(Adds background and comments on Libor, context on Trump's decision)
NEW YORK, Nov 2 (Reuters) - Jerome Powell, who is expected to take the reins of the Federal Reserve in 2018, said on Thursday that Wall Street's transition from the London interbank offered rate, or Libor, to more robust reference rates will be complicated and costly but likely necessary.
In a pre-recorded video address from Washington, the Fed governor focused on the business of regulating banks even while markets focus on how he would run the world's most powerful central bank. President Donald Trump is expected on Thursday afternoon to name him as the successor to Fed Chair Janet Yellen.
After apologizing for not being able to attend the New York conference in person, Powell said the transition from Libor will "involve significant costs" for broker-dealers and others who rely on it. Yet it would likely be necessary after some of the world's biggest banks were found to have manipulated Libor in recent years, setting up a 2021 deadline for a new system.
"We have to acknowledge that the transition will be complicated. Unfortunately, as I have discussed, we cannot guarantee that it won't be necessary," Powell, a soft-spoken centrist who has been a Fed governor since 2012, told the gathering of market participants. "Despite those complications and costs, a transition may prove necessary."
The conference was hosted by the Alternative Reference Rates Committee (ARRC), which was tasked with selecting a new rate at the behest of regulators including the Fed who worried that a decline in short-term bank lending since the 2008 financial crisis undermined faith in Libor, and posed risks to the trillions of dollars of derivatives backed by the rate.
Britain has said a substitute for Libor must be in place by the end of 2021.
"Libor may remain viable well past 2021, but we do not think that market participants can safely assume that it will," said Powell, the Fed's point person on the issue. "Users of Libor must now take into account the risk that it may not always be published."
Powell emerged as the front-runner for the top Fed job after a months-long search for a nominee. He would need Senate confirmation to replace Yellen, whose term expires in early February.
(Reporting by Jonathan Spicer; Editing by Paul Simao)