BRUSSELS, July 9 Europe's top regulatory
official intends to propose new rules that would criminalise the
manipulation of benchmarks such as Libor, a spokesman for the EU
commissioner in charge of financial reform said on Monday.
Michel Barnier wants to amend proposed market-abuse
legislation that is designed to clamp down on insider trading
and other wrongdoing to include the manipulation of a reference
such as Libor, which is a basis for lending and derivatives
contracts around the world.
"We need to draw lessons from the Libor case," a spokesman
for Barnier said. "We intend to close the regulatory gap in our
proposed market-abuse legislation by including the direct
manipulation of market indexes such as Libor."
As it stands, the market-abuse proposal, which is now being
negotiated with the European Parliament and EU member
governments, defines insider dealing and market manipulation as
criminal offences and lays down minimum penalties.
A global investigation into manipulation of interbank
lending rates widened last week with Britain's fraud squad
taking up the case.
Authorities in the United States, Europe, Japan and Canada
are examining more than a dozen big banks over suspected rigging
of Libor (the London Interbank Offered Rate).
British-based bank Barclays (BARC.L) has so far been the
only bank to admit wrongdoing, agreeing last week to pay a fine
of more than $450 million.
The Libor rates, compiled from estimates by large banks of
how much they believe they have to pay to borrow from each
other, are used to determine interest rates on trillions of
dollars in contracts around the world.
The European Commission proposes legislation that would
apply across all 27 countries in the European Union. The bloc's
member states and the European Parliament must give approval
before it can take effect.
(Reporting by John O'Donnell; editing by Rex Merrifield)
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