Who Calculated Libor Rate Before 2012

Historical LIBOR Administrator Lookup

Enter a year to determine which organization was responsible for calculating and administering the LIBOR rate during that period.

Administering Body:

function calculateLiborAuthority() { var yearInput = document.getElementById("queryYear").value; var year = parseInt(yearInput); var resultDiv = document.getElementById("liborResult"); var output = document.getElementById("authorityOutput"); var context = document.getElementById("authorityContext"); if (isNaN(year) || yearInput.length !== 4 || year 2025) { resultDiv.style.display = "block"; resultDiv.style.backgroundColor = "#fee"; resultDiv.style.borderLeftColor = "#c00"; output.innerText = "Invalid Year"; context.innerText = "Please enter a valid 4-digit year between 1986 (inception) and present."; return; } resultDiv.style.display = "block"; resultDiv.style.backgroundColor = "#eef"; resultDiv.style.borderLeftColor = "#003366"; if (year = 2012 && year < 2014) { // Transitional period output.innerText = "BBA (Transitional Period / Under Review)"; context.innerText = "Following the Wheatley Review in 2012, the BBA continued administration temporarily while the process of transferring responsibility began."; } else { // Post-2014 reform era output.innerText = "ICE Benchmark Administration (IBA)"; context.innerText = "As of early 2014, administration was officially transferred to ICE Benchmark Administration to improve governance and transparency."; } }

Understanding LIBOR Governance: Before and After 2012

For decades, the London Interbank Offered Rate (LIBOR) served as the primary global benchmark for short-term interest rates, underpinning trillions of dollars in financial contracts worldwide, from mortgages to complex derivatives. Understanding its historical governance is crucial for comprehending financial history and the context of its recent cessation.

Who Calculated LIBOR Before 2012?

Prior to the significant reforms that began around 2012, the calculation and administration of the LIBOR rate were the responsibility of the British Bankers' Association (BBA).

The process was relatively straightforward but relied heavily on trust. Every business day in London, a panel of major banks selected by the BBA would submit estimates of the interest rates at which they believed they could borrow unsecured funds from other banks in the London wholesale money market. These submissions covered various currencies and maturities ranging from overnight to one year.

Once the BBA received these submissions, they utilized a "trimmed mean" methodology. They discarded the highest and lowest quartile of submissions (the top 25% and bottom 25%) and averaged the remaining middle values. This average became that day's official LIBOR fixing.

The Turning Point: The 2012 Wheatley Review

The system governed by the BBA came under intense scrutiny following the global financial crisis. Investigations revealed that certain panel banks had been manipulating their rate submissions to benefit their trading positions or to appear healthier than they actually were during times of financial stress.

This scandal led to the UK government commissioning the "Wheatley Review of LIBOR" in 2012. The review concluded that the existing governance structure was fundamentally flawed and lacked necessary independent regulation.

The Post-2012 Transition

A primary recommendation of the Wheatley Review was to strip the BBA of its responsibility for LIBOR. A transitional period occurred between 2012 and 2013 as regulators sought a new administrator.

By early 2014, the responsibility was formally transferred to a new entity created for this purpose: the ICE Benchmark Administration (IBA), a subsidiary of Intercontinental Exchange. The IBA was tasked with reforming the benchmark, moving away from reliance on expert judgment and towards transaction-based data, before the eventual decision was made to phase out LIBOR entirely.