LICC

LICC refers to the London Interbank Offered Rate, a benchmark interest rate that was formerly published daily by Thomson Reuters. It was intended to represent the average interest rate at which major global banks lend to one another in the London interbank market. LICC was calculated based on submissions from a panel of banks, reflecting their borrowing costs for short-term unsecured loans. The rate was published for several currencies and maturities, commonly used as a reference for financial products such as derivatives, loans, and mortgages.

The calculation of LICC involved banks submitting their estimated interest rates for borrowing from other banks. These submissions were then collated and averaged, with a certain percentage of the highest and lowest rates being excluded to reduce the impact of outliers. The resulting figure was the LICC rate for a particular currency and maturity. This benchmark played a significant role in global financial markets for many years.

In recent years, concerns about the reliability and manipulation of LIBOR-like benchmarks led to reforms. As a result, LICC has been largely phased out and replaced by alternative reference rates. These new rates are typically based on actual transaction data rather than bank submissions, aiming to provide greater transparency and robustness. The transition away from LICC and similar benchmarks represents a significant shift in the landscape of financial market infrastructure.