I was going to write “simple fix”, but fix is the problem.
For the basics read this BBC explainer.
The technical problem is that both Libor and FX have a batch closing cycle…how quaintly Victorian.
The “close” (aka the “fix”) has a real need. Lots of financial systems need to enter a FX or Libor rate. You cannot enter a real time rate. You need a rate on a daily basis. I am sure all systems will go real time at some point, but that does not solve the problem today.
It is technically simple to come up with some average for the day for both Libor and every FX pair. I can imagine different algos for this, all open source (eg. trade weighted average). Systems that need a daily FX or Libor rate can choose which algo they use. If one algo gets gamed too much, you can switch to a different one.
That would be a simple surgical fix. It would move the last vestige of Victorianism from our global financial markets. In the meantime, I am sure we will get a lot more pain-killers and bandages in the form of lawyers listening to data mined chat rooms (which will simply force the bad guys to collude in the sauna or other place where nobody can listen).
The UK financial regulators are proving to be tech savvy and innovation friendly so I am sure they will finally get rid of this batch anchor holding back the real time speedboat. This is one more thing needed for London to earn its reputation as the Fintech Capital of the world.