Bloomberg News

Global Regulators Weigh Benchmarks Overhaul Amid Rates Scandal

January 11, 2013

Global regulators sought to bolster the way market benchmarks including Euribor are set, saying the process raises concerns over “potential inaccuracy or manipulation.”

The International Organization of Securities Commissions said it’s seeking views on possible measures to overhaul the setting and governance of such rates, according to a statement on its website today.

Organizations in charge of setting benchmark rates should seek to “verify the accuracy and plausibility” of the data they receive from banks and other market participants, IOSCO said. The group said it may draw up a code of conduct.

UBS AG (UBSN), Switzerland’s biggest bank, must pay $1.5 billion to U.S., U.K. and Swiss regulators for trying to rig global interest rates. The sum is triple the penalties levied against Barclays Plc (BARC), which agreed to pay 290 million pounds ($467 million) in June to resolve the U.S. and U.K.’s Libor and Euribor regulatory probes.

Madrid-based IOSCO, which represents regulators in more than 100 countries, last year responded to the interbank-rate scandal by announcing a task force to investigate the setting and governance of market benchmarks.

The task-force is led by Financial Services Authority Managing Director Martin Wheatley and U.S. Commodity Futures Trading Commission Chairman Gary Gensler.

Allowing rate-setting panels to select their own members may “give rise to conflicts of interest,” IOSCO said.

The group will seek views on possible measures until Feb. 11. The review covers benchmarks across different “financial sectors,” IOSCO said.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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