Brussels is wading into the interest rate-rigging scandal rocking the City of London with a proposal to outlaw attempts to manipulate market indices across the EU, and a fundamental of the rules on how Libor is set.
Michel Barnier, the EU commissioner overseeing financial services, will amend reforms to EU market abuse rules so that potential “loopholes” are closed and criminal sanctions specifically cover tampering with indices such as Libor and Euribor.
Mr Barnier called the falsification of such benchmark rates a “betrayal” with potentially “systemic consequences”.
This issue will be taken up at EU level by Mr Barnier, whose staff will be in market indices to see whether they should be brought under the watch of regulators. “I have never believed in self-regulation for a public good”, Mr Barnier told the FT. “I believe that we need to make sure there is more transparency in this process.”
While this could take several months, Mr Barnier will, within the next fortnight, bring forward changes to his Market Abuse Directive and regulation. These reforms, first published last year, only indirectly covered manipulation of market indices, a weakness that MEPs such as Arlene McCarthy wanted rectified.
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