LONDON (Reuters) - The Bank of England (BoE) has revised its proposals for reforming how a benchmark for lending between banks is calculated, as part of its attempts to stamp out the manipulation of key reference points for financial contracts.
The BoE also said on Thursday it would push back implementing the changes to March or April 2018, rather than the end of this year, as previously stated.
In a consultation paper published last year, the BOE said the methodology for calculating the Sterling Overnight Index Average (SONIA) should be based on the average rate using a volume-weighted median, rather than the volume-weighted mean used currently.
In a supplementary consultation paper published on Thursday, the BoE said a so-called “trimmed mean” approach, not part of the first consultation, would be better.
“The trimmed mean is less sensitive to erroneous or potentially manipulative transactions of plausible size, or data reporting problems,” the BoE said.
“In contrast, relatively small changes in the distribution of transactions can occasionally affect the median.”
SONIA has been considered as an alternative for some contracts to the London Interbank Offered Rate (LIBOR), a global
benchmark for around $450 trillion of contracts that has been tainted by a market-rigging scandal.
The BoE assumed overall responsibility for SONIA last year.
Reporting by Huw Jones; Editing by David Holmes