By Huw Jones
LONDON, Nov 19 (Reuters) - Replacing the quote-based Libor with an index drawing on actual market trades won't happen anytime soon, the benchmark's new administrator said on Tuesday.
The London Interbank Offered Rate is compiled from quotes by banks of the rate they believe they would pay to borrow from another bank.
Barclays, Royal Bank of Scotland and others have been fined for manipulating Libor, sparking calls from the United States, where the rate is a reference in home loans, for a new index based on actual market transactions.
Britain passed a law requiring Libor to have a new administrator, stripping the British Bankers' Association trade body of that role.
Transatlantic exchanges group NYSE Euronext, which was acquired by ICE last week, won the tender to administer Libor. It said on Tuesday the transition from the BBA to ICE will be completed early next year.
The focus now is on a smooth transition to the new administrator and restoring confidence in the index rather than wholesale change in the benchmark's composition, Finbarr Hutcheson, who heads the new administrator, said.
"We will be very transparent on how Libor is set," Hutcheson told a Financial Conduct Authority conference.
Britain is facing pressure from the United States to replace Libor with a market-based index, which is considered less vulnerable to rigging.
Andrew Hauser, head of sterling markets at the Bank of England, said the "palette of benchmarks" needed to be expanded, even if the number of alternatives will be limited.
Referring to calls for a market-based index, Hutcheson said, "The reality is that that doesn't exist at the moment. There is no simple answer."
Global regulators, such as the Financial Stability Board, are studying how transition to market-based alternatives could take place, with the outcome due next year.
"Right now our focus is on a smooth transition," Hutcheson said.
John Grout of the Association of Corporate Treasurers said the call for a market-based index came mainly from politicians. But such an index could also caused problems when there are no transactions, he said.
"We have no more faith in transaction-based benchmarks than in good-faith-based indices," Grout told the conference, adding that strict new controls on Libor were restoring confidence in the index.
Hutcheson said once the infrastructure is in place for administering Libor, ICE "will be looking to leverage that as much as we can in other oppportunities for benchmark administration".
A new European Union law now being approved is expected to require independent administrators for a range of major benchmarks used across Europe.