Frequently Asked Questions (FAQs)
What is bbalibor™?
bbalibor stands for British Bankers’ Association London Interbank Offered Rate and is a composite of the rates of interest at which banks borrow funds of a sizeable amount from other bank in the London market. bbalibor is the most widely used "benchmark" or reference rate for short term interest rates. It is compiled by the BBA in conjunction with Thomson Reuters and released to the market shortly after 11.00am London time each day. For more information on the BBA, please refer to the About the BBA section of our website
Where is bbalibor used?
bbalibor is the primary benchmark for short term interest rates globally. It is used as the basis for settlement of interest rate contracts on many of the world’s major futures and options exchanges (including CME Group and NYSE Euronext LIFFE) as well as most Over the Counter (OTC) and lending transactions such as mortgages.
How is bbalibor calculated?
The BBA enlists a panel of banks for each currency, where the panel size for each currency ranges from 8 to 16 banks. Each bank supplies the rate they perceive they could be offered funds in the London market for a certain currency and maturity. As the BBA calculates 15 maturities for each currency, a bank will supply 15 quotes for each currency everyday. Banks are selected to panels on the basis of scale of market activity, reputation and perceived expertise in the currency concerned.
What currencies does bbalibor quote for?
New Zealand Dollar
I cannot find the current bbalibor rates, why?
We recognise the importance of our data to a wide variety of users and therefore we supply a suite of bbalibor rates for free of charge on our website. However, use of current and some historical data requires a licence from the bba. For information please refer to the Rates section of our website.
I want the data for personal use so where can I get current data for free?
bbalibor is compiled each London Business day by Thomson Reuters and distributed live via a number of data vendors including Thomson Reuters, Bloomberg, Quick, Infotec, Class Editori, IDC, Proquote and Telekurs. The BBA is a trade association and not a commercial data vendor and we allow data vendors to redistribute our data. Many websites operated by financial services and media outlets are licensed to display bbalibor data at the end of the day (that is, after 5pm London Time). Additionally, the financial press, including the Wall Street Journal and Financial Times publish bbalibor data from the previous day. These firms may offer certain bbalibor rates on their website, but these will be the key rates only.
Can you provide a forecast on what bbalibor rates will be in the future?
The BBA do not provide forecasts on future movements of bbalibor and at present have no intention to do so. bbalibor is extremely market sensitive and affected by a number of factors such as liquidity in the London cash markets, constitution of the contributor panels and local interest rate policy. The BBA therefore is not able to provide any forecasts.
bbalibor is a short–term interest rate and is only calculated up to a maturity of 12 months. We have never calculated bbalibor rates beyond this nor do we have any intention of doing so as the liquidity in the unsecured interbank cash market dries up after a one year maturity.
Some people use interest rates swap rates as approximation for longer periods but please be aware that the methodology is likely to be quite different for bbalibor.
Can I have the volume of transactions based on bbalibor?
Whilst the BBA own the bbalibor trademark, and we are involved in its calculation, we do this at the request of our member banks, and for the wider market. Banks and other institutions do not need our permission or any relationship with us in order to use bbalibor as a reference rate, so it is very difficult for us to know precisely how many transactions are linked to bbalibor. Independent research has estimated that instruments with an outstanding value of approximately $360 Trillion (dollars) are indexed to bbalibor. However, the BBA do not have exact figures, or a breakdown of how this is split between commercial finance, mortgages and personal loans.
What do the abbreviations s/n, o/n and 1w, 1m mean?
These abbreviations denote for the maturities for which bbalibor is fixed. There are 15 different maturities for each currency and day of fixing. The shortest maturity is overnight (O/N) for Euro, US Dollar, Pound Sterling, and Canadian Dollar and spot/next (s/n) for all other currencies. 1 w stands for 1 week and 1m stands for 1 month. The longest maturity for which bbalibor is fixed is 12m (12 Months).
Why is my Mortgage set against bbalibor?
Many banks now offer loans that are pinned against bbalibor rather than a domestic base rate. A mortgage lender offering a mortgage set against bbalibor will detail exactly what rate they employ as a benchmark and should provide precise information on this. Your personal rate will be set against a currency and maturity. Note that because a mortgage is taken out, say in the UK, it does not necessarily mean that the mortgage has to be set against GBP bbalibor, and indeed could be set against any rate we produce.
Where Can I get individual submissions from Panel Banks?
The BBA is a trade association and not a commercial data vendor, and in light of the 1800 submissions received everyday into the bbalibor process, the BBA is unable to provide this data on the public section of our website. Thomson Reuters and other data vendors that have the capacity to provide the rates and do so via their terminals.
Where can I get bbalibor before 1986?
bbalibor began calculation in 1986. Therefore, there are no bbalibor rates before 1986.
How did bbalibor begin?
During 1984 it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably Interest Rate Swaps, Foreign Currency Options and Forward Rate Agreements.
Whilst recognizing that such instruments brought more business and greater depth to the London Interbank market, it was felt that future growth could be inhibited unless a measure of uniformity was introduced.
In October 1984 the BBA working with other parties such as the Bank of England established various working parties, which eventually culminated in the production of the BBAIRS terms – the BBA standard for Interest Swap rates.
Part of this standard included the fixing of BBA Interest Settlement rates, the predecessor of bbalibor. From 2 September 1985 the BBAIRS terms became standard market practice.
Which Factors influence bbalibor rates?
bbalibor rates are dependent on a number of factors, including local interest rates, banks expectations of future rate movements, the profile of contributor banks (contributor panels are reviewed bi-annually), liquidity in the London markets in the currency concerned etc.
Why is the bbalibor standard important?
bbalibor is important because it:
- is long established
- reflects the largest range of international rates
- is truly international reference rate
- has a wide commercial use
- has a wide international dissemination
- has a transparent calculation mechanism
- provides a robust settlement rate
- the banks represented on the panels are the most active in the cash markets and have the highest credit ratings
bbalibor’s London base is significant: well over 20% of all international bank lending and more than 30% of all foreign exchange transactions take place through the offices of banks in London and represents a unique snapshot of competitive funding costs. London has representation from close to 500 banks, and many other major financial institutions actively trade in the euromarkets which are based primarily in London. In addition, no reserve requirements are applied in London.