
Libor, ring-fencing and the Risk Awards
The week on Risk.net, January 22–28, 2016

LIBOR is in the headlines once again as the issue of replacing the benchmark causes trouble
RING-FENCING is causing more headaches as banks grow impatient for final rules
THE RISK AWARDS recognise derivatives excellence at Citi, BlackRock, Citadel and others
COMMENTARY: Libor's legacy
This week, six interdealer brokers on trial in London were acquitted of crimes related to the Libor-rigging scandal. The men were accused of conspiring with convicted UBS trader Tom Hayes, who was imprisoned last year, but the jury cleared them of all charges of conspiracy. Elsewhere, though, the aftershocks of the Libor scandal continue to rumble.
Moves to replace Libor with another unsecured benchmark rate such as Eonia have hit a pothole, with the news that volumes have dropped so low in the unsecured money markets that the Eonia rate is now highly volatile and "almost meaningless", according to Eurex. A revised Eonia methodology is one possible solution, as is using a rate based on secured lending.
There was one piece of good news, however – a legal expert said at a conference in the Hague that a change of benchmark was unlikely to lead to widespread and disruptive terminations of Libor-based contracts. Speaking at the same conference, senior FSB advisor Darrell Duffie said regulators will eventually have to push the market on to better reference rates if it didn't move by itself.
And research by Risk.net has found that hugely costly and embarrassing conduct scandals such as Libor-rigging and mis-selling have drawn far more management attention and resources to culture and conduct risk than before, in particular at major UK banks.
QUOTE OF THE WEEK – "This is all still very new – Sef trading is only a few years old, and I think that at this point our rules should allow for some variety. We'll see how practices develop [and] we'll see what the market wants" – CFTC chairman Timothy Massad
ALSO THIS WEEK
MetLife puts forward alternative approach to G-Sii designation
NTNI definition could be dropped from G-Sii assessment and replaced by liquidity measures, says insurer
Liquidity stress test regime needs attention, say central bankers
DNB experts recommend improved market-wide and bank-specific liquidity stress tests
Banks hold advantage in clearing contract talks
Buy side losing battle with prospective clearing members
Massad: let market decide what it wants from Sefs
The market should decide whether it wants to trade via voice or electronic execution on Sefs, says CFTC chairman Timothy Massad
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on 7 days in 60 seconds
Bank capital, margining and the return of FX
The week on Risk.net, December 12–18
Hedge fund losses, CLS and a capital floor
The week on Risk.net, December 5–11
Capital buffers, contingent hedges and USD Libor
The week on Risk.net, November 28–December 4
SA-CCR, SOFR lending and model approval
The week on Risk.net, November 21-27, 2020
Fallbacks, Libor and the cultural risks of lockdown
The week on Risk.net, November 14-20, 2020
Climate risk, fixing Libor and tough times for US G-Sibs
The week on Risk.net, November 7-13, 2020
FVA pain, ethical hedging and a degraded copy of Trace
The week on Risk.net, October 31–November 6, 2020
Basis traders, prime brokers and election risk
The week on Risk.net, October 24-30, 2020