Li­bor’s days are num­bered

The Star Early Edition - - LETTERS -

CRIT­I­CAL steps for re­plac­ing Li­bor could be taken by next year, Bri­tish in­dus­try of­fi­cials said, in­creas­ing the chances of a smooth tran­si­tion from the in­ter­est rate bench­mark used to price fi­nan­cial con­tracts worth tens of tril­lions of pounds. When reg­u­la­tors an­nounced last month that scan­dal-plagued Li­bor would be re­placed by the end of 2021, there was scep­ti­cism among some in­dus­try play­ers over whether such a huge tran­si­tion could take place on time – or even at all. But prepa­ra­tions are al­ready un­der way to put in place two es­sen­tial el­e­ments for the planned re­place­ment, So­nia, to as­sume its role in the mar­ket. The clear­ing arm of the Lon­don Stock Ex­change, which al­ready clears short­dated So­nia swops – prod­ucts used to hedge against ad­verse moves in rates or cur­ren­cies – said it was plan­ning to clear the kind of longer-dated swops cov­ered by Li­bor. An in­dus­try group, whose mem­bers in­clude the 16 top deal­ers of swops and other de­riv­a­tives, mean­while said it aimed to cre­ate So­nia fu­tures con­tracts. Fran­cois Jour­dain, who chairs the group set up by the Bank of Eng­land to pro­mote adop­tion of So­nia, said he had no doubt that the tran­si­tion would take place. “It will hap­pen,” he said. – Reuters

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