'European EDR'

Depository

Receipt

A negotiable security (receipt) that is issued by a European bank, and that represents securities which trade on exchanges outside of the banks home country. Abbreviated as "EDRs", these securities are traded on local exchanges and used by banks - and issuing companies in the U.S. and other countries - to attract investment capital from the European region. Also known as "Euro Depository Receipts", which may or may not imply that the euro is the currency the receipt is issued upon. While the euro isnt the only currency that can be used to issue and trade European Depository Receipts, it is the most common because of its widespread adoption in Europe.

American Depository Receipts (ADRs) are the equivalent of this type of bank receipt in the U.S. Investors in EDRs are entitled to the same dividends and capital gains as the investors who hold common shares in the same company. ----------------------------------------------------------------------------------------------------------------LIBOR: The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. It is usually abbreviated to Libor or LIBOR, or more officially to BBA Libor (for British Bankers' Association Libor) or the trademark bbalibor. It is the primary benchmark,

along with the Euribor, for short term interest rates around the world. Libor rates are calculated for ten different currencies and 15 borrowing periods ranging from overnight to one year and are published daily at 11:30 am (London time) by Thomson Reuters.[4][5] Many financial institutions, mortgage lenders and credit card agencies set their own rates relative to it. At least $350 trillion in derivatives and other financial products are tied to the Libor. In June of 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the Libor scandal. Introduction

In 1984, it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably interest rate swaps, foreign currency options and forward rate agreements. While recognizing that such instruments brought more business and greater depth to the London Interbank market, bankers worried that future growth could be inhibited unless a measure of uniformity was introduced. In October 1984, the British Bankers' Association (BBA)working with other parties, such as the Bank of England established various working parties, which eventually culminated in the production of the BBA standard for interest rate swaps, or "BBAIRS" terms. Part of this standard included the fixing of BBA interest-settlement

rates, the predecessor of BBA Libor. From 2 September 1985, the BBAIRS terms became standard market practice. BBA Libor fixings did not commence officially before 1 January 1986. Before that date, however, some rates were fixed for a trial period commencing in December 1984. Member banks are international in scope, with more than sixty nations represented among its 223 members and 37 associated professional firms as of 2008. Eighteen banks for example currently contribute to the fixing of US Dollar Libor. The panel contains the following member banks. Bank of America Bank of Tokyo-Mitsubishi UFJ Barclays Bank BNP Paribas

Citibank NA Credit Agricole CIB Credit Suisse Deutsche Bank HSBC JP Morgan Chase Lloyds Banking Rabobank Royal Bank of Canada Socit Gnrale Sumitomo Mitsui Banking The Norinchukin Bank The Royal Bank of Scotland UBS AG Scope: The Libor is widely used as a reference rate for many financial instruments in

both financial markets and commercial fields. There are three major classifications of interest rate fixings instruments, including standard interbank products, commercial field products, and hybrid products which often use the Libor as their reference rate. In the United States in 2008, around 60 percent of prime adjustable rate mortgages and nearly all subprime mortgages were indexed to the US dollar Libor.[12][13] In 2012, around 45 percent of prime adjustable rate mortgages and more than 80 percent of subprime mortgages were indexed to the Libor.[14][15] American municipalities also borrowed around 75 percent of their money through financial products that were linked to the Libor.[16][17] In the UK, the three-

month British pound Libor is used for some mortgagesespecially for those with adverse credit history. The Swiss franc Libor is also used by the Swiss National Bank as their reference rate for monetary policy.[18] The usual reference rate for euro denominated interest rate products, however, is the Euribor compiled by the European Banking Federation from a larger bank panel. A euro Libor does exist, but mainly, for continuity purposes in swap contracts dating back to pre-EMU times. The Libor is an estimate and is not intended in the binding contracts of a company. It is, however, specifically mentioned as a reference rate in the market standard International Swaps and Derivatives Association documentation, which are used by parties wishing to transact in

over-the-counter derivatives. Definition of Libor: Libor is defined as:

interest

rate

The rate at which an individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11.00 London time. This definition is amplified as follows: 1)The rate at which each bank submits must be formed from that banks perception of its cost of funds in the interbank market. 2)Contributions must represent rates formed in London and not elsewhere. 3)Contributions must be for the currency concerned, not the cost of

producing one currency by borrowing in another currency and accessing the required currency via the foreign exchange markets. 4)the rates must be submitted by members of staff at a bank with primary responsibility for management of a banks cash, rather than a banks derivative book. 5)The definition of funds is: unsecured interbank cash or cash raised through primary issuance of interbank Certificates of Deposit. The British Bankers' Association publishes a basic guide to the BBA Libor which contains a great deal of detail as to its history and its current calculation.