The European parliament today voted to approve a new law designed to make the manipulation of benchmark rates, such as Libor and Euribor, much trickier to do.
The legislation, which aims to make the rate setting process more transparent and less likely to be subject to conflict of interests, was voted through by 505 votes to 113.
The new law will also subject those involved in benchmark administration to a greater degree of scrutiny. For example, they will need to publish a benchmark statement, which details precisely what the benchmark measures, the methodology by which it is set and what the impact of a change in or the cessation of the benchmark would be on financial contracts.
Those involved in the administration of critical benchmarks, which are those that influence contracts and financial instruments with an average value of at least €500bn (£389.2bn) or which have no or very few substitutes, will also need to have a clear organisational structure to prevent conflicts of interest occurring.
"This law should put an end to manipulation of benchmarks and I am delighted it has now been passed," said Cora van Nieuwenhuizen, lead MEP. "These indices are important for people with mortgages, but are also used to establish the price of petrol and the Euro exchange rate and should therefore be fully trustworthy."
The new law will now need to be officially approved by the Council. It will then be entered into the EU Official Journal, coming into force the day after its publication.