Definitions

The Foreign Exchange and Money Market Committee, the independent body that oversees all aspects of the calculation of bbalibor™, has agreed on the following definition of bbalibor™. The bbalibor™ definition is kept under constant review.

LIBOR is defined as:

“The rate at which an individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11.00 London time.”

This definition is amplified as follows:-

• The rate at which each bank submits must be formed from that bank’s perception of its cost of unsecured funds in the interbank market.  This will be based on the cost of funds not covered by any governmental guarantee scheme.  
• Contributions must represent rates at which a bank would be offered funds in the London Money Market.
• Contributions must be for the currency concerned, not the cost of producing one currency by borrowing in another currency and accessing the required currency via the foreign exchange markets.
• The rates must be submitted by members of staff at a bank with primary responsibility for management of a bank’s cash, rather than a bank’s derivative book.
• The definition of “funds” is: unsecured interbank cash or cash raised through primary issuance of interbank Certificates of Deposit.

For information and explanation of this,  please visit The Basics section of our website.