The Treasury is promising to implement all 10 of Martin Wheatley’s recommendations on Libor.
The recommendations, presented to the Government on 28 September, include a new code of conduct for submitters, relieving the British Bankers’ Association of their administrative duties and corroborating Libor by transaction data.
A new administrator will be decided by a independent committee chaired by Baroness Hogg.
The Government will amend the Financial Services Bill in order to implement the recommendations that require primary legislation including the introduction of criminal sanctions for any attempted manipulation of the rate, bringing Libor activities under statutory regulation and providing the Financial Conduct Authority with powers to make banks to submit to Libor.
Financial secretary to the Treasury Greg Clark says: “The Government is determined to restore the credibility of Libor. That is why we have accepted Martin Wheatley’s recommendations in full and will begin the process of implementing them without delay.
“The Government’s changes to legislation will ensure those that attempt to manipulate Libor face the full force of the law. But this is just one part of the process, the banks and the BBA will have to play their part to ensure that reform is effective and Libor’s reputation is restored.”
Other recommendations include a reduction in the number of currencies and maturities submitted, the publication of submissions after a three month window and the UK, European and International Authorities to establish clear principles for global benchmarks.
Wheatley proposes the removal of the Australian, Canadian and New Zealand Dollars, as well as Swedish and Danish Krone along with maturities of four, five, seven, eight, 10 and 11 months.
All market participants will be urged to consider whether Libor is appropriate for their needs.
The FSA fined Barclays £59.5m for misconduct over Libor manipulation in June, the largest fine ever imposed by the regulator. Additional fines from the US Commodity Futures Trading Commission and the US Department of Justice brought the total to £290m.
The Royal Bank of Scotland is reported to have entered into advanced negotiations with regulators in September over allegations it was also involved in Libor manipulation.