EU launches consultation on Libor regulation
The European Commission launched Wednesday a consultation on possible new rules on financial market benchmarks after the interest-rate rigging scandal in London shook investor confidence.
Investigations have shown the London-based Libor scandal to be "yet another example of unacceptable behaviour by banks," Commissioner for Internal Market and Services Michel Barnier said in a statement.
"Doubts about the accuracy and integrity of indices can undermine market confidence, cause significant losses to consumers and investors and distort the real economy," Barnier said. "It is therefore essential that steps are taken to ensure the integrity of benchmarks and the benchmark-setting process."
He said the Commission has changed its legislative proposals on market abuse but "changing the sanctions regime alone may not be sufficient: wider work is required to regulate how indices and benchmarks are compiled, produced and used."
The consultation, which runs to November 15, will cover all benchmarks, not just interest rate benchmarks such as Libor, and will seek to identify possible shortcomings at every stage in the production and use of benchmarks.
The ultimate objective is to ensure the integrity of benchmarks, the statement said.
Libor, or London Interbank Offered Rate, is a flagship London instrument used as an interest rate benchmark throughout the world.