Miscellanea

1. BUSINESS 1 Analysis – LIBOR sunset could get stirred up by banking turmoil A crisis of confidence in global banking and a backlog of uncleared contracts is making an already cumbersome shift to a new set of rates even harder as the end of the LIBOR era approaches, according to industry experts. Once dubbed as the world’s most important number, the London Interbank Offered Rate or LIBOR is a rate based on quotes from big banks on how much it would cost to borrow short-term funds from one another. It was discredited when the authorities found traders had manipulated it, prompting calls for reform. It is largely being replaced by risk-free rates (RFRs) compiled by central banks as they are based on actual transactions, including the Federal Reserve’s Secured Overnight Financing Rate (SOFR) for instance, making them harder to rig. LIBOR has already been scrapped for use in new contracts, with the use of a few remaining dollar-denominated rates in outstanding contracts due to end in June. “With the transition deadline in sight, LIBOR’s grand finale may be more dramatic than previously thought with derivative contracts piling up amid the current banking turmoil,” said Glenn Yin, Head - Research and Analysis, AETOS Capital Group. Global trading activity (as measured by DV01) in cleared over-the-counter (OTC) and exchange-traded interest rate derivatives