The initial review by the Financial Services Authority (FSA) is the first concrete step to reforming Libor after a rigging scandal that has dragged in global banks and hurt the reputation of regulators on both sides of the Atlantic.
"The existing structure and governance of Libor is no longer fit for purpose and reform is needed," the FSA's managing director, Martin Wheatley, said in a speech in London.
The future of other benchmarks - for everything from oil and gold to stock prices - was also under scrutiny, he said.
The London Interbank Offered Rate, known as Libor, sets prices for everything from credit card payments to complex derivatives, but its credibility has been damaged since it emerged that it had been manipulated by the big banks that set it.
Wheatley's review was ordered after UK bank Barclays was fined more than $450m (£288m) for rigging Libor. Lenders such as Royal Bank of Scotland also face fines.
In his proposals, Wheatley makes clear alternative benchmarks to Libor should be used in some cases while the calculation of the rates themselves needs to be done differently.
Benchmarks would be based less on judgment and more on actual trades, he suggests. Banks could also be obliged to contribute to setting Libor to widen participation.