31 / 01 / 2014

On 1 February 2014 the administration of LIBOR was transferred from the British Banker’s Association to the IntercontinentalExchangeGroup (ICE), and BBA LIBOR is now know by the name ICE LIBOR.  The need for a new administrator of LIBOR was highlighted in the Wheatley Review.

LIBOR reflects the average rate at which banks can obtain unsecured funding in the London inter-bank market for a particular currency and a particular time period. It is used globally as a benchmark to calculate payments made under all manner of finance documents – for example, derivatives, syndicated and bilateral loan agreements and floating rate notes.

The appointment of ICE as the new administrator will need to be reflected in the LIBOR definition in finance documents entered into after 1 February 2014.  With regard to pre 1 February 2014 finance documents, they will typically define LIBOR by reference to BBA LIBOR. On the basis that ICE LIBOR retains substantially the same attributes as BBA LIBOR and the transfer of the administration function does not involve a fundamental change in the way in which the relevant data is collected and the calculation made, the widely held view in the market is that a reference to BBA LIBOR will operate to reference ICE LIBOR.