Libor is well on its way to being replaced with a new short-term benchmark.
A committee formed by the Federal Reserve in 2014 to come up with a transition plan named a broad Treasury repo rate as its preferred alternative to Libor, which traders see as having many drawbacks, including being subject to manipulation.
Next, the Alternative Reference Rate Committee (ARRC) will work on a transition and implementation plan, which it will publish later this year, before new guidelines take effect.
Ian Lyngen and Aaron Kohli of BMO Capital Markets have a nice, succinct explanation of what it means in their morning note:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
