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Certificates of Deposits

7 Dec 2007

Certificates of deposit (CDs) are negotiable time deposits made at a bank or a building society. CDs are bearer instruments and can pay either a fixed or a floating rate of interest; coupons on floating rate CDs are fixed semi-annually against a reference rate such as LIBOR. CDs are quoted according to their yield, and are priced according to their yield-discounted cashflows. They are issued in a wide range of currencies.

The BBA (in conjunction with the Bank of England) issues Guidelines for the Issuance of Certificates of Deposit in the London Market. These CDs carry all necessary security features required by the BBA's 'London Good Delivery Rules' and are generally recognised as being the industry standard for all CDs issued.

The CD Guidelines were last updated in November 1996.

Following the dematerialisation of Sterling money market instruments in 3rd Quarter 2003 the BBA issued guidelines on the changes to the issuance of Sterling money market instruments, including CDs, which is available from the link below.

Related Links

Preparing for the Dematerialisation of Money Market Instruments
 (Internal Link)

 
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