LIBOR rates have risen as a result of the SEC reforms of the regulation of Prime MMFs effective October 14 2016 as reported by Bloomberg. Funds are already moving out of Prime MMFs to alternatives such as Government only MMFs which are less affected by the new regulations.
This is beginning to restrict what has been a major alternative source of funding for banks, especially funding which is less affected by the liquidity regulations such as LCR.
Many banks previously raised funding by selling substantial amounts of their CDs and CP to Prime MMFs. Some banks even swept excess investor deposits daily to Prime MMFs. Given the new regulations, many of these investors, will no longer allow this.
The rise in LIBOR is considerably higher than rises in the Federal Funds rate especially for longer term funding which has liquidity (both market and regulatory) benefits.
Federal Funds Effective Rate
Overnight LIBOR. Rise since June approximately 3BP
3 month LIBOR. Rise since June approximately 18BP
6 Month LIBOR. Rise since June approximately 30BP
12 month LIBOR. Rise since June approximately 30BP
Source
The mCD is an new class of bank term deposit, which has the same liquidity benefits as longer term funding, but at a lower cost.