Libor fixings! UBS subpoenaed for interbank rate | FT Alphaville

Libor fixings! UBS subpoenaed for interbank rate

Libor — the interbank rate set by, erm, the banks and curated by the British Bankers’ Association (BBA) — has not been without its critics in recent years.

And the creation of the rate has been also not been without scrutiny. The BBA started a review into possible manipulation of the rate back in early 2008 — even before Libor skyrocketed to its financial crisis highs. We can’t remember what the outcome was, though the review centred on banks ‘providing misleading quotes.’

Anyway — spotted in UBS’s just-released annual report:

UBS has received subpoenas from the SEC, the US Commodity Futures Trading Commission and the US Department of Justice in connection with investigations regarding submissions to the British Bankers’ Association, which sets LIBOR rates. UBS understands that the investigations focus on whether there were improper attempts by UBS, either acting on its own or together with others, to manipulate LIBOR rates at certain times. In addition, UBS has received an order to provide information to the Japan Financial Supervisory Agency concerning similar matters. UBS is conducting an internal review and is cooperating with the investigations.

And here’s the full response from the BBA on Tuesday:

We are committed to retaining the reputation and integrity of BBA LIBOR, which continues to be the authoritative benchmark of the wholesale money market. It has a straightforward and unambiguous calculation method which excludes any rates which are significant outliers. It is fully transparent – all of the data inputted by the contributor banks is publicly available, as is our methodology. And all decisions regarding the design and governance of the benchmark are taken in full consultation with market participants.

We observe rigorous standards in our scrutiny and governance of the LIBOR mechanism, and work with the industry to ensure their continued full confidence in one of its most accurate and reliable benchmarks.

UBS is one of 20 banks that set BBA’s US dollar-denominated Libor fixings.

Related link:
Fall in Libor fails to paint a true picture – FT
How to profit from the Euribor-Eonia basis – FT Alphaville