Brussels, 05/09/2012 (Agence Europe) - Following the recent scandal of manipulation of LIBOR (the UK's inter-bank interest rate index), the European Commission has opened a consultation exercise that will run until Thursday 15 November, inviting stakeholders to comment on possible new rules for the production and use of indices serving as benchmarks for financial contracts (EURIBOR and FTSE 100 index) and other trading indices (prices, house prices and pensions), be they compiled by trading bodies like banks and stock exchanges or public bodies like trade unions. The public consultation will feed into reflection on whether legal action needs to be taken. EU Internal Market Commissioner Michel Barnier does not believe that self-regulation is effective, explained one of his spokespersons on Wednesday 5 September. Any regulation would inevitably have to take into account the diversified nature of benchmarks and their compilation.
At the end of July 2012, the Commission amended its draft regulation on market abuse to make the manipulation of LIBOR and other indices a criminal offence (see EUROPE 10663). In the consultation document, the Commission says that would not remove the danger of manipulation arising from conflicts of interest in the compilation and management of such benchmarks. The consultation will look at transparency, how benchmarks are compiled, the role of public and private bodies compiling benchmarks and the potential impact of EU regulations, including transition, continuity and international usage. The Commission points out: “Doubts about the accuracy and integrity of indices can undermine market confidence, cause significant losses to consumers and investor and distort the real economy,” and is concerned about the potential negative impact on small business of compulsory changes to benchmarks and the danger that legislation would encourage the use of benchmarks compiled outside the EU. (MB/transl.fl)