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European Parliament: Consultation on market manipulation in relation to LIBOR and EURIBOR
On 20 August 2012, the Economic and Monetary Affairs Committee of the European Parliament published a questionnaire for public consultation on market manipulation in relation to the London Interbank Offered Rated (LIBOR) and Euro Interbank Offered Rate (EURIBOR) benchmarks for interbank lending rates. The consultation follows on from the European Commission’s amended proposals for a Regulation on insider dealing and market manipulation and for a Directive on criminal sanctions for insider dealing and market manipulation which were published in the wake of investigations into the possible manipulation of EURIBOR and LIBOR.
The consultation covers the following areas:
- Tackling the culture of manipulation: Respondents are asked about their perception of the scale of market manipulation of LIBOR and EURIBOR, as well as whether there are other financial instruments, markets and/or benchmarks vulnerable to potential manipulation. The questionnaire asks what action should be taken to ensure the integrity and quality of all benchmarks, financial instruments and markets. In this regard, respondents’ views are sought on the following: (i) the need for regulation of benchmarks and the entities that input into the setting of benchmarks; (ii) whether traded rates as opposed to offered rates are a better basis for input or whether a ‘hybrid’ approach should be adopted; (iii) awarding anonymity to the posters of rates (and the possible disadvantages to such an approach, including whether this would undermine the integrity of prices); and (iv) the types of powers regulators of the financial sector should be given to set and introduce criminal sanctions for attempted or actual manipulation of benchmarks.
- Establishing integrity and trust post LIBOR/EURIBOR: Respondents’ views are sought on, amongst other things, the specific measures that need to be taken at European and global levels to improve investor confidence, as well as to improve cooperation between global regulators. Views are also sought on the specific measures needed to enhance transparency and information quality in the financial sector, as well as the type of future action that could be taken to achieve better governance in order to prevent future manipulation in the financial services industry.
The deadline for comments is 17 September 2012.
(European Parliament, Consultation on market manipulation in relation to LIBOR and EURIBOR, 20.08.12)
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