LIBOR - who benefited?

LIBOR (London Inter-Bank Offered Rate) has existed for more than 30 years as a means for banks to set the reference rate of interest for variable rate loans such as syndicated loans to national and local governments, international bodies and major corporations.  In the 1970s, the reference panel comprised five banks.  The fixing was made at a set time each day, the top and bottom rates were disregarded and an average was calculated based on the remaining three, to set for example the three month rate for sterling loans.  Rates such as EURIBOR were set in a similar way. 

Today, the Sterling LIBOR reference panel has 16 banks, and the daily submissions are made to Thompson Reuters, which manages the process on behalf of the British Bankers' Association (BBA). 

The top four and bottom four rates are disregarded at each fixing.  So this means, even when its rate submissions were manipulated, that Barclays would have been in the disregarded eight unless at least four other banks were wider from the average than they were.  Barclays submissions would have no effect when they're outside the central zone, and therefore any manipulation that had a material impact must have been minuscule.

Here are the members of the Sterling panel, as shown on the BBA LIBOR site

Abbey National plc	JP Morgan Chase
Bank of Tokyo-Mitsubishi UFJ Ltd	Lloyds Banking Group
Barclays Bank plc	Mizuho Corporate Bank
BNP Paribas	Rabobank
Citibank NA	Royal Bank of Canada
Credit Agricole CIB	The Royal Bank of Scotland Group
Deutsche Bank AG	Société Générale
HSBC	UBS AG

Two reasons have emerged for manipulations: one is to enhance trading books, and improve reported profits for the traders involved; the other is to improve a bank's standing as reflected by apparent cost of funding. There are reports that this latter manipulation was encouraged by HM Treasury and possibly the Bank of England. 

Every bank has sophisticated systems to manage its interest rate risks.  They assemble live data from the bank's trading systems and should be used to derive the rate submissions for LIBOR. 

The Parliamentary Inquiry (if that's what happens) can demand a full history from each of the panel members and find out the exact nature of the attempted rate manipulation, the difference between actual and submitted rates, and find from the BBA whether the manipulated rate was included in the day's calculation.  Each bank should be able to identify its profit or loss from a successful manipulation, and any individuals that profited personally from manipulating rates.

We live in interesting times, and with good management and some careful legislative change, this scandal can be used to improve processes and accountability in the banking market.

Antivirus update

I'm now uninstalling Kaspersky Internet Security 2012 from my main Windows XP system, and will give a try-out to Microsoft Security Essentials. If that doesn't work out, I'll be back to AVG. Kaspersky seemed to be unable to give reasonable performance in the set-up that I have for that system:

• Toshiba Tecra M10 with 3 GBytes memory and 150 GBytes of disk
• Windows XP Pro Service Pack 3 
• Microsoft Office Pro 2003 including Outlook 2003 
• Mozilla Firefox as the default browser, though Chrome, Internet Explorer and Safari are also installed and were tried out to see if performance would be any better
• Microsoft Task Switcher power toy used to move from application to application

The system would hang up frequently, usually when Outlook was used.  Moving from message to message could cause processor utilisation to go to 100% and stay there for minutes on end.  One of the key components in Kaspersky, avp.exe, seemed to clock up a colossal number of page faults as shown in the Processes tab of Windows Task Manager, and the system fan seemed to be operating most of the time.  I tried reducing the e-mail scan heuristics intensity to 'Light' in the Kaspersky settings, but to no avail.

Of course, it's quite possible that cumulative security updates from Microsoft may have messed up Outlook's performance.  I felt that performance worsened after about April 2011, and this happened to coincide with updates for AVG Internet Security, which I was using at the time.  It will be instructive to see if Outlook performs as well as I'd expect with Microsoft Security Essentials.  

The experience of uninstalling Kaspersky and installing MSE has been pretty painless and fairly quick - about three quarters of an hour, including one reboot and the initial quick scan.  I decided to opt for Advanced membership for the Microsoft Active Protection Service in the MSE settings, but 'No' to Customer experience monitoring; the former should only be invoked if something happens, while the latter could impact performance at all times - presumably it starts a service at Windows load time.

By the way, MSE is free for small businesses with up to 10 PCs and for domestic use.  I'm still running Kaspersky on the Windows Vista PC without any obvious problem, although I don't run Outlook on that system.

Internet World show 25/04/2012

Earl's Court Exhibition Centre was hosting the 20th Internet World show this week, as well as two other events at Earl's Court at the same time - Information Security Europe and Service Desk and IT Support (IT Service Management).

This had a lot to offer for people using website hosting, development, e-commerce, content management, social media, mobile data, Search Engine Optimisation, digital marketing and web analytics.  

There were some blank spaces in the exhibition hall, suggesting that times are hard even in this sector of the industry.  I saw a couple of presentations that were very poorly put together; one guy was pointing out details from data listings in a tiny font size that only he could read, and another just ploughed through features of his solution with no attempt to tie them to anyone's needs.  One of the handouts had only a US toll-free number on it; unlikely to gain many calls from Europe.

Despite that, there was still plenty to interest the visitor, and I enjoyed these:

• Brightstarr, using Sharepoint to give consistent customer branding, and lots of other good things
• Dave Coplin of Microsoft Bing on the subject of the digital consumer, and how things like location-based searching will change the ways in which we use information
• Frank van den Berg of Dutch-based Salesupply talked lots of common sense about web localisation; his firm wasn't in the exhibitor list so far as I can see
• Rick Osterloh of Skype on the changing mobile ecosystem, and a fascinating insight into the potential impacts of lower data pricing;  he also described experiences of 4G communications (known as LTE - Long Term Evolution technology) in New York

More about the show here.  Despite the soaking received from Wednesday's downpours on the way there, it was worth the time spent.

Antivirus update

AVG Antivirus (the paid-for version, running on Windows XP Pro) started to give me concerns about 12 months ago.  Handling of e-mail in Microsoft Outlook seemed to slow down dramatically, and any sort of activity by the software, such as updates, would make the system grind to a halt.  I wrote to AVG on the subject but the best they could come up with was that the PC seemed to be running a great number of programs, and maybe I could cut it down a bit.
This didn't seem fantastically helpful, so I decided to try a different antivirus and internet security package when my licence renewal came due.  That's what I've done, and the chosen replacement is Kaspersky Internet Security.  Here are my experiences:

Windows XP Pro SP3 (well-configured system, 3 GBytes memory)

Uninstalled AVG and restarted PC, with Internet connection switched off. 
Kaspersky installer tried to check for newer version (even though the package was downloaded two days earlier)
Checking for incompatible software - box was empty - said it was removing incompatible software and then asked me to reboot again. 
Installation continued after reboot and agreeing for a second time to terms and conditions. 
Then I had a Windows error message - Generic Host Process for Win32 Services (?) had fallen over.  The installation then hung on 'deleting backup files' - cancelling the installation seemed to do no good, and in the end I did a hard switch-off, holding down the laptop's power-on/off button.
After restarting, lo and behold, Kaspersky antivirus was installed. Reconnected to Internet.  I entered the activation code, and then set off the update process.  This took ages - something like 150 MBytes to download.  More annoyingly, because this wasn't part of the original install package, I have to do this again for each of the other two PCs included in my licence.
A few add-ins (URL advisor was one of them) needed to be checked when loading Mozilla Firefox.
Still getting used to this on Outlook.  The set-up for spam detection is different, and I'm not sure it's even as 'quick' as AVG when clicking Next Item.  My first feeling was that incoming mail scans seemed to be slower, and I also felt that the PC was less responsive, hanging for a second or three when switching from program to program or window to window using ALT+TAB. Now after a few hours' use, I'm feeling fairly comfortable with it. Maybe the problem was the first run syndrome - sometimes settings need to be made on the fly, and this can slow everything down.

Update 20/04: Had to reboot again following installation of Kaspersky updates.  Seemed slow again when starting Outlook.

Update 26/04:  Multiple occurrences of system becoming unresponsive for minutes on end.  Outlook 2003's CPU usage doesn't just spike, it goes to 100% and stays there.   This seems to be triggered by double clicking an e-mail in the Unread Messages list - a little fundamental, and can be overcome by switching to another (non-Outlook) window.  I've been searching the support forums for a solution, but found nothing so far.  This is causing me to look urgently for some other anitvirus or Internet security package. 

Windows Vista SP1

Uninstalled AVG and restarted PC
Kaspersky installer installed without glitches or need to reboot again.
I entered the activation key and then was able to kick off the update process.  As mentioned above, 150 MBytes.  Then it seemed to sit on 'updating databases and the application (88%)...' for ages, but finally got there. 
This is a Windows Vista system, so I don't use it for serious work, but as an occasional standby and browser host.  I don't run any e-mail software on it, so I can't compare with the XP Pro experience.  Experience so far is that IE9 is fine, but Mozilla Firefox crashed repeatedly when trying to access the BBC News site or iGoogle.  Not too clever, a reboot seems to be the next thing to try.
After a reboot, Firefox seems to be working fine.  And there's a Kaspersky gadget in the sidebar, slightly bulky but useful nonetheless.

Windows XP Pro SP3 (small memory system)


Installation steps were simple, as for Vista - it didn't ask for additional reboots.  Again there was a large download to update after installation.  I'll be waiting for feedback from the user of this system, with fingers crossed.

Summary

Installation was fairly painless apart from the first install which was done without Internet connection.  I don't like the fact that I had to download the updates three times.  That's really wasteful.  The glitches with Firefox seem to have been resolved by a reboot.  And I've also installed the Kaspersky virus protection product on my MacBook Pro, to see how it goes and if anything is detected. Overall I was starting to feel good about the decision until problems with Outlook came to light.  Now trying to find out why, and what I can do about them.