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How is Libor different from Mibor? And why is Mibor still not considered mature enough?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pinky asked over 2 years ago

How is Libor different from Mibor? And why is Mibor still not considered mature enough?

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

**LIBOR** is the London Interbank Offer Rate. It's a rate at which banks in London are willing to lend to each other. The ICE (Intercontinental Exchange Benchmark Administration) currently calculates LIBOR every day using this methodology: Every contributor bank is asked to base their ICE LIBOR submissions on the following question: “At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11 am London time?” Every ICE LIBOR rate is calculated using a trimmed arithmetic mean. Once each submission is received, they are ranked in descending order and then the highest and lowest 25% of submissions are excluded. This trimming of the top and bottom quartiles allows for the exclusion of outliers from the final calculation LIBOR is calculated for five currencies- CHF, EUR, GBP, JPY, and USD. It is also calculated for seven maturities. Oh and fun fact- LIBOR used to be administered by the British Bankers' Association (BBA), but after it turned out banks had been lying about their rates there was a big Libor scandal and the BBA handed administration of LIBOR over to ICE. **MIBOR** is the Mumbai Interbank Offered Rate. It's a similar thing but it is calculated for banks in India in Rupees. So it's a different set of counterparties lending a different currency to each other. As for the second part of the question about it not being considered "mature" enough, I have trouble answering without more context on what is being asked.

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