The U.K.’s Financial Services Authority has proposed new rules governing Libor after accepting the recommendations of Martin Wheatley, the managing director of the FSA and the CEO-designate of the Financial Conduct Authority.
The new rules will initially cover only Libor, though the government may extend coverage to additional benchmarks if deemed necessary in the future. Administrators will monitor activity, and a policy on conflict of interest and required systems will be implemented, Economia reports.
Wheatley said that “confidence and trust” are essential in financial markets.
“The disturbing events uncovered in the manipulation of Libor have severely damaged that trust,” Wheatley said, according to Economia. “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.”
Wheatley’s reform recommendations were published in September and included a 10-point plan to reform the benchmark. Previously established by the British Bankers Association, Libor will now be overseen by the Financial Conduct Authority. Additionally, any individual who attempts to manipulate the key interest rate will be committing a criminal offense.
“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,” Wheatley said, BBR reports.
The government announced last month that it would adopt all recommendations laid out by Wheatley, amending the Financial Services Bill to reflect the changes.
Wheatley was asked to conduct a review of Libor after Barclays paid out more than $450 million to U.S. and U.K. regulators for its involvement in Libor manipulation.