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  #71  
Old 05-15-2013, 06:39 PM
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http://www.ft.com/cms/s/0/27c4a71a-b...#axzz2TBQeygK8

Quote:

Martin Wheatley, the UK regulator leading efforts to reform the London Interbank Offered Rate, told the Financial Times that a parallel system would provide continuity for holders of $350tn in existing contracts that reference Libor while also paving the way for a new benchmark tied more closely to objective data.

But the idea could set up a conflict with US regulators, who recently called for a “prompt” switch to transaction-based rates. Gary Gensler, chairman of the US Commodity Futures Trading Commission, which spearheaded the Libor probe, told the FT that the existing system was “unsustainable” in the long run because banks were not doing enough unsecured lending to make accurate estimates.
.....
Mr Wheatley, chief executive of the Financial Conduct Authority, said he believes market participants rather than regulators should make the final decision on how and when to scrap Libor.
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Old 07-01-2013, 06:46 PM
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http://www.bloomberg.com/news/2013-0...investors.html

Quote:
Paula Ramada, who has a doctorate in economics from the Massachusetts Institute of Technology, says she can calculate how much investors lost from banks’ alleged rigging of benchmark interest rates. Now all she needs is funding, a team of analysts and weeks to run the numbers.
.....
Investors suing banks to recover losses must quantify those damages, which some analysts have estimated will total billions of dollars. While regulators have uncovered e-mails between employees trying to rig the London interbank offered rate, the benchmark for more than $300 trillion of securities worldwide, it has been harder to show that investors actually lost money.

“The facts are pretty clear on the plaintiffs’ side, but it’s still an issue of proving damages,” said Samuel Buell, a professor at Duke University School of Law in Durham, North Carolina, and a former lead prosecutor for the U.S. Justice Department’s Enron Task Force.
....
Plaintiffs must prevail on liability claims to seek damages.
Some of those efforts were defeated in March when Buchwald dismissed more than two dozen interrelated antitrust claims by litigants, including pension funds and bondholders, who said banks conspired to set Libor at artificial levels. She allowed some commodities-manipulations claims to proceed.
Antitrust cases are attractive to plaintiffs because damages awards may be multiplied. Buchwald agreed with the banks, who had argued that plaintiffs failed to show harm stemming from anticompetitive behavior.
Other plaintiffs are pursuing fraud claims. Earlier this week, the Regents of the University of California filed an antitrust complaint in federal court in San Francisco against more than a dozen firms, including Barclays and Bank of America Corp. (BAC), accusing them of fraud, deceit and unjust enrichment.
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Old 07-09-2013, 06:00 PM
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http://dealbreaker.com/2013/07/nyse-...r-some-reason/

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The Hogg Tendering Advisory Committee announced today that it’s selling Libor to NYSE Euronext, which immediately raises questions like:

-the “Hogg Tendering Advisory Committee”? Really? and
-why would you want to own Libor?

So: one, yes, the Hogg Tendering Advisory Committee, my favorite name for a financial thing since the Tick Size Flexibility Act of 2013, was put in charge of picking someone to take over Libor. And, two, because it’s profitable I guess?

.....
Meh. We’ve talked before about the theory that Libor would have been better if it had been more commercialized: if you’re selling Libor as a valuable product, like the S&P index or whatever, then you have incentives to get it right. But of course BBA, the old Libor administrator, was selling it: they licensed it to people who needed to know Libor, and got paid licensing fees. They had every incentive to correctly report Libor. Just no incentive to have that Libor reflect bank borrowing costs, or be unmanipulated.

NYSE on the other hand is in the business of selling, not Libor data, but derivatives. But it’s not in the business of owning derivatives. It has all the good incentives that Libor banks have (the desire to have Libor be a robust thing that makes customers confident in trading derivatives on it) but none of the bad ones (the desire to push Libor to favor their own derivatives book). If there’s anyone who wants Libor to inspire confidence, it’s a derivatives exchange. Wanting Libor to inspire confidence is not the same as making it inspire confidence, but I guess it’s a start.
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Old 08-29-2013, 09:13 AM
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http://online.wsj.com/article/SB1000...364511212.html

Quote:
Three days after Tokyo-based trader Tom Hayes was fired by Citigroup Inc. C +0.14% for trying to manipulate benchmark rates, he shot off a letter to one of the bank's human-resources executives.

"My actions were entirely consistent with those of others at senior levels" in Citigroup Japan, he wrote on Sept. 9, 2010, and "the senior management at [Citigroup Japan] were aware of my actions."

Regulators in the U.S. and U.K. are probing up to a dozen banks, including Citigroup, in connection with alleged efforts to manipulate the London interbank offered rate, or Libor, in order to benefit their trading positions. Among other things, they want to know whether senior executives knew of, or participated in, illegal activity. Mr. Hayes's letter is now in the hands of investigators in the U.K.'s Serious Fraud Office, and the former trader has been cooperating for months with their investigation, according to a person familiar with the matter.

....
A few senior executives at other big banks previously have been drawn into the Libor fray. The top two executives at Barclays PLC, BCS +2.62% which settled Libor-rigging charges in 2012, resigned following disclosures that they had instructed employees to tweak Libor data. Senior executives at two other financial institutions were included on emails in which employees appeared to discuss rate-manipulation arrangements.

Regulators and former traders have said that for years it was viewed as business-as-usual for trading desks at many banks to try to sway their banks' Libor submissions to benefit their trading positions. Some former traders said they didn't view the practice as improper.

Citigroup's involvement in the Libor saga stems at least in part from the bank's decision in 2008 to get bigger in the booming business of trading securities linked to interest rates.

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Old 07-07-2015, 01:40 PM
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http://www.wsj.com/articles/libor-re...tor-1436195584

Quote:
Libor Reform Has Not Gone Far Enough, Says Regulator
Financial benchmark at the heart of the rate-rigging scandal remains broken

Nearly five years after the emergence of a rate-rigging scandal that cost banks more than $7 billion in fines, the financial benchmark at the heart of the affair remains broken.

A top U.K. regulator says efforts to overhaul the London interbank offered rate, or Libor, haven't gone nearly far enough. The U.S. Federal Reserve says Libor is no longer fit to serve as the market’s main benchmark. And Intercontinental Exchange Inc., the exchange operator known as ICE, which is in charge of reforming Libor, says it is struggling to get enough support from the industry to make the benchmark better.

ICE has committed to publishing new proposals for Libor reform this summer. Martin Wheatley, chief executive of the U.K. Financial Conduct Authority, said the benchmark needs a full overhaul, that “changes the definition” of Libor.

......
The FCA’s Mr. Wheatley notes that Libor is still calculated based on a best guess of how much it would hypothetically cost a bank to borrow, rather than hard data produced by real trades.

“The key is to make the benchmark trade-based (like a FTSE index) so that the judgment part is removed from the submitters,” he told The Wall Street Journal in an email.

Not everyone agrees. John Grout, head of policy at the U.K. Association of Corporate Treasurers, said it would be difficult to remove any element of judgment and still produce Libor every day, because sometimes there are not enough transactions to allow a rate to be calculated.

.....
Regulators had hoped to improve the accuracy of Libor by getting more banks to participate in setting the benchmark. So far though, the number of banks submitting daily estimates of their hypothetical borrowing costs hasn't changed since the scandal broke. Finbarr Hutcheson, a senior executive with the ICE unit dealing with Libor reform, acknowledged that efforts to encourage new banks to take part are floundering.

Karim Haji, a partner in the financial services division at KPMG LLP, said increasing the number of banks would make it harder for traders to manipulate the rate. But there is reluctance from banks to participate in the scandal-tainted process, he said.

“Getting more banks to submit Libor is hard because they are taking a risk and [are] not really rewarded for it,” he said.

Another major hurdle to Libor reform: red tape. Changing the benchmark would mean changing reams of contracts and legal documents that refer to it, said Farid Anvari, a lawyer at Baker & McKenzie. The market for thousands of commercial loans that use Libor would be especially troublesome because each contract would have to be individually rewritten, he said.

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Old 07-17-2015, 08:48 AM
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http://www.wsj.com/articles/germany-...ure-1437068759

Quote:
German regulators accused a half-dozen current Deutsche Bank AG executives of failing to stop or tell regulators about years of attempted market manipulation, according to a confidential report reviewed by The Wall Street Journal that portrays the German bank as suffering from a badly broken corporate culture.

.....
Mr. Jain, whose resignation took effect June 30 and who is still employed by Deutsche Bank as a consultant, is singled out for especially harsh criticism in the letter for allegedly providing inadequate leadership and failing to stop manipulation of the London interbank offered rate, or Libor, and other market benchmarks. Mr. Fitschen isn’t criticized in the report.

......
The comments are part of a “Senior Management Review” that takes up more than half of BaFin’s report and addresses alleged shortcomings of 11 current or former Deutsche Bank executives. The letter is based in part on a review conducted by accounting and consulting firm Ernst & Young into the bank’s handling of the Libor investigation. Deutsche Bank in April paid $2.5 billion to settle U.S. and British Libor-rigging allegations. It admitted wrongdoing.

Another executive, Deutsche Bank’s European CEO, Stephan Leithner, is faulted for alleged “incorrect attestation” of facts related to traders’ roles in multiple benchmark-rigging investigations. Mr. Leithner didn’t respond to requests for comment. Michele Faissola, the bank’s head of asset and wealth management and a longtime confidant of Mr. Jain, also is criticized for allegedly withholding information from regulators and for “stubbornly maintaining the status quo” of the bank’s Libor processes, despite what BaFin says was mounting evidence of suspicious behavior. Mr. Faissola has written to BaFin disputing the regulator’s findings, said a person familiar with the matter.

....
In spring 2008, after front-page Wall Street Journal articles raised questions about Libor’s reliability, Deutsche Bank officials internally discussed whether the benchmark might be manipulated, according to BaFin. Nearly five years later, in February 2013, Mr. Leithner sent an email to Mr. Jain and Deutsche Bank spokesman Michael Golden noting that “it would be better” if 2008 discussions about Libor “were not mentioned to the press because otherwise the question would be raised about why nobody at DB had reacted at that time,” according to the BaFin report.

The Deutsche Bank spokesman said Mr. Leithner didn’t feel that the bank needed to publicly talk about five-year-old issues in 2013.

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Old 01-28-2016, 02:58 PM
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I haven't been following this story, but this article popped up in my article-popper-upper and seems of possible interest.

http://www.standard.co.uk/news/uk/si...-a3167316.html

Quote:
The sixth broker accused of trying to fix Libor rates has been cleared today in another serious blow to the beleaguered Serious Fraud Office.

The four month trial at Southwark Crown Court, which has cost millions to the taxpayer, has now resulted in all the defendants being acquitted.

One of them, Colin Goodman, nicknamed Lord Libor, branded the case against them “a complete shambles”.

Lawyers said the speed of the unanimous verdicts at the end of such a long trial was “unheard of” and claimed the SFO’s prosecution of the brokers was an attempt to make them “scapegoats.”

Loud cheers and applause broke out in court as Darrell Read was cleared of trying to fix the benchmark lending rate.
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Old 01-19-2017, 05:50 PM
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https://www.theguardian.com/business...m_medium=email

Quote:
Libor scandal: the bankers who fixed the world’s most important number

With arrogant disregard for the rules, traders colluded for years to rig Libor, the banks’ lending rate. But after the crash, the regulators were on their trail

.....
Libor was set by a self-selected, self-policing committee of the world’s largest banks. The rate measured how much it cost them to borrow from each other. Every morning, each bank submitted an estimate, an average was taken, and a number was published at midday. The process was repeated in different currencies, and for various amounts of time, ranging from overnight to a year. During his time as a junior trader in London, Hayes had got to know several of the 16 individuals responsible for making their bank’s daily submission for the Japanese yen. His flash of insight was realising that these men mostly relied on inter-dealer brokers, the fast-talking middlemen involved in every trade, for guidance on what to submit each day.

Brokers are the middlemen in the world of finance, facilitating deals between traders at different banks in everything from Treasury bonds to over-the-counter derivatives. If a trader wants to buy or sell, he could theoretically ring all the banks to get a price. Or he could go through a broker who is in touch with everyone and can find a counter-party in seconds. Hardly a dollar changes hands in the cash and derivatives markets without a broker matching the deal and taking his cut. In the opaque, over-the-counter derivatives market, where there is no centralised exchange, brokers are at the epicentre of information flow. That puts them in a powerful position. Only they can get a picture of what all the banks are doing. While brokers had no official role in setting Libor, the rate-setters at the banks relied on them for information on where cash was trading.

Most traders looked down on brokers as second-class citizens, too. [Tom] Hayes [derivatives trader at UBS] recognised their worth. He saw what no one else did because he was different. His intimacy with numbers, his cold embrace of risk and his unusual habits were more than professional tics. Hayes would not be diagnosed with Asperger’s syndrome until 2015, when he was 35, but his co-workers, many of them savvy operators from fancy schools, often reminded Hayes that he wasn’t like them. They called him “Rain Man”.

By the time the market opened in London, Lehman’s demise was official. Hayes instant-messaged one of his trusted brokers in the City to tell him what direction he wanted Libor to move. Typically, he skipped any pleasantries. “Cash mate, really need it lower,” Hayes typed. “What’s the score?” The broker sent his assurances and, over the next few hours, followed a well-worn routine. Whenever one of the Libor-setting banks called and asked his opinion on what the benchmark would do, the broker said – incredibly, given the calamitous news – that the rate was likely to fall. Libor may have featured in hundreds of trillions of dollars of loans and derivatives, but this was how it was set: conversations among men who were, depending on the day, indifferent, optimistic or frightened. When Hayes checked the official figures later that night, he saw to his relief that yen Libor had fallen.

Hayes was not out of danger yet. Over the next three days, he barely left the office, surviving on three hours of sleep a night. As the market convulsed, his profit and loss jumped around from minus $20 million to plus $8 million in just hours, but Hayes had another ace up his sleeve. ICAP, the world’s biggest inter-dealer broker, sent out a “Libor prediction” email each day at around 7am to the individuals at the banks responsible for submitting Libor. Hayes messaged an insider at ICAP and instructed him to skew the predictions lower. Amid the chaos, Libor was the one thing Hayes believed he had some control over. He cranked his network to the max, offering his brokers extra payments for their cooperation and calling in favours at banks around the world.

By Thursday, 18 September, Hayes was exhausted. This was the moment he had been working towards all week. If Libor jumped today, all his puppeteering would have been for nothing. Libor moves in increments called basis points, equal to one one-hundredth of a percentage point, and every tick was worth roughly $750,000 to his bottom line.

.....
In 2009, Hayes was lured away from UBS to join Citigroup. The head of Citigroup’s team in Asia, the former Lehman banker Chris Cecere, a small, goateed American with a big reputation for finding new ways to make money, had been given millions of dollars to attract the best talent – and Hayes was his round-one pick.

It wasn’t just the $3m signing bonus that had won Hayes over. The promise of a fresh start at one of the world’s biggest banks, with him at centre stage in its aggressive expansion into the Asian interest-rate derivatives market, had proved too tempting to resist. After persuading him to join, Cecere boasted to colleagues that he’d found “a real ****ing animal”, who “knows everybody on the street”.

Cecere set in motion plans for Citigroup to join the Tibor (Tokyo interbank offered rate) panel which, Hayes would crow, was even easier to influence than Libor because fewer banks contributed to it. Hayes wanted to hit the ground running when he started trading, and being able to influence the two benchmarks that helped determine the profitability of the bulk of his positions was an important step. Another was bringing Citigroup’s own London-based Libor-setters on board.

On the afternoon of 8 December, Cecere was at his desk on the Tokyo trading floor. He had an office but seldom used it, preferring to be amid the action. He believed that six-month yen Libor was too high. After checking the submissions from the previous day, he was surprised to see that Citigroup had input one of the highest figures.

Cecere contacted the head of the risk treasury team in Tokyo, Stantley Tan, and asked him to find out who the yen-setter was and request that he lower his input by several basis points. It turned out the risk treasury desk in Canary Wharf was responsible for the bank’s Libor submissions.
......
The knock on Hayes’s door came at 7am on a Tuesday, two weeks before Christmas 2012. Hayes padded down the bespoke pine staircase of his newly renovated home in Woldingham, Surrey, to let in more than a dozen police officers and Serious Fraud Office investigators. A year before, he had been fired from Citigroup, and shortly afterwards returned to the UK, where he married his girlfriend Sarah Tighe.

Hayes stood at his wife’s side as the officers swept through the property, gathering computers and documents into boxes and loading them into vehicles parked at the end of the gravel driveway. The couple had only moved in a fortnight before. Their infant son was upstairs in bed. Traffic was heavy by the time the former trader was led to the back of a waiting car. The 20-mile crawl from Surrey to the City of London passed in silence.

Bishopsgate police station is a grey, concrete building on one of the financial district’s busiest thoroughfares. In a formal interview, Hayes was told he had been brought in to answer questions relating to allegations that between 2006 and 2009 he had conspired to manipulate yen Libor with two of his colleagues. Hayes responded that he planned to help but would need time to consider the 112 pages of evidence so would not be answering any questions that day. It was late when he arrived back in Surrey.

In June, Barclays had become the first bank to reach a settlement with authorities, admitting to rigging the rate and agreeing to pay a then-record 290 million in fines. From the moment Barclays had settled, sparking a political firestorm that burned for weeks, Hayes’s destiny had been leading to this point. The Serious Fraud Office (SFO), which had previously resisted launching a probe into Libor rigging, was forced to reverse its position and on 6 July issued a statement announcing it would be undertaking a criminal investigation. That week the government launched its own review into the scandal. The British public and its politicians were out for scalps.

On 19 December, eight days after his arrest, Hayes was at home on his computer when a news bulletin popped up with a link to a press conference in Washington. As cameras flashed, Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, took turns outlining the $1.5bn settlement the authorities had reached with UBS over Libor. The Swiss bank, they explained, had pleaded guilty to wire fraud at its Japanese arm. Then came the sucker punch.

“In addition to UBS Japan’s agreement to plead guilty, two former UBS traders have been charged, in a criminal complaint unsealed today, with conspiracy to manipulate Libor,” said Breuer. “Tom Hayes has also been charged with wire fraud and an antitrust violation.” Neither Tan nor Cecere has ever been charged with wrongdoing.

At that moment the full horror of the situation hit Hayes for the first time. The two most powerful lawyers in the US planned to extradite him on three separate criminal charges, each carrying a 20–30 year sentence. Less than 24 hours later, a member of Hayes’s legal team was on the phone to the SFO to discuss cutting a deal.

Fighting the charges seemed futile: the UBS settlement made reference to more than 2,000 attempts by Hayes and his colleagues to influence the rate over a four-year period. He was the star attraction, the “Jesse James of Libor”, as he would later tell it. The US authorities had yet to issue extradition papers, but it was only a matter of time.

So began a race to convince the SFO to take on Hayes as a sort of chief informant, who in return would receive leniency and, more importantly, an agreement that he would be dealt with in the UK.

To secure this arrangement Hayes had to agree to tell the SFO everything he knew and promise to testify against everybody involved. Crucially, he also had to plead guilty to dishonestly rigging Libor. It was not enough to admit trying to influence the rate. He had to confess that he knew it was wrong.

During two days of so-called scoping interviews to test his knowledge of the case, Hayes talked openly about his campaign to rig Libor, for the first time in his life. At the SFO’s offices near Trafalgar Square he admitted he had acted dishonestly and brought the investigators’ attention to aspects of the case they knew nothing about. The interviews covered everything from his entry into the industry and his trading strategies to how the Libor scheme began and the various individuals who helped him rig the rate. They barely had to prod to get him to talk. Hayes seemed to relish reliving moments from his past. His voice sped up when he talked about heady days piling into positions, squeezing the best prices from brokers and playing traders off against each other.

“The first thing you think is where’s the edge, where can I make a bit more money, how can I push, push the boundaries, maybe you know a bit of a grey area, push the edge of the envelope,” he said in one early interview. “But the point is, you are greedy, you want every little bit of money that you can possibly get because, like I say, that is how you are judged, that is your performance metric.”

Paper coffee cups piled up as Hayes went over the minutiae of the case. At one stage, Hayes was asked about how he viewed his attempts to move Libor around. The exchange would prove crucial.

“Well look, I mean, it’s a dishonest scheme, isn’t it?” Hayes said. “And I was part of the dishonest scheme, so obviously I was being dishonest.”

Main photograph: Tom Archer/Barcroft Media

• This article is adapted from The Fix: How Bankers Lied, Cheated and Colluded to Rig the World’s Most Important Number by Liam Vaughan and Gavin Finch (Wiley, 19.99). To order a copy for 16.99, go to bookshop.theguardian.com or call 0330 333 6846
https://bookshop.theguardian.com/fix...mpaign=article
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Old 07-27-2017, 12:21 PM
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END OF LIBOR

https://www.ft.com/content/529f8553-...8?desktop=true

Quote:
FCA: Libor to end in 2021


The head of the Financial Conduct Authority has revealed that Libor, the inter-bank lending rate at the centre of a multi-year scandal, will be phased out in 2021, as regulators look to replace it with a more reliable alternative.Andrew Bailey said in a speech in London on Thursday morning that Libor was unable to fulfill its objective of capturing the cost of banks borrowing from each other because this activity has fallen so sharply since the 2008 financial crisis.

.....


Libor came under the spotlight after evidence emerged that it was being manipulated by some of the largest global banks during the financial crisis.

Libor is the rate at which banks lend to each other, setting a benchmark for the price of mortgages, loans and other financial contracts.

It also gives an indication of a bank’s borrowing costs. The lower the rate, the more creditworthy a bank is deemed to be. At the onset of the financial crisis in 2008, it became a closely watched indicator of a bank’s health.

But a number of banks manipulated Libor through the economic meltdown, to give a healthier picture of their credit quality.

Banks have been fined about $9bn to date for rigging the rates they submitted, including a 290m fine imposed on Barclays.

....



The FCA boss said the process of transitioning away from Libor to alternative interest rate benchmarks would take four to five years. He said the FCA had persuaded banks to voluntarily continue producing Libor during that time, after which he expected the market to shift to alternative measures.


.....


He said that a number of alternative benchmarks have already been put forward as suitable replacements by the industry, including the UK’s Sonia. “Work must therefore begin in earnest on planning transition to alternative reference rates that are based firmly on transactions.”



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Old 07-31-2017, 04:02 PM
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http://www.foxbusiness.com/features/...er-update.html

Quote:
Libor: A Eulogy for the World's Most Important Number -- Update

The world's most important number will be no more.

Libor -- the London interbank offered rate -- was created in 1986 to help banks set interest rates on big corporate loans. Thirty-one years later, a top U.K. banking regulator said the benchmark would be phased out over the next five years.

Libor is calculated by asking banks how much it theoretically would cost them to borrow money from other banks. It wasn't designed to be anything more than an invisible bit of financial wiring, hidden deep below the surface of the banking system. Nobody expected it to become a foundation of global finance -- or a synonym for one of the era's biggest banking scandals.

Libor started out as a symbol of the clubby and arguably incestuous world of London banking in the 1970s and '80s. Libor was based on something resembling an honor system.

Libor quickly came to symbolize much more: the globalization of finance and the adrenaline-crazed, anarchic environment that overtook the banking system in the years leading up to the financial crash last decade.

Banks, driven by a rational desire for ever-growing profits, rushed to create newfangled products that their traders used to place bets on the future direction of interest rates and many other trends -- and Libor became a crucial ingredient. The lobbyist group that ran Libor, the British Bankers' Association, hungered for new revenue sources and concocted dozens of new flavors of its product, across different currencies and time periods.

Meanwhile, American banks adopted Libor to determine what borrowers paid on variable-rate mortgages, student loans and, more recently, credit cards. Libor soon was buried in the fine print of countless contracts all over the world.

Because most derivatives aren't traded on public exchanges, it is hard to say exactly how vast Libor's reach is, but studies have estimated that hundreds of trillions of dollars of financial contracts world-wide are based on the benchmark.

......
But Libor was rife with problems. Its method of calculation -- the BBA simply asked banks to estimate how much it might cost them to borrow -- was inexact at best. And the lack of government supervision proved an invitation for banks to manipulate the number.

Banks had huge stakes in the direction of Libor. The profitability of their loan portfolios hinged on the benchmark's fluctuations. And bank traders, with huge holdings of interest-rate swaps and other derivatives, had billions of dollars riding on tiny swings.

It turned out that banks were skilled at getting Libor to move in favorable directions. After all, it was their employees who were guesstimating their borrowing costs, so it was simple enough to skew those figures in helpful directions.

Tom Hayes, a UBS Group AG and Citigroup Inc. trader who in 2015 was convicted as the ringleader of a Libor-manipulating crew, once estimated that perhaps 5% of his hundreds of millions of dollars in trading profits stemmed from his ability to get Libor nudged up or down by fractions of a percentage point. And he was hardly alone -- dozens of other traders and bank managers were involved in similar manipulative behavior (although Mr. Hayes, sentenced to 11 years in prison, is currently the one of the few behind bars).


......
The goal now is to find or create comparable benchmarks that are calculated based on actual transactions in the market -- in other words, derived from actual, not theoretical, borrowing costs. The new measurements are likely to lean on algorithms, a reflection of the increasingly computerized and robotic nature of the financial system.

Five years from now, Libor isn't likely to exist. Its legacy -- distrust in banks and doubts about regulators' ability to police the industry -- is likely to linger.

David Enrich is author of "The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History," a book about the Libor scandal. You can write to him at

david.enrich@wsj.com
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