Share these talks and lectures with your colleagues
Invite colleaguesPractice paper
LIBOR: The drama is still to come
Journal of Securities Operations & Custody,
12
(3),
255-265
(2020)
Abstract
This paper first summarises the origin of the London interbank offered rate (LIBOR) and its methodology. Secondly, the impact of the financial crisis is explored as it revealed LIBORs flaws, leading to the LIBOR manipulation scandal which caused the market to question the reliability of LIBORs. Thirdly, the responses to the failures of LIBOR are considered, highlighting the complexity of LIBORs and their position in the market, as revealed by the conflicting views on how to remedy the reference rate’s flaws. Lastly, the consequences of the discontinuation of LIBOR are analysed, with a particular focus on the new risk-free rates, the vast amount of documentation referencing LIBOR and how ‘quick-fixes’ will do little alleviate the mounting workload and possible litigation risk faced by firms; concluding that the effects of LIBORs discontinuation will be felt well beyond the LIBOR cut-off date.
Keywords: LIBOR; IBOR; FCA; benchmarks; fallback; interest rates; legal; repapering; contract; amendment
The full article is available to subscribers to the journal.
Author's Biography
Akber Datoo is the founder and CEO of D2 Legal Technology (D2LT), an award-winning global legal consulting firm advising clients on the use of technology and data to unlock business value through legal change. D2LT operates at the exciting intersection of FinTech and LegalTech. After graduating with firstclass honours in Computer Science from Cambridge University, Akber began his career as a technologist at the investment bank Union Bank of Switzerland (UBS). Through this, he saw an opportunity for Digital Transformation across the legal profession and decided to retrain and qualify as a lawyer, working at magic circle law firm Allen & Overy. Akber founded D2LT in 2011, where he has overseen its growth during the last eight years across the United Kingdom, the United States and Asia. He was appointed to the Law Society’s Technology and Law Committee in 2016 and is the author of the Wiley textbook Legal Data for Banking: Business Optimisation and Regulatory Compliance, published in April 2019.
