The Financial Services Authority (FSA) has proposed new rules and regulations for financial benchmarks following the recommendations of the Wheatley Review into Libor.
Libor has historically been set by the financial markets, and existed outside of any regulatory regime. The FSA said this industry-led approach had failed in the case of Libor.
In July chancellor George Osborne commissioned Martin Wheatley, managing director of the FSA and chief executive designate of the Financial Conduct Authority (FCA), to undertake a review of the structure and governance of Libor and the corresponding criminal sanctions regime.
The proposals included in the FSA's consultation include:
- requirements for benchmark administrators to corroborate submissions and monitor for any suspicious activity;
- requirements for those submitting data to benchmarks to have in place a clear conflicts of interest policy and appropriate systems and controls;
- introducing two new significant influence controlled functions created under the FSA’s approved persons regime for the administrator and submitting firms.
Wheatley (pictured) said: ‘Confidence and trust are critical to financial markets. The disturbing events uncovered in the manipulation of Libor have severely damaged that trust. Today’s proposals will bring in clear rules for the setting and governance of benchmarks and are a key step to ensuring the integrity of Libor.’