Europe: Euribor-EBF - report on the implementation of the EBA/ESMA recommendations

The European Banking Authority and European Securities and Markets Authority have published a report in which they review the progress made in respect of their recommendations concerning the Euribor-EBF benchmark: see here (pdf). A summary of the report's findings is available here. Significant progress in implementing the recommendations is noted. The recommendations are available here (pdf).

Europe: Euribor and benchmark rate setting

The European Securities and Markets Authority and the European Banking Authority have published the results of their joint work on Euribor, including proposed principles for the process by which benchmark rates are set in the European Union. Significant weaknesses are identified with regard to the governance of the Euribor rate setting process (see here, pdf) and recommendations for improvement are made (here, pdf). The proposed principles for the setting of benchmarks, published for consultation, are available here (pdf). Recommendations have also been published regarding the supervision of activities relating to banks' participation in the Euribor panel (here, pdf).

It's also worth noting that the International Organisation of Securities Commissions has recently published a consultation report concerning financial benchmarks: see here (pdf).

UK: Wheatley Review of LIBOR - final report published

Martin Wheatley, the chief executive designate of the new Financial Conduct Authority, has published his proposals for the reform of the London Inter-Bank Offered Rate (LIBOR) setting process: see here (pdf).

Comprehensive reform of LIBOR, rather than its replacement, is advocated. The report proposes, amongst other things, that market participants should continue to play a major role in the production and oversight of LIBOR. However, it recommends that a new administrator (a private organisation not a public authority) should be formed to take over responsibility for LIBOR from the British Bankers' Association. It also recommends that administration of LIBOR, and the submission of rates, should be subject to greater statutory regulation. It is, for example, suggested that section 397 ("Misleading statesments and practices") of the Financial Services and Markets Act 2000 should be amended to cover manipulation of LIBOR. With regard to banks' submissions, one of the main findings of the report is that these should be explicitly and transparently supported by transaction data. A short video, in which Martin Wheatley sets out his proposals, is available below (with acknowledgements to the BBC). The text of the speech he delivered this morning is available here.



Note: The setting of interbank rates in other countries is also under review, including, for example, Euribor, SIBOR, BUBOR and HIBOR.

Europe: Commission consults on the regulation of indices used as benchmarks in financial and other contracts

The European Commission has published for discussion a paper concerning the regulatory framework governing the production and use of indices serving as benchmarks in financial and others contracts: see here (pdf). The paper does not contain any firm proposals but instead seeks to identify the issues and shortcomings in the production and use of benchmarks in order to consider whether regulatory change is required.