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The council of the BBA, a private trade association, voted earlier this month to give up management of Libor, according to people familiar with the matter. The move clears the way for what is likely to be the biggest change in Libor's 26-year history, and introduces the possibility that British or international regulators could be in charge of overseeing the rate, which is tied to trillions of dollars of financial contracts.
The vote earlier this month reflected the council's expectation that Mr Wheatley [FSA, currently conducting a government-commissioned review of Libor's future] is likely to recommend stripping the BBA of oversight responsibility, and the council wanted to signal that London's financial community wouldn't resist his recommendation, the people familiar with the matter said.
"The BBA seeks to work with the Wheatley review team as they complete their consultation on the future of Libor", a BBA spokesman said in a statement. "If Mr Wheatley's recommendations include a change of responsibility for LIBOR, the BBA will support that."
One uncertainty is who would take over running and overseeing Libor from the BBA. One possibility is that it could be run by a private company but overseen by public authorities. In the past, however, the BBA concluded that the uncertainty hanging over Libor meant it would be hard to find a third party to buy it.
It also is unclear which regulatory bodies might inherit oversight responsibilities for Libor. Among the options would be the Bank of England, which is set next year to assume responsibility for regulating the British financial sector. Other possibilities include the Financial Stability Board, a body that consists of regulators from around the world and which is already conducting a review of Libor, or the Bank for International Settlements, the Switzerland-based organisation that serves as a sort of clearinghouse for central banks.
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