LIBOR-EURIBOR rate setting - ACT press release

In our October 2011 press release¹ the ACT commented that we think it essential that banks active in the relevant markets be willing to input rates promptly and in good faith to maintain orderly availability of these composite rates.

Colin Tyler, Chief Executive said:

 LIBOR and EURIBOR are of great importance to users of financial markets such as non-financial businesses of all sizes. We expect banks active in relevant markets to contribute rates in good faith and with appropriate compliance processes. We appreciate the time and effort put in by the contributor banks to make LIBOR and EURIBOR possible. 

We have read the findings by UK and US authorities about the conduct of Barclays group in the period 2005-9 and the statements therein about the conduct of other un-named rate contributors with concern. The authorities’ work is unfinished.

However we note the improved guidance issued by BBA for LIBOR and EBF for EURIBOR during the period examined by the authorities and the opportunity for all rate contributors to overhaul their internal controls related to rate contributions since then. And that the BBA has announced recently a review of LIBOR arrangements.

We are, of course, concerned that banks, realising the reputational risks associated with contributing rates may be tempted to avoid that by not contributing. So, we reiterate our view that it is incumbent on the large banks active in markets to contribute to an appropriate set of reference rates in good faith and with appropriate compliance processes. Banks’ customers expect no less of them. Failing to contribute would cast doubt on a bank's standing, its confidence in its internal controls and its good faith in dealing with customers and the markets in general.

Notes for editors

• ACT stresses the importance of LIBOR and EURIBOR to companies”, 24 October 2011, available at http://www.treasurers.org/node/7329.

The US Department of Justice’s statement: www.justice.gov/opa/pr/2012/June/12-crm-815.html
The UK Financial Services Authority’s finding: www.fsa.gov.uk/static/pubs/final/barclays-jun12.pdf
The US CFTC FINDING: www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalplea...

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