European lawmakers to question regulators over Libor

Mon Sep 24, 2012 6:54am EDT
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By John O'Donnell

BRUSSELS (Reuters) - Some of the world's top financial regulators will answer questions in the European Parliament on Monday about market manipulation such as the rigging of benchmark interest rate Libor.

The scandal over fixing the rate used as a reference for financial transactions worth more than $350 trillion globally has led to a fine for Britain's Barclays (BARC.L: Quote) and prompted an antitrust investigation by the European Commission as well as a pledge to criminalize the fixing of such indexes.

Michel Barnier, the European commissioner in charge of regulation, and Joaquin Almunia, the EU's antitrust chief, will face questions from the parliament's influential economic and monetary affairs committee from 9.00 a.m. EDT on Monday.

Gary Gensler, the chairman of the U.S. Commodity Futures Trading Commission, will testify by videoconference. Masamichi Kono, chairman of the International Organisation of Securities Commissions will also attend.

Barnier has raised the possibility that EU regulators could take over supervising benchmarks such as Libor, breaking with the current system where banks themselves supervise the London-based rate and its continental European equivalent Euribor.

He has already outlined a proposal for criminal penalties for those who rig an index such as the London Interbank Offered Rate (Libor), but new rules are not set to take effect until 2015.

"We want to find out how they intend to ensure that the criminal sanctions are sufficient to discourage the manipulation of such indexes," said Sven Giegold, a German member of the European Parliament.

"We want more," he said. "We want to go beyond the limited scope of the Commission's proposal."   Continued...

Barclays bank headquarters in Canary Wharf, east London August 30, 2012. REUTERS/Olivia Harris