Oct. 9 (Bloomberg) -- European Union lawmakers backed punishments for market abusers, including jail time, in a bid to prevent any repeat of the scandal engulfing Libor and other interbank lending rates.
Members of the European Parliament’s economic and monetary affairs committee called for courts to be able to impose prison terms on people found guilty of egregious cases of insider dealing and market manipulation. The lawmakers also backed the use of fines and other administrative sanctions against traders who unsuccessfully try to rig the market.
“The Libor scandal has demonstrated that the culture in the financial sector has not changed and that they cannot be trusted to self-regulate,” said Arlene McCarthy, the lawmaker handling parliament’s adoption of the rules. “Our vote today has extended the law so that all benchmarks and indices fall under market abuse rules to cover all possible and future manipulation.”
Confidence in Libor, the benchmark interest rate for more than $360 trillion of securities, was shaken following Barclays Plc’s admission in June that it submitted false rates. The revelations provoked renewed calls for tougher oversight of the financial system and pushed regulatory and criminal probes of Libor and other interbank lending rates, such as Euribor, to the top of the political agenda.
Barnier last year proposed the upgrade to the bloc’s sanctions against market abuse. He said the law was needed to iron out marked differences between nations in the penalties handed down for financial crimes. He updated the plans in July to ensure that they would cover abuse of Libor and other benchmarks.
Barnier has called for the law to be approved this year to boost confidence following the Libor revelations.
The measures must be agreed on by the parliament and by a weighted majority of the region’s national governments before they can take effect. Today’s vote sets out the assembly’s negotiation position on the draft law.
To contact the reporter on this story: Jim Brunsden in Brussels at email@example.com
To contact the editor responsible for this story: Anthony Aarons at firstname.lastname@example.org