BRITAIN acted yesterday to switch management of the prized Libor exchange rate and restore confidence in it after revelations of market rigging besmirched the reputation of the City of London financial center.

The Treasury said the Libor rate, which plays a pivotal role in many areas of global finance, would be supervised by stock exchange operator NYSE Euronext.

Supervision would still be based in London, but the switch was intended to restore the "credibility" of the global benchmark, the Treasury said yesterday.

"NYSE Euronext is to be the new Libor administrator," the Treasury said.

This came after the British Bankers' Association was forced to give up its role following the Libor scandal.

The announcement followed a tendering process that was launched in late February to find a new administrator for the London Interbank Offered Rate (Libor) via an independent committee.

"This change will play a vital role in restoring the international credibility of Libor," committee chairwoman Baroness Hogg said.

Britain's banking sector was rocked last year by revelations that Barclays bank tried to manipulate the rate, which is used as a benchmark for global financial contracts worth US$300 trillion.

Libor is calculated daily, using estimates from banks of their own interbank rates. However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

In the wake of the scandal, the government launched the Wheatley Review, which called in September for the BBA to lose its key role.

"The appointment of a proposed new administrator is a major step forward in the reform of Libor," the Treasury said.

"With the transfer of responsibility from the BBA Libor Ltd to the new administrator, one of the principal recommendations of the Wheatley Review, which was set up last year in the wake of the findings of Libor manipulation, will have been implemented."

Finbarr Hutcheson, CEO of NYSE Liffe, welcomed the decision.

"We look forward to working with BBA Libor Ltd in completing the smooth transition to NYSE Euronext Rate Administration Limited, and continuing the process of restoring credibility, trust and integrity in Libor as a key global benchmark."

The Financial Times, citing unnamed sources, said NYSE Euronext had beaten others to the Libor role, including Bloomberg, the London Stock Exchange and Markit.