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Frequently Asked Questions (FAQs)

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is the primary benchmark for short term interest rates globally and is used as the basis for settlement of interest rate contracts on many futures and options exchanges. It is used in many loan agreements throughout global markets, including mortgage agreements; and is also considered a barometer to measure the health of financial money markets.

Once calculated, all LIBOR figures – including all of the contributors' individual submitted rates – are distributed by Thomson Reuters. The figures appear on more than one million screens around the world and are widely reported by the media, wire services and online. They are also available for analysis and examination by financial practitioners, authorities, academics and others.

Where is bbalibor used?

LIBOR is not an interest rate; it is a benchmark used by banks, securities houses and investors to gauge the cost of unsecured borrowing in the London interbank market.

LIBOR is the basis for a range of financial instruments. Derivatives based on LIBOR are now traded on exchanges such as LIFFE and the Chicago Mercantile Exchange (CME) as well as over-the-counter. LIBOR is also used as the basis for many types of lending, from syndicated and commercial lending to residential mortgages.

How is it calculated?

On every London business day, Thomson Reuters calculates and distributes the set of benchmark rates known collectively as LIBOR.

Each day between 1100 and 1110 hrs London time banks contributing to the LIBOR-setting process send their interbank borrowing rates directly and confidentially to Thomson Reuters. Thomson Reuters undertakes checks, discards the highest and lowest contributions (the top and bottom quartiles), and then uses the middle two quartiles to calculate an average. This methodology is sometimes called a “shaved mean” or a “trimmed mean”. On each London business day this process is followed 150 times to create the LIBOR rates for all the ten currencies and 15 borrowing periods (or ‘maturities’) in which the LIBOR rate is set. These figures are then distributed by Thomson Reuters by midday London time. Thomson Reuters makes public all contributions, including the outliers in the top and bottom quartiles, and these can be seen on a range of financial vendor screens around the world.

What currencies does bbalibor quote for?

GBP
Pound Sterling
USD
US Dollar
JPY
Japanese Yen
CHF
Swiss Franc
CAD
Canadian Dollar
AUD
Australian Dollar
EUR
Euro
DKK
Danish Kroner
SEK
Swedish Krona
NZD
New Zealand Dollar

I cannot find the current bbalibor rates - why?

We recognise the importance of our data to a wide variety of users and therefore we supply a suite of delayed bbalibor rates free of charge on our website. However, commercial use of bbalibor data requires an appropriate licence from the BBA. For information please refer to the Rates section of our website.

I want the data for personal use - where can I get current data for free?

bbalibor is set each London Business day by Thomson Reuters and distributed live via a number of data vendors including Thomson Reuters, Bloomberg, Quick, Infotec, Class Editori, IDC, Proquote and Telekurs. The BBA is a trade association - not a commercial data vendor - and we allow data vendors to redistribute our data. Many websites operated by financial services and media outlets are licensed to display bbalibor data at the end of the day (that is, after 5pm London Time). Additionally the financial press, including the Wall Street Journal and Financial Times, publish bbalibor data from the previous day and the BBA maintains a Twitter page publishing free daily updates of the three-month Sterling BBA LIBOR rate: twitter.com/BBALIBOR

Can you provide a forecast on what bbalibor rates will be in the future?

The BBA do not provide - or endorse - forecasts on future movements of bbalibor. bbalibor is extremely market sensitive and affected by a number of factors.

bbalibor is a short–term interest rate and is only calculated up to a maturity of 12 months. We have never calculated bbalibor rates beyond this.

Some people use interest rates swap rates as approximation for longer periods but please be aware that this is not endorsed by the BBA.

What is the volume of transactions based on bbalibor?

Whilst the BBA owns the bbalibor trademark, and we coordinate the governance of the benchmark in line with the LIBOR Panel Banks and Users Group, we do this at the request of our member banks and the wider market. As a large number of contracts are indexed to LIBOR are traded bilaterally, it is very difficult for us to know precisely how many transactions overall are linked to bbalibor.  The BBA does not have exact figures, or a breakdown of how this is split between commercial finance, mortgages and personal loans.

What do the abbreviations s/n, o/n and 1w, 1m mean?

These abbreviations denote the maturities for which bbalibor is calculated and there are 15 different maturities for each currency. The shortest maturity is overnight (O/N) for Euro, US Dollar, Pound Sterling, and Canadian Dollar, whilst it is spot/next (s/n) for all other currencies. 1w stands for 1 week and 1m stands for 1 month. The longest maturity for which bbalibor is calculated is 12m (12 months).

Why is my mortgage set against bbalibor?

Many banks offer loans that are referenced against bbalibor rather than a domestic base rate. A mortgage lender offering a product set against bbalibor should detail exactly what rate they employ as a reference (e.g. Sterling Three Month) and should provide precise information regarding how your overall mortgage payment is calculated. Your rate will be set against a currency and maturity.

Where can I get individual submissions from panel banks?

The BBA is a trade association - not a commercial data vendor - and in light of the large number of submissions received daily into the bbalibor process, the BBA is unable to provide this data on the public section of our website. Thomson Reuters and other data vendors that have the capacity to provide the rates do so via their terminals.

Where can I get bbalibor before 1986?

bbalibor began calculation in 1986. Therefore, there are no bbalibor rates before 1986.

How did bbalibor begin?

During 1984 it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably Interest Rate Swaps, Foreign Currency Options and Forward Rate Agreements.

Whilst recognising that such instruments brought more business and greater depth to the London interbank market, it was felt that future growth could be inhibited unless a measure of uniformity was introduced.

In October 1984 the BBA working with other parties such as the Bank of England established various working parties, which eventually culminated in the production of the BBAIRS terms – the BBA standard for Interest Swap rates.

Part of this standard included the setting of BBA Interest Settlement rates, the predecessor of bbalibor. From 2 September 1985 the BBAIRS terms became standard market practice.

Why is the bbalibor standard important?

bbalibor is important because:

  • it is long established
  • it reflects the largest range of international rates
  • it has a wide commercial use
  • it has a wide international dissemination
  • it has a transparent calculation mechanism
 
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