Thomson Reuters switches focus after LIBOR loss

It is moving to upgrade its rate calculation business to meet tougher new international standards as it seeks to increase revenues.

An internal document obtained by the FT estimated that the group could earn as much as $27 million over six years from users subscribed to services linked to benchmark rates, but the figures have been scaled back by revisions in recent weeks, according to two people familiar with the process.

The company’s 18-month action plan to refocus the business comes at a time when a network of traders and brokers face criminal charges over attempts to rig global interbank interest rates to make money on derivatives. 

Thomson Reuters ran the daily administration process for LIBOR for more than 30 years but the group failed in a joint bid with the London Stock Exchange Group to run it and the business will move next year to NYSE Euronext, the transatlantic exchanges operator.

Thomson Reuters is the calculator for about 150 benchmark fixings globally. The majority are in Asia and the group acknowledges that local operators are likely to follow the lead of LIBOR and Euribor in choosing providers and calculation methods.

The company plans to upgrade to standards agreed by the International Organisation of Securities Commissions (Iosco), an association of the world’s securities and futures markets regulators. Iosco has called for their introduction by the middle of 2014.

Peter Moss, head of trading at Thomson Reuters, said that “doing nothing isn’t really an option. The question is what level of something do we do.” The company sees fixed income and foreign exchange as “a strategic focus” for its trading business, and most of the benchmark fixings are bond and foreign exchange-related, rather than interbank rates. “We see an interest in becoming an administrator in certain situations.” ■