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Britain hands Libor rate supervision to New York

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(Globalpost/GlobalPost)

Britain will hand over supervision of Libor interest rate-setting to stock exchange operator NYSE Euronext, after last year's interbank rate-rigging scandal, the Treasury said on Tuesday.

"NYSE Euronext is to be the new Libor administrator," the Treasury said in a statement, after industry body the British Bankers' Association was forced to relinquish its role following the Libor crisis.

The announcement followed a tendering process that was launched in late February to find a new administrator for the London Interbank Offered Rate (Libor) in a process run by an independent committee.

"After overseeing an open and competitive tendering process, the committee is pleased to announce that NYSE Euronext Rate Administration Limited has been accepted by the BBA as the new administrator of Libor," added committee chair Baroness Hogg in the statement.

"This change will play a vital role in restoring the international credibility of Libor," she said.

Britain's banking sector was rocked last year by revelations that Barclays bank tried to manipulate the rate, which is used as a benchmark for global financial contracts worth about $300 trillion.

Libor is calculated daily, using estimates from banks of their own interbank rates. However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

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http://www.globalpost.com/dispatch/news/afp/130709/britain-hands-libor-rate-supervision-new-york