Trader Luke Scanlon, right, works on the floor of the New York Stock Exchange Monday, July 8, 2013. Stocks rose in early trading Monday ahead of the start of second-quarter corporate earnings reports. (AP Photo/Richard Drew)
Trader Luke Scanlon, right, works on the floor of the New York Stock Exchange Monday, July 8, 2013. Stocks rose in early trading Monday ahead of the start of second-quarter corporate earnings reports. (AP Photo/Richard Drew)
LONDON (AP) ? The company behind the New York Stock Exchange will take over running and restoring confidence in the scandal-hit London interbank offered rate, or LIBOR, a UK committee has ruled.
The independent panel, set up by the UK Treasury, on Tuesday chose NYSE Euronext to take over LIBOR from the British Bankers' Association, which had supervised the rate-setting for decades. The changeover is scheduled to be completed by early 2014, the panel's chair, Baroness Sarah Hogg, said in a statement. The panel did not identify other bidders.
"This change will play a vital role in restoring the international credibility of LIBOR," she said in a statement.
LIBOR underpins trillions of dollars of transactions all over the world. It is an average rate that measures how much they expect to pay each other for loans. The rate is also used in calculating borrowing costs of hundreds of trillions of dollars in loans and investments such as bonds, auto loans and derivatives.
But the rate was underpinned on trust ? an honor system that relied on the banks to be honest. Revelations of its manipulation last summer both shocked the financial community and forced a reform in how it was administered.
The scandal emerged when authorities realized banks ? including Royal Bank of Scotland, Barclays and UBS ? were submitting false data to gain market advantages.
U.S. and U.K. regulators fined RBS more than $460 million for rate-rigging. Barclays' role led to a $453 million fine and the resignation of chief executive, Bob Diamond. Swiss bank UBS was fined $1.5 billion.
After the scandal erupted, the government moved to restore confidence in LIBOR's integrity, establishing the panel to review the rate and creating criminal penalties for those who violate the rules.
"We want to protect taxpayers and restore faith in financial services," financial secretary to the Treasury Greg Clark said in a statement.
"The government is committed to developing a safer and strong banking sector. We want a financial sector that serves the interests of business and helps to drive economic growth."
The rate will be administered by NYSE Euronext Rate Administration Limited, a new subsidiary of NYSE Euronext.
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