Connect with us

Hi, what are you looking for?


U.S. regulators urge financial firms to quickly ditch Libor rate benchmarks

Stock Markets5 minutes ago (Jun 11, 2021 04:30PM ET)

(C) Reuters. FILE PHOTO: Financial Stability Board chair and Federal Reserve Vice Chairman for Supervision Randal Quarles addresses the Economic Club of New York in New York City, U.S., October 18, 2018. REUTERS/Brendan McDermid

By Pete Schroeder and Katanga Johnson

WASHINGTON (Reuters) -U.S. financial regulators urged market participants on Friday to accelerate their efforts to detach financial products from Libor interest rate benchmarks, while casting doubt on new benchmarks built to compete with their preferred replacement.

Federal Reserve Vice Chair Randal Quarles emphasized there is “no path forward” for Libor, which is being scrapped after numerous banks were fined for manipulating it, and that firms have no reason to delay moving derivatives and other market contracts to the new Secured Overnight Financing Rate.

“The deniers and laggards are engaging in magical thinking,” Quarles said during a meeting of the Financial Stability Oversight Council, a regulatory panel. “Libor is over.”

A host of senior U.S. officials, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell, echoed that message, as regulators worry that financial firms are moving away too slowly from the previous benchmark, which is set to expire at the end of this year for new contracts.

Yellen said some sectors, including business loans, are “well behind” where they should be in the transition. Regulators have struggled for months to convince market participants to abandon Libor, and have relied on increasingly severe rhetoric to convince them that the benchmark will no longer be an option in the near future.

At the same time, regulators had harsh words for competing benchmarks, like the Bloomberg Short-Term Bank Yield Index (BSBY). They warned that, like Libor, those benchmarks are built on relatively few transactions, which could make them unreliable or subject to manipulation.

Securities and Exchange Commission Chairman Gary Gensler said BSBY is built around less than $10 billion in transactions per day when it is meant to serve as a foundation for trillions of dollars in transactions.

“When a benchmark is mismatched like that, there’s a heck of an economic incentive to manipulate it,” he warned.

U.S. regulators urge financial firms to quickly ditch Libor rate benchmarks

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

World News

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered...

World News

George Soros and Bill Gates are part of a consortium acquiring a British developer of rapid-testing technology, including for Covid-19 and tropical diseases,...


If you parked your car in one of the thousands of parking spots across Calgary, there’s a good chance you paid the Calgary Parking...


ForexMay 27, 2021 02:04AM ET (C) Reuters. By Peter Nurse — The dollar edged higher in early European trade Thursday, finding support from...

Disclaimer: it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. Copyright © 2021 Your Morning Voice. All Rights Reserved