Global watchdogs to hear from public on financial benchmarks fix

Tue Feb 26, 2013 6:00pm EST
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By Douwe Miedema

WASHINGTON Feb 26 (Reuters) - Global regulators will ask the public for more comments before publishing a report on how to fix financial benchmarks after the Libor interest-rate rigging scandal, U.S. derivatives regulators said on Tuesday.

They will then release a report by late spring or the summer that lays out basic guidelines for financial benchmarks, the regulators said at a public hearing.

"This was just a decision this morning," said Jackie Mesa, a director in the Office of International Affairs at the U.S. Commodity Futures Exchange Commission (CFTC).

"Our hope is to put one more consultation out on the principles themselves that will go out either late March or early April," she told reporters.

The report by the CFTC and the International Organization of Securities Commissions (IOSCO), a group of securities regulators, had been expected by March.

Global regulators are rethinking the Libor, which underlies vast amounts of contracts from mortgages to student loans, after the widespread manipulation of the benchmark by more than a dozen banks and brokers came to light.

Britain's Royal Bank of Scotland Group Plc last month became the third bank to pay fines relating to the global Libor scandal, settling allegations it manipulated the rate to make more profits in its derivatives trading business.

CFTC Chairman Gary Gensler has often said he favors a rate based on actual lending transactions between banks and not on a survey of estimates of where the banks think they can borrow money, as is currently the case.   Continued...