All articles tagged with #libor
Originally Published 5 months ago — by BBC
Two former City traders, Tom Hayes and Carlo Palombo, had their convictions for rate-rigging overturned by the UK's Supreme Court, which ruled their trials were unfair, highlighting issues in the prosecution of financial crimes and raising questions about industry practices and justice system reforms.
Originally Published 2 years ago — by Zing! Blog by Quicken Loans
The Secured Overnight Financing Rate (SOFR) is an interest rate used by financial institutions for overnight borrowing, backed by U.S. Treasury securities, and serves as a benchmark for various financial instruments, including adjustable-rate mortgages (ARMs). SOFR has replaced LIBOR due to its reliance on actual transaction data, making it less susceptible to manipulation. For homeowners, SOFR affects the rates of ARMs during the adjustment period, but not fixed-rate mortgages. It's important for borrowers to understand how SOFR may influence their mortgage rates and to be aware of the terms in their loan contracts.
Originally Published 2 years ago — by Barron's
The London interbank offered rate (Libor), the world's dominant interest rate benchmark for the past 40 years, has come to an end. As regulators look for replacements, the authors argue against a one-size-fits-all approach and advocate for the development and adoption of multiple benchmarks in addition to the secured overnight financing rate (SOFR). They highlight the need for credit-sensitive benchmarks that reflect the borrowing costs of banks and everyday businesses, as well as benchmarks with longer terms. They believe that variety and choice in interest-rate benchmarks are essential for market performance and durability.
Originally Published 2 years ago — by The New York Times
The financial system's reliance on the London Interbank Offered Rate (LIBOR), a tarnished interest-rate benchmark, is coming to an end after a decade-long process. LIBOR, which underpinned trillions of dollars in contracts globally, will cease to be published from next week. It was replaced by the Secured Overnight Financing Rate (SOFR) in the United States. The transition away from LIBOR has been a massive effort, with significant fines imposed on the financial industry for manipulating the benchmark. While most contracts have shifted to SOFR, some loans still tied to LIBOR remain, posing challenges for borrowers. British regulators have published a rate that mimics LIBOR until September 2024 to avoid market disruptions.
Originally Published 2 years ago — by BBC
UK and US regulators were informed of a state-led drive to "rig" interest rates in the 2008 financial crisis, but covered it up, according to evidence. The documents suggest lenders sharply dropped their interest rate estimates after pressure from central banks. Evidence was not shown to juries where bankers were jailed for smaller-scale interest rate "rigging". Regulators said they had followed disclosure rules, declined to comment or in one case rebutted the claims.
Originally Published 2 years ago — by The Times
In 2008, amid a market panic and higher Libor rates, six central banks including the US Federal Reserve and the Bank of England launched a coordinated cut in official interest rates to get real borrowing rates down. This unprecedented intervention was prompted by a brainstorming event at the Peterson Institute in Washington, as emergency funding was announced to recapitalise UK banks.
Originally Published 2 years ago — by Financial Times
The transition from LIBOR to SOFR is almost complete, with the final cessation of LIBOR expected at the end of this year. While the transition has caused some pain for market participants, particularly in the derivatives market, the end is in sight. SOFR-linked products are becoming more prevalent, and the market is adjusting to the new interest rate benchmark.