May 12 A dual-track system, including
survey-based lending rates along with transaction-linked
indices, is likely to replace scandal-hit London interbank
lending rate Libor as soon as next year, the Financial Times
reported on its website on Sunday.
The new system would provide continuity for holders of $350
trillion in existing contracts that reference Libor while also
paving the way for a new benchmark tied more closely to
objective data, Martin Wheatley, chief executive of Britain's
Financial Conduct Authority who is leading efforts to reform the
benchmark, told the FT.
The proposal, however, could conflict with U.S. regulators,
who want a switch from survey-based lending rates to
transaction-linked indices to calculate the interest payable on
corporate debt and underpin the global market in financial
Gary Gensler, chairman of the U.S. Commodity Futures Trading
Commission, 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.
The top U.S. regulator told a conference in London last
month alternatives based on market transactions should be used
and a fixed date set for scrapping the existing Libor and
Euribor benchmarks that are currently based on quotes from
More than a dozen banks are under investigation by
authorities in Europe, Japan and the United States over
suspected Libor rate rigging between 2007 and 2010 and
officials, including incoming Bank of England Governor Mark
Carney, are weighing up reforms to safeguard its integrity.