A:

LIBOR, LIBID and LIMEAN are all reference rates used to benchmark short-term interest rates. The London Interbank Offered Rate (LIBOR) is the rate at which banks can borrow unsecured funds from other banks in the Londoninterbank market. The London Interbank Bid Rate (LIBID), on the other hand, is the rate that banks are willing to pay for unsecured funds from other banks in the London interbank market. Both these rates (especially LIBOR) are considered the foremost global reference rates for short-term interest rates. They are derived from a filtered average of the world's most credit-worthy banks' interbank bid/ask rates for institutional loans with maturities that range between overnight and one year.

The London Interbank Mean Rate (LIMEAN) is considered the mid-market rate in the London Interbank market. LIMEAN is the calculated average between LIBOR and LIBID and can be used to identify the spread between the two rates. LIMEAN is also used by institutions borrowing and lending money in the interbank market (rather than using LIBOR or LIBID), and is a reliable reference to the rate most indicative of the interbank market.

LIBOR and LIBID are both calculated and published daily. However, unlike LIBID, which has no formal correspondent responsible for fixing it, LIBOR is set and published daily at 6am EST (11am in London) by the British Bankers' Association. LIBOR is also used extensively as a key reference rate for a variety of global financial instruments such as short-term interest futures contracts, forward rate agreements, interest rate swaps and currency options. LIBOR is also a key driver in the Eurodollar market, because it is used as the reference rate for valuing eurodollar futures contracts. (To learn more about LIBOR, read An Introduction To LIBOR.)

This question was answered by Lovey Grewal

RELATED FAQS
  1. What is the difference between LIBID and LIBOR?

    Both LIBID and LIBOR are rates primarily used by banks in the London interbank market. The London interbank market is a wholesale ... Read Answer >>
  2. How does LIBOR compare to the Federal Reserve rate as an accurate indicator?

    Explore a comparison of the predictive efficacy of the Federal Reserve's fed funds rate and the Intercontinental Exchange's ... Read Answer >>
  3. How did LIBOR come into use?

    Learn about the significance of the London Interbank Offered Rate, or LIBOR, and the history of how the daily LIBOR became ... Read Answer >>
  4. What are the differences between the Federal Funds Rate and LIBOR?

    Learn the key differences between the federal funds rate and the London Interbank Offered Rate, including currency denomination ... Read Answer >>
  5. Where on the internet can I find LIBOR rate information?

    Learn what the LIBOR is, which website provides general LIBOR information and which website provides ICE LIBOR data going ... Read Answer >>
  6. Who determines the LIBOR rate?

    Learn about what the LIBOR rate is, how it is determined and calculated, and who determines what the LIBOR rate on a daily ... Read Answer >>
Related Articles
  1. Investing

    The Importance Of LIBOR In Financial Markets

    What is LIBOR and why are its interest rates so important to the financial markets?
  2. Insights

    London Interbank Offered Rate (LIBOR)

    Learn more about this rate which banks use to determine the amount of interest to charge other banks.
  3. Personal Finance

    An Introduction To LIBOR

    This influential rate is published daily in Britain, and felt all around the world.
  4. Insights

    What Is ICE LIBOR And What Is It Used For?

    In the case of ICE LIBOR, an innocent-sounding set of letters has a profound bearing on every loan you make.
  5. Investing

    Why BBA LIBOR Was Replaced By ICE LIBOR

    We track the reason behind the change in LIBOR's prefix from BBA to ICE.
  6. Insights

    What Is The Relationship Between The Federal Funds, Prime And LIBOR Rates?

    The prime rate and LIBOR rate, two of the most prominent benchmark rates, tend to track the federal funds rate closely over time. However, during periods of economic turmoil, LIBOR appears more ...
  7. Insights

    Two Alternatives for the U.S. LIBOR Benchmark Rate

    Working with the Fed, major Banks have identified two strong alternatives for U.S. credit market to replace LIBOR
  8. Investing

    What Rising LIBOR Is and Is Not Telling You

    Find out why the London Interbank Offered Rate (LIBOR) is on the rise, but not for the usual reasons.
  9. Investing

    The Insiders Who Fix Rates for Gold, Currencies And Libor

    The system by which benchmark rates are fixed for interest rates, currencies and gold is archaic - and, many would argue, deeply flawed.
  10. Investing

    Three Convicted in LIBOR Rigging Scandal

    A jury in London has found guilty three former Barclays traders of rigging the key overnight interest.
RELATED TERMS
  1. London Interbank Mean Rate - LIMEAN

    The mid-market rate in the London Interbank market, which is ...
  2. London Interbank Bid Rate - LIBID

    The average interest rate which major London banks borrow Eurocurrency ...
  3. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  4. LIBOR Curve

    A graphical representation of various maturities of the London ...
  5. LIBOR Scandal

    A scandal in which financial institutions were accused of fixing ...
  6. LIBOR Flat

    An interest rate benchmark used to establish the floating interest ...
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center