HM Treasury published on 10 August 2012 an initial discussion paper to support the review of LIBOR by Martin Wheatley, chief executive-designate of the Financial Conduct Authority. The discussion paper follows the Treasury’s setting of the Wheatley Review’s Terms of Reference on 30 July 2012.
“My review will look at three areas:
Firstly, reforming the current framework for setting and governing Libor.
This will include how banks submit data, and whether actual trade data can be used to set the reference rate; the governance of Libor; and whether the setting of Libor should be brought into statutory regulation.
We will also look at alternative rate-setting processes and the financial stability consequences of a move to a new regime and, how a transition might be appropriately managed.
The second area we’ll look at how we work out the best way to tackle abuse. This will consider the scope of the UK authorities’ civil and criminal sanctioning powers to deal with the type of misconduct we’ve seen. We’ll also look at whether individual persons in banks with a role in Libor setting should be subject to prior approval by the regulator.
And finally, we’ll look at other areas where price-setting mechanisms are used in financial markets and whether we need to make policy changes. We’ll make provisional recommendations designed to inform the work on benchmark reform being considered at globally.”
The discussion paper is open for consultation until 7 September 2012.
UPDATE 11 September 2012: GC100 opposes amending s397 FSMA 2000.