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British bank trade body not best suited to run Libor, court hears
[LONDON] The British Bankers' Association was probably not the best organisation to oversee the Libor interest rate benchmark, the banking industry trade group's former head of Libor said at a London trial on Tuesday.
The BBA had been in charge of the London interbank offered rate or Libor benchmark that helps to price around $450 trillion of financial contracts worldwide.
"With the benefit of 20/20 hindsight, you probably shouldn't have major benchmarks run by trade bodies and it (Libor) no longer is," John Ewan, the former Libor manager at the BBA, said. He now works for Thomson Reuters.
Mr Ewan was in court as a witness for the prosecution in the trial of Tom Hayes, a former yen derivatives trader at UBS and Citigroup, who is accused of conspiring with others to rig the benchmark rates between 2006 and 2010 to increase his trading profits.
Mr Hayes has pleaded not guilty to eight counts of conspiracy to defraud. His lawyers will set out a detailed defence later in the trial, which is scheduled to last into August.
Mr Ewan, who has been cross-examined by Mr Hayes's legal team since Monday, has already told the court he was aware of warnings that Libor rates, designed to reflect interbank borrowing costs, were being manipulated by banks to suit derivatives positions as far back as 2005.
Mr Hayes, 35, a former star trader in Tokyo at UBS and Citigroup, is the first person worldwide to face a jury trial over Libor rigging allegations. He has told Britain's Serious Fraud Office investigators that knowledge of Libor manipulation was widespread, the court has heard.