NYSE Vows to Save Libor as Chilton Questions Neutrality
9 July 2013, by Nandini Sukumar (Bloomberg)
http://www.bloomberg.com/news/2013-07-09/nyse-vows-to-save-libor-as-chilton-questions-neutrality.html

Excerpt:

NYSE (NYX) Euronext marched itself to the center of the financial world’s biggest scandal today, vowing to restore confidence in the London interbank offered rate amid a rigging investigation that has generated $2.5 billion in fines.

The New York Stock Exchange operator will replace the British Bankers’ Association as Libor’s administrator in 2014, the London-based lobby group that started the gauge more than two decades ago said in a statement.

More than $300 trillion in securities are benchmarked to it. As part of an overhaul, the Financial Conduct Authority began regulating Libor in April.

The transfer, criticized by a member of the U.S. Commodity Futures Trading Commission, hands control to NYSE, which owns the London-based Liffe derivatives market and is in the process of being acquired by IntercontinentalExchange Inc.

U.K. regulators recommended that the BBA be stripped of responsibility for Libor after finding banks had tried to manipulate it to profit from bets on derivatives.

“We had a ‘fox guarding the henhouse’ issue here, and we should learn from that,” Bart Chilton, a Democrat on the CFTC, wrote in an e-mail.

“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.”

Liffe, Europe’s second-largest derivatives exchange, offers Libor-based short sterling futures and Euribor, dominating the market for trading of short-term interest rate products.

Ownership of that business means it’s in Liffe’s interest that investors have confidence in Libor, according to Finbarr Hutcheson, chief executive officer of Liffe.