EC looks to criminalise Libor rigging after Barclays scandal
Market-abuse proposal defines insider dealing and market manipulation as criminal offences
By CFOWorld staff | CFO UK | Published 12:19, 09 July 12
European commissioner Michel Barnier plans to amend market-abuse legislation to criminalise rate rigging such as Libor manipulation, the European Commission announced on Monday.
Barnier, who is responsible for internal markets, intends to propose new rules to include the manipulation of a benchmark such as Libor, which is a basis for lending and derivatives contracts around the world.
"We need to draw lessons from the Libor case," a spokesman for Barnier said. "We intend to close the regulatory gap in our proposed market-abuse legislation by including the direct manipulation of market indexes such as Libor."
As it stands, the market-abuse proposal, which is now being negotiated with the European parliament and EU member governments, defines insider dealing and market manipulation as criminal offences and lays down minimum penalties.
A global investigation into manipulation of interbank lending rates widened on Friday when the Serious Fraud Office announced it would launch an investigation to see if a criminal prosecution is warranted.
Authorities in the US, Europe, Japan and Canada are examining more than a dozen big banks over suspected rigging of Libor (the London Interbank Offered Rate).
Barclays has so far been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than £290 million
The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars in contracts around the world.
The EC proposes legislation that would apply across all 27 countries in the European Union. The euro zone member states and the European parliament must give approval before it can take effect.
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