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News: UK vs US regulators on Libor | FT article

13 May 2013 | Maria Leontiou

A dual track system to pave the way for a new benchmark tied more closely to objective data? At least this is what Martin Wheatley, the UK regulator leading efforts to reform the London Interbank Offered Rate, has told the Financial Times. On the other side of the Atlantic however, this idea would not seem that appealing as US regulators push for “prompt” switch to transaction-based rates. Mr Gary Gensler, chairman of the US Commodity Futures Trading Commission, which spearheaded the Libor probe, is more than eager to get rid of the "malicious" libor and find its sucessor.... More details here (FT subs). Maria L. Bill: Surely the millions of OTC transactions that reference LIBOR can't be moved to a new underlying index without huge legal and pricing impacts, taking years to complete? Even an ISDA 'protocol' wouldn't be sufficient I suspect - any other views?


Comments

Jonno doubt the responsiblity for finding the LIBOR sucessor falls on Mr Wheatley but it seems that Chairman Gensler won't stay still for long. I wouldn't be surprised if he made suggestions later on......

MariaI'm not sure this is regulatory conflict just different roles:- Chairman Gensler has only influence but not the job of defining the new benchmark. He's using his influence to demand urgency without acknowledging the challenges or offering specific suggestions for the solution.- Mr Wheatley is appointed to coordinate an actual solution proposal and seems to be putting out some early thoughts into that. It's hard to assess his proposal without more detail that the FT article lacked.Jon

I hope Chairman Gensler has answers up the sleeve on the exemptive reliefs and lawsuits gunning up the regs he is responsible for otherwise loud simplistic pronouncements on LIBOR may ring a little hollow in months to come.