One Year Ago In Derivatives Week

Delegates at the 23rd International Swaps and Derivatives Association Annual General Meeting in Vienna were concerned that a breakdown in the credibility of the London Interbank Offered Rate would lead market participants to peg derivatives on alternative benchmarks. At the time, some believed banks were not reporting accurate numbers to the British Bankers' Association for fear the higher rates they were paying would spook the market. But there was no evidence to support this. [Plummeting interest rates around the world have heaped further pressure on LIBOR's credibility as the most important benchmark in the derivatives market. Officials are now concerned about the prospect of negative payments, where a swap priced as a spread minus LIBOR could bring about a situation where the recipient of payment would be in the position of owing money (DW Online, 11/12).]