Frequently Asked Questions (FAQs)

What is bbalibor™?

bbalibor stands for British Bankers’ Association London Interbank Offered Rate and is the average interest rate at which leading banks borrow funds of a sizeable amount from other banks in the London market. bbalibor is the most widely used "benchmark" or reference rate for short term interest rates. It is set by Thomson Reuters and released to the market shortly after 11.00am London time each day.

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 it calculated?

Thomson Reuters calculates and publishes bbalibor on a daily basis. It assembles interbank borrowing rates from contributor banks at 11.10am and averages the middle two quartiles of these rates (discarding the top and bottom quartiles). This then becomes a particular bbalibor rate for that currency and maturity. This methodology is sometimes called a "shaved mean" or a "trimmed mean" and is repeated 150 times to create rates for all 15 borrowing periods and all 10 currencies.

As well as publishing the 150 LIBOR rates, Thomson Reuters also publishes all of the contributor data provided by each individual bank. The BBA publishes the full methodology used for the calculation process, as well as the instructions given to contributing banks and the methods used to select panel banks. The calculation is therefore fully transparent: the markets can see not only the day’s bbalibor rates, but also all of the contributed data used to calculate the rates.

Any bank may apply to join the contributor panels: there is no requirement to be in London, or a member of the BBA. Banks are selected on the basis of their market activity.

What currencies does bbalibor quote for?

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 delayed bbalibor rates free of charge on our website. However, commercial use of bbalibor data requires an appropriate licence from the BBA. For information please refer to the Rates section of our website.

I want the data for personal use - where can I get current data for free?

bbalibor is set 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 and the BBA maintain a Twitter page publishing free daily updates of the three-month Sterling BBA LIBOR rate: twitter.com/BBALIBOR

Can you provide a forecast on what bbalibor rates will be in the future?

The BBA do not provide - or endorse - forecasts on future movements of bbalibor. 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.

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 liquidity in the unsecured interbank cash market dries up in maturities longer than one year.

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 from bbalibor.

What is the volume of transactions based on bbalibor?

Whilst the BBA owns the bbalibor trademark, and we coordinate the governance of the benchmark in line with the Foreign Exchange and Money Markets (FX&MM) Committee, we do this at the request of our member banks and 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.  The BBA does 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 the maturities for which bbalibor is calculated and there are 15 different maturities for each currency. The shortest maturity is overnight (O/N) for Euro, US Dollar, Pound Sterling, and Canadian Dollar, whilst it is spot/next (s/n) for all other currencies. 1w stands for 1 week and 1m stands for 1 month. The longest maturity for which bbalibor is calculated is 12m (12 months).

Why is my mortgage set against bbalibor?

Many banks offer loans that are referenced against bbalibor rather than a domestic base rate. A mortgage lender offering a product set against bbalibor should detail exactly what rate they employ as a reference (e.g. Sterling Three Month) and should provide precise information regarding how your overall mortgage payment is calculated. Your rate will be set against a currency and maturity.

Where can I get individual submissions from panel banks?

The BBA is a trade association - not a commercial data vendor - and in light of the large number of submissions received daily 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 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 recognising 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 setting 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
• it reflects the largest range of international rates
• it has a wide commercial use
• it has a wide international dissemination
• it has a transparent calculation mechanism
• it 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: 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.