Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a650332
European regulators take action to safeguard Euribor
by Emma Dunkley on Jan 11, 2013 at 14:15
Regulators in Europe are moving to ensure the rate-setting process for Euribor and other benchmarks is strengthened and less susceptible to manipulation.
The European Securities and Markets Authority (ESMA) has worked with the European Banking Authority (EBA) to propose a raft of principles for the rate-setting process.
These include a review of Euribor’s administration and management as well as clear recommendations to the Euribor-European Banking Federation to improve the governance and transparency of the rate-setting process.
The bodies propose formal EBA recommendations to national authorities on the supervisory oversight of banks participating in the Euribor panel.
They also suggest a joint ESMA-EBA consultation on ‘Principles for benchmark setting processes in the EU’, which form a framework for the conduct of benchmark rate-setting and the activities of participants in the process.
Steven Maijoor, ESMA Chair, said: ‘The proposed Principles, which are aligned with on-going EU and international work, will give clarity to benchmark providers and users, and are an immediate step to be taken in advance of potential wider changes in the supervisory and regulatory framework for financial benchmarks.’
Major weaknesses in rate-setting
Both ESMA and the EBA found ‘significant weaknesses and insufficiencies’ in the governance of the Euribor rate-setting process and have made a series of recommendations.
The bodies said their work on the governance aspects is concurrent with legal investigations related to Euribor being conducted by authorities within the EU.
The regulators said the main weaknesses and insufficiencies in the rate-setting process include the steering committee not being ‘sufficiently independent’, as a majority of its members come from the panel banks.
News sponsored by:
Today's top headlines
More about this:
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.