EU set to review rules on Libor rate-setting

9 July 2012 | By Chris Salih

The European Union commissioner Michel Barnier is set to propose new rules to prevent attempts to manipulate market indices across the EU and call for a review of the rules on setting the rate of Libor.

According to the FT, Barnier is planning to amend reforms to EU market abuse in a bid to close “loopholes” and introduce criminal sanctions for those who specifically tamper with the likes of Libor and Euribor.

Barnier’s staff are currently reviewing market indices to see whether they should be brought under the direct watch of regulators.

Speaking to the FT, he said: “I have never believed in self-regulation for a public good. I believe we need to make sure there is more transparency in the process.”

Barnier’s work is expected to overlap with the FSA’s into whehter there is a need to apply criminal penalties for manipulating the likes of Libor. The UK review, headed by FCA chief exec designate Martin Wheatley is set to finish this autumn, in time for the recommendations to be included in a Financial Services Bill moving through parliament. There is no fixed deadline for Barnier’s review, which is expected to take several months.

The news comes amid reports that the Libor scandal is set to hit the continent after German regulators are launching a probe into Deutsche Bank.

According to the Independent on Sunday, the leading German regulator BaFin, has upgraded an exsiting investigation into the bank to a “special investigation process” – which is expected to indicate serious breaches by the bank.

Barclays was fined £290m last month by both UK and US regulators after it was deemed to have fixed the rate of Libor.

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