The FSA is set to outline plans to scrap Libor and replace it with a combination of actual transaction data and predicted rates overseen by a new independent body.
Head of conduct regulation Martin Wheatley will publish an initial discussion paper today as part of the Government’s review of Libor. The proposals signal an attempt to restore trust in the financial system following Barclays’ £290m fine for Libor manipulation.
The FT reports that Wheatley will outline the possibility of scrapping Libor altogether in order to replace it with a combination of actual transaction data and predicted rates.
A rate based on actual trades would then be overseen by an independent body as opposed to the British Bankers’ Association.
Wheatley is also expected to raise the possibility of introducing criminal sanctions with regards to rate manipulation and to make the rate setting subject to more formal regulation. Individual submitters could then become subject to special FSA clearance.