NYSE Euronext to Buy Scandal-Plagued Libor
NYSE Euronext, the company that runs the New York Stock Exchange (NYSE), announced on Tuesday it will buy the scandal-plagued Libor (London Interbank Offered Rate).
Libor, which is the benchmark interest rate banks use to loan to other banks, affects trillions of dollars of financial contracts. Recently, U.K. and U.S. regulators have slapped three banks with a combined $2.5 billion in penalties after it was revealed that banks engaged in a Libor rate-rigging scheme designed to profit from their positions.
NYSE Euronext, which will take over Libor in 2014, has yet to announce the terms of the deal but says it hopes to continue “the process of restoring credibility, trust and integrity in Libor as a key global benchmark.”
Some regulators, however, see trouble on the horizon in having NYSE Euronext own Libor.
“We had a ‘fox guarding the henhouse’ issue here, and we should learn from that,” Commodity Futures Trading Commission member Bart Chilton told the New York Times. “I firmly believe that having a truly neutral third party administrator would be the best alternative, and I’m not sure that an exchange is the proper choice.”