Global watchdogs to hear from public on financial benchmarks fix

WASHINGTON Wed Feb 27, 2013 6:06am IST

The logo of the Royal Bank of Scotland is seen at an office in London February 6, 2013. REUTERS/Neil Hall

The logo of the Royal Bank of Scotland is seen at an office in London February 6, 2013.

Credit: Reuters/Neil Hall

Related Topics

Stocks

   

WASHINGTON (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 (RBS.L) 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.

But the problem with that plan is that banks are hardly lending any money on an unsecured basis to each other anymore after the 2007-2009 financial crisis and the interbank market is not expected to come back to life anytime soon.

That issue was beyond the scope of the present report however, and could well be taken up by the Financial Stability Board (FSB), a global financial risk watchdog, after the CFTC and the IOSCO put out their study.

"What we're doing with the IOSCO report is trying to deliver on one piece of that, being best principles for benchmarks," Gensler told reporters after a public roundtable with market participants in the CFTC's offices.

Thomson Reuters Corp (TRI.TO), parent company of Reuters, has been calculating and distributing Libor rates for the sponsor of the Libor benchmark, the British Bankers' Association.

(Reporting by Douwe Miedema. Editing by Andre Grenon)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

School Shooting

School Shooting

Two killed, four wounded in Washington state school shooting.  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage