TOP REGULATOR Michel Barnier yesterday launched a consultation on the future of Libor and other similar key lending rates as he seeks to clamp down on financial manipulation across the EU.
The European Commission (EC) wants to make rate-rigging a crime, alongside insider dealing and market manipulation – and that could mean jail terms for rogue bankers in future.
But the consultation will also seek ways to change the way market indices and benchmarks are compiled, as well as studying governance and transparency around the measures.
“The international investigations underway into the manipulation of Libor have revealed yet another example of unacceptable behaviour by banks. Doubts about the accuracy and integrity of indices can undermine market confidence, cause significant losses to consumers and investors, and distort the real economy,” said Barnier.
“The Commission has already acted quickly to amend its legislative proposals on market abuse. However, changing the sanctions regime alone may not be sufficient: wider work is required to regulate how indices and benchmarks are compiled, produced and used.”
Although Libor is the most high-profile of the rates being examined, the consultation will also cover Euribor as well as commodities and real estate price indices, the EC said.