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FSA to suggest Libor be scrapped

FSA Sky 480

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.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. when is everybody going to realise thst the connection between “Base Rate” as dictated by those idiots at the B.o.E and the real world was broken in 2008. The banks (in the real world) now charge what they like (if they lend at all)

    So we now have a B.o.E who have no relevant tool to control anything.

    Thanks Gordon

  2. Door, stable, bolted

  3. futher to my previous comment, sombody tell me what was wrong with MLR????

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