Government accepts all recommendations in Wheatley LIBOR report

Government accepts all recommendations in Wheatley LIBOR report

 On 17 October 2012, HM Treasury published a written statement from Greg Clark, Financial Secretary to HM Treasury, announcing that the government accepts all the recommendations in the final report on the review of the London Interbank Offered Rate (LIBOR) undertaken by Martin Wheatley, FSA Managing Director and Chief-Executive designate of the Financial Conduct Authority (FCA).

HM Treasury published Mr Wheatley's final report on 28 September 2012, setting out ten main recommendations for the reform of LIBOR, including new regulation of LIBOR, an overhaul of how LIBOR is run, and reforms to the LIBOR mechanism.

The government will amend the Financial Services Bill 2012-13 (FS Bill) or, according to an HM Treasury press release, the Banking Reform Bill, to implement the following recommendations, as legislation is required:

  • The submission of rates and administration of benchmarks such as LIBOR will be regulated by the FCA.
  • Section 397 of the Financial Services and Markets Act 2000 (FSMA) will be extended to capture the making of misleading statements to manipulate benchmarks such as LIBOR as criminal offences. The FCA will have the lead role in investigating and prosecuting those offences.
  • The FCA will be given a specific power to make rules requiring banks to contribute to the LIBOR setting process. The press release states that this will be with reference to a code of practice produced by the rate administrator.

The other recommendations will also be implemented, including the BBA giving up its operational role in the LIBOR setting and governance process to be replaced by a new LIBOR administrator.

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