The London Interbank Offered Rate (LIBOR) is used as the floating rate for a wide range of financial contracts, including interest rate swaps, mortgages and money market instruments. LIBOR sets the settlement price for exchange-traded interest rate contracts and is also used by central banks in setting their interest rate targets. It is estimated that, globally, hundreds of trillions of dollars of interest rate exposure is tied to LIBOR.
The LIBOR scandal that came to light in 2008, and that resulted in global banking institutions being accused of manipulating the LIBOR and other benchmarks, has generated considerable press coverage, and huge fines for those banks involved. In response to this scandal, and concerns about the accuracy of other benchmarks, regulators in the United Kingdom and the European Union have been proposing and enacting legislation that brings benchmarks under far greater regulation than before and grants regulators greater powers to punish wrongdoing associated with the administration, submission to and use of benchmarks. The breadth of some of this legislation is such that it captures not only benchmarks used across global markets like LIBOR, but also proprietary indices.
Please join us as Mayer Brown partner Mark Compton discusses the impact that these new regulations can have on a broad range of market participants.