ARR LEAVES LIBOR BEHIND

The London Inter-Bank Offered Rate (Libor) is an interest rate average calculated from estimates submitted by the leading banks in London.

Introduction

The Name LIBOR (London Interbank Offered Rate) used to be synonymous in every other loan which is raised in global currencies i.e., USD, EUR, GBP, JPY and CHF. And the trust was also unshakable on LIBOR that no one could even think to question the validity of LIBOR as benchmark. Almost all over the world banks used to price different financial products by keeping LIBOR as the benchmark. But in the beginning of 2012 investigation in LIBOR revealed that manipulation in LIBOR rate was happening by some of the top global banks notable Deutsche Bank, Barclays, UBS, Rabobank, and the Royal Bank of Scotland for benefiting their positions and this manipulation was taking place as far as 2003. Then administration of LIBOR was transferred to Intercontinental Exchange, earlier The British Bankers'

Association was issuing the LIBOR rates. Regulators in United States, UK and European Union fined the banks for more than USD 9 Billion for rigging the LIBOR.

Criminal charges were also levelled against individual traders and brokers for their role in the manipulation of LIBOR rates. The British Regulator that was compiling the LIBOR said the banks are no longer required to submit interbank lending rates for LIBOR post 2021. According to the Federal Reserve and regulators in the UK, LIBOR will be phased out completely by June 30, 2023.