YA THINK?

NYSE Euronext to take over scandal-hit Libor
By Kirstin Ridley

LONDON | Tue Jul 9, 2013 5:23pm EDT
(Reuters)

The U.S. owner of the New York Stock Exchange (NYX.N) announced Tuesday it will take over the running of Libor, the benchmark interest rate at the center of a global rigging scandal, in a move that Britain's financial regulator said would restore its integrity.

A central cog in the world financial system, Libor rates are used as a reference for some $550 trillion in contracts ranging from complex derivatives to everyday credit card bills. Trust in the London interbank offered rate (Libor) was shaken by revelations last year that traders had routinely manipulated it, prompting an overhaul of the system by which it is calculated.

With uncertainty about the future regulation of Libor, and given NYSE Euronext is being bought by U.S. peer IntercontinentalExchange (ICE) (ICE.N) for $8.2 billion, not everyone was convinced the appointment was a good idea.

"We had a 'fox guarding the henhouse' issue here, and we should learn from that," said Bart Chilton, a member of the U.S. Commodity Futures Trading Commission (CFTC) regulator.

"I firmly believe that having a truly neutral third-party administrator would be the best alternative, and I'm not sure that an exchange is the proper choice," Chilton said.