CC leads on British Bankers’ Association overhaul of Libor

CC leads on British Bankers’ Association overhaul of LiborClifford Chance is advising the British Bankers’ Association (BBA) on its review of the governance of the London interbank offered rate (Libor) Partner Habib Motani is leading the team advising the BBA on proposed changes, which include altering the definition and application of Libor.

In June this year the BBA issued a consultation document and invited financial institutions to give feedback, which was published earlier this month.

Motani said: “There were a number of proposals that are now being discussed. The ;expansion ;of ;the ­membership for the foreign exchange money market committee is one of the proposals, as well as a European dollar index as an addition to Libor. These are very much in the discussion phase and nothing has been decided as yet.”

Market concern surrounding the formulation of Libor, which is set by a
small panel of banks, has ­encouraged the BBA to analyse the indices and outline ­appropriate use for the 10 currencies it is used in.

Motani said: “There’s been a lot of debate in the market about Libor and its specific use. What the BBA wants to do is provide clarity on the use of Libor and what it is specifically designed for.”

Clifford Chance, which has advised on a number of other documentation initiatives for the BBA, including the establishment of Libor, was responsible for guiding the association through the consultation process and assisting it in creating ­several key proposals.

The magic circle firm is now assisting the BBA with creating a publicly ­documented framework that will describe the principles according to which the BBA should operate Libor.

The BBA is also considering expanding currency panels, with any banks wishing to contribute to the formulation of Libor being invited to contact the BBA.