The Libor benchmark is likely to be replaced by a “dual-track” system where survey-based lending rates run alongside transaction-linked indices, the FT reports.
The Libor rate – the rate at which banks can borrow funds from other banks – has been at the centre of huge controversy over the past year. Royal Bank of Scotland, UBS and Barclays have been hit with billions of pounds worth of global fines after their traders were found to have fixed rates.
Financial Conduct Authority chief executive Martin Wheatley led a review into Libor which was published in September last year. The review set out 10 recommendations to improve the Libor system.
In an interview with the FT, Wheatley says a parallel system would provide continuity for holders of $350tn (£228tn) in existing contracts that reference Libor while also paving the way for a new benchmark tied more closely to objective data.