBOR, and the development of new ‘nearly risk free’ benchmark rates (RFRs).
Currently LIBOR is compiled from data gathered by submitting banks who are asked ‘At what rate could you borrow funds, were you to do so, by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11am?’ That is to say LIBOR is based on estimates provided by banks as to what rate they could hypothetically borrow at.
The FSB recommended changing the approach to calculating LIBOR (and other IBORs) from a submissions-based approach to one based on actual market transactions. ICE, LIBOR’s administrator, has issued consultation papers considering the mechanics of moving to such a system. It is hoped that such a change will strengthen the integrity of the benchmark making it harder to manipulate, ensure that the benchmark is grounded in actual borrowing and is more transparent.
LIBOR is published every day for a variety of currencies and a variety of tenors, for some of those currencies and tenors there will be days with insufficient market liquidity for a benchmark to be published purely by reference to real transactions. ICE’s proposals to deal with the problem of insufficient liquidity ultimately fall back on individual judgment to ensure that the various benchmarks are populated. ICE will publish a roadmap for the evolution of LIBOR to a
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
1. Banking & finance lawyer with experience in syndicated lending and project finance in London, Paris and Sydney
2. Likes yoga, DIY (although the output doesn’t generally reflect the input) and sunny climes
3. Thinks the law is very unlike how LA Law made it look
Kate is a solicitor specialising in banking and finance with particular emphasis on syndicated lending and project finance. She has acted for both borrowers and lenders on a wide range of finance transactions, often involving multiple jurisdictions.
Kate trained and qualified in the Debt and Derivative Securities team at Allen & Overy LLP. She later joined the Banking and Finance team at Freehills (now Herbert Smith Freehills) in Sydney. Most recently, she was in the Projects and Infrastructure team at Norton Rose LLP before joining LexisNexis. Kate is dual-qualified in England and Wales and New South Wales, Australia.
0330 161 1234