NEW YORK, June 10 (Reuters) - ICAP will launch the New York Funding Rate, an alternative U.S. benchmark for short-term bank borrowing costs on Wednesday, the interdealer broker said on Tuesday.
Also on Tuesday, the British Bankers Association announced measures to improve the process for compiling the London interbank offered rate (Libor), the world's most widely watched measure of short-term borrowing costs.
Some market participants have called for an alternative U.S. rate benchmark to Libor because Libor's reliability has been questioned during the current global credit crisis.
A daily NYFR poll to set the rate "will be conducted during the New York morning when the Eurodollar market is most active," said ICAP in a statement. The survey will ask banks for market rates as of 9:15 a.m. EDT (1315 GMT), while the results will be calculated by 10 a.m. (1400 GMT) and disseminated shortly after that, ICAP said.
NYFR will reflect banks' estimate on the market rate to obtain unsecured funding from each other, rather than the rates at which banks say they are borrowing, which Libor measures.
On an anonymous basis, banks will be asked to submit a representative rate for NYFR for where an institution would be likely to obtain funding in the market, rather than report on their own costs that morning, ICAP said. The number of contributors will vary, but at least 16 participants each day will be needed in order to publish the rate.
"ICAP initially will collect data on 1- and 3-month rates, but other maturities may be added to the program over time depending on market interest," ICAP's release added.
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