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ARTICLE · 04 AUGUST 2020

No More LIBOR

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On 3 August, the move away from benchmarking against LIBOR and other interbank offered rates ("IBORs") will take its next step forward as the Bank of England publishes the new daily SONIA Compounded Index

United KingdomFinance and Banking
James Gaudin
James Gaudin
Paul Worsnop
Paul Worsnop
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Bank of England takes another step away from LIBOR

On 3 August, the move away from benchmarking against LIBOR and other interbank offered rates ("IBORs") will take its next step forward as the Bank of England publishes the new daily SONIA Compounded Index for the first time.

The London Interbank Offered Rate ("LIBOR") is a daily benchmark interest rate calculated as an average of panel bank submissions and provides an indication on the rate banks pay to borrow unsecured money in five currencies for periods ranging from overnight to 12 months.

In the aftermath of the 2008 financial crisis, regulators in the UK and the US discovered LIBOR rates had been systematically manipulated by traders which precipitated moves in major international finance centres to reform interbank offered rates such as LIBOR by making them more transparent and robust.

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