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ICE Benchmark Administration Replaces the British Bankers' Association as Administrator of LIBOR

Finance Alert | February 4, 2014
By: Meredith A. Bieber

As of February 1, 2014, ICE Benchmark Administration Limited (IBA) replaced the British Banker’s Association (BBA) as the administrator of the London Interbank Offered Rate (LIBOR). IBA is an autonomous entity acting within Intercontinental Exchange Group, Inc. (ICE), a global network of exchanges and clearing houses.

The replacement comes in the wake of the LIBOR rigging scandal that erupted in 2012, when it was alleged that certain banks were manipulating their submitted rates so as to appear more creditworthy and/or to profit from trades. The Wheatley Review (Report) of LIBOR, a review of the LIBOR framework commissioned by the U.K.’s Chancellor of the Exchequer (i.e. the British Cabinet minister who is responsible for economic and financial matters) and published in 2012, contained a ten-point plan for comprehensive review of LIBOR, including the recommendation that the BBA transfer responsibility for LIBOR to a new independent administrator.[1] On July 9, 2013, following a rigorous selection process, the Hogg Tendering Advisory Committee for LIBOR announced that the BBA accepted its recommendation that NYSE Euronext Rate Administration Limited, a subsidiary of NYSE Euronext, should be the new LIBOR administrator. ICE subsequently acquired NYSE Euronext, and NYSE Euronext Rate Administration Limited was renamed ICE Benchmark Administration Limited in November 2013.

According to the IBA’s website, “As published by the IBA, ICE  LIBOR, formerly known as BBA LIBOR, will be a continuation of what was previously known as BBA LIBOR and there shall be no changes to the manner in which the rate is calculated or data collection methodologies at the time of the transition”.[2]

Lenders should update their form loan documents to change references to BBA LIBOR to ICE LIBOR, and, where an existing agreement or promissory note specifically refers to the BBA LIBOR, it may be necessary to amend the document to refer to the ICE LIBOR unless the document is sufficiently clear that “BBA LIBOR” refers to any successor LIBOR.

The Report also recommends the cessation of the compilation and publication of LIBOR for those currencies and maturities for which there is insufficient trade data to corroborate submissions, which, if implemented in full, would reduce the number of LIBOR benchmarks published daily from 150 to 20. In fact, by mid 2013 the BBA ceased quoting LIBOR for certain maturities including the two-week, five-month and 11-month maturities and ceased publishing LIBOR for the Canadian and Australian dollars. Where form agreements or existing agreements reference currencies or maturities that have been or will be discontinued, market participants will need to consider alternatives.

Finally, to the extent that they do not do so already, lenders should make sure that their standard agreements set forth adequate contingencies in the event that LIBOR is no longer compiled and published.

For additional information, please contact Meredith Bieber (bieberm@whiteandwilliams.com | 215.864.6292).


[1] Source: The Wheatley Review of LIBOR: final report https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/191762/wheatley_review_libor_finalreport_280912.pdf

[2] https://www.theice.com/publicdocs/IBA_LIBOR_FAQ.pdf

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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