EU Weighs Scrapping ESMA Oversight of Libor in Benchmark Rules
U.K. regulators would retain a role in the oversight of the London interbank offered rate as the European Union considers backing away from a plan to shift supervision of the tarnished benchmark to an EU agency in Paris.
The European Commission may rewrite draft proposals scheduled to be presented later this month, that would have handed oversight of critical benchmarks including Libor to the Paris-based European Securities and Markets Authority, according to an EU official, who requested anonymity because the talks are private.
Under the alternative plan being considered, the rates would be overseen by a group, or college, of national regulators including the U.K. Financial Conduct Authority, the official said.
Michel Barnier, the EU’s financial services chief, is scheduled to present plans on Sept. 18 for toughening benchmark-setting rules. In addition to assigning responsibility for supervision, the plans would also hand investors a right to sue if they lose money from shoddy rate-setting, and empower regulators to force banks to submit data to administrators, according to a draft of the measures obtained by Bloomberg News.
Global regulators have fined UBS AG (UBSN), Barclays Plc (BARC) and Royal Bank of Scotland Group Plc about $2.5 billion for distorting Libor and similar benchmarks. Other firms are still under investigation around the world, and probes into potential manipulation have extended beyond interbank lending rates.
The FCA is currently responsible for regulation of Libor and how it is administrated. Under the alternative EU plan, ESMA would still have a role as a dispute mediator between the national regulators, the official said. Chris Hamilton, a spokesman for the U.K. authority, declined to comment.
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