The London Interbank Offered Rate or LIBOR is actually a set of several benchmarks that reflect the average interest rate at which large global banks can borrow from each other. The leading indicator used to price loans and other debt instruments, it is produced once a day by the Intercontinental Exchange (ICE) and regulated by the Financial Conduct Authority. There are a total of 35 LIBOR rates posted each day; interest rates are compiled for loans with seven different maturities (or due dates) for each of 5 major currencies, including the Swiss franc, the euro, the pound sterling, the Japanese yen, and the U.S. dollar.

Each morning, just before 11 a.m. Greenwich Mean Time, the ICE Benchmark Administration (IBA) asks a panel of contributor banks (usually 11 to 18 large, international banks) to answer 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 a.m. London time?" Only banks that have a significant presence in the London market are considered for membership on the ICE LIBOR panel, which is determined annually.

The banks confidentially send their answers for each of the loan maturities, ranging from overnight to one year – annualized interest rates for unsecured funding for a specified period and specified currency. The IBA calculates the LIBOR rate using a trimmed mean, throwing out figures in the highest and lowest quartile and averaging the remaining numbers.

The market intelligence firm Thomson Reuters publishes the resulting Libor rates, as well as all the contributing rates that the banks provide, around 11:45 a.m. each day. According to the British Bankers Association, these numbers appear on over one million trading screens around the world and in a wide variety of news sources. Any loans that are tied to one of the Libor indices – for example, a three-month U.S. dollar rate – will change in lockstep with the new figures.

After the revelation of a price-manipulation scandal in 2012, the terms and administration of LIBOR changed; it's now officially known as ICE LIBOR.