Monday, September 21, 2009

Do you want to set Libor?

The deadline for snaring a place on the BBA’s daily LIBOR-setting panel is approaching.

To enter you must be able to prove that:

a) you are a bank

b) you are already active in the interbank market

c) you haven’t confused yourself (and are, say, one of the 16 banks already part of the gang)

Meet those criteria and the BBA’s Foreign Exchange and Money Markets Committee will want to hear from you.

From Reuters on Monday:

“We have been in contact with a number of banks about joining our Libor panel. Any bank is welcome to join the panel and we have had responses from BBA members as well as banks who are not members of the BBA,” John Ewan, BBA director, told Reuters at a Libor seminar at the BBA in London.

Ewan said he was asking applicants to supply historical data to show evidence of their activity in the bank-to-bank interest rate market. “If banks want to be considered for a panel expansion, they need to get data to us by the end of this month,” he said.

“We will be doing our next semi-annual review of the panel banks towards the end of November. At that point the committee that oversees Libor will look at (widening the panels),” Ewan said.

“While it is the committee’s decision, their view will be that if additional members will make a difference they may well consider adding further banks to the panel,” he added.

But one credit crunch-era concern about allowing smaller banks on to the panel remains - that the more vulnerable banks which are regularly charged more to borrow will push up the aggregate borrowing costs for all their other LIBOR chums.

Certainly something for those wannabe-Libor setters to ponder before the interview process begins.

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