Bank of England moves to clear up SONIA rate setting
Commuters exit the underground in front of the Bank of England in London, Britain October 7, 2016. REUTERS/Peter Nicholls
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
LONDON (Reuters) - The Bank of England said on Monday it planned to change the way a benchmark for interbank lending is calculated as part of its attempts to stamp out the manipulation of key yardsticks in financial markets.
The BOE said it was proposing that the methodology for calculating the Sterling Overnight Index Average (SONIA) should be based on the average rate using a volume-weighted median, rather than a volume-weighted mean.
The change would make it harder for traders to influence SONIA unduly by placing outlying quotes.
A money market analyst at a large international bank said the change was of the BoE's push to prevent traders from skewing SONIA and other benchmark rates and to improve transparency.
SONIA has been considered as an alternative for some contracts to the London Interbank Offered Rate (LIBOR), a global benchmark for around $450 trillion of contracts that has been tainted by a market-rigging scandal.
The BoE assumed overall responsibility for SONIA earlier this year and intends to implement fully its reforms by late 2017. It published a consultation paper on its proposed reforms on Monday.
(Reporting by William Schomberg and Patrick Graham)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Poll: Global stocks forecast to rise next year, but face risks a-plenty
- Egypt protest law amendment offers little change, lawyers say
- Egyptian women's rights advocate Azza Soliman detained
Create E-mail Alert Related CategoriesReuters
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!