Fixing Libor

Martin Wheatley, head of an independent review set up by the UK Government into Libor, has published a discussion paper setting out initial proposals for reforming the current framework for setting and governing Libor. The review panel is now seeking feedback from all stakeholders over the next four weeks and sets out initial analysis on:

• the role that Libor play in financial markets; 
• the flaws in the current structure of setting Libor, its governance and oversight; and 
• a range of options for reform, including the issue of transition. 

The discussion paper, open for consultation until 7 September, can be downloaded at http://www.hm-treasury.gov.uk/d/condoc_wheatley_review.pdf

Speaking on the paper Mr. Wheatley said: “It is clear that regardless of the outcome of ongoing international investigations, trust in a vital part of the financial system has been badly damaged and timely action is needed to repair it. Today, we are taking the first step in this process by launching the Wheatley Review discussion paper, which seeks responses from a wide range of market experts and international stakeholders. This review aims to ensure that LIBOR is reformed in whichever way fully restores credibility and trust.”

Financial Secretary to the UK Treasury Mark Hoban said: "This discussion paper demonstrates that we will give regulators the powers they need to prevent the manipulation of key benchmark rates in the future. This review will report by the end of the summer in time for any necessary changes to be taken forward in legislation. The Government is also working with its international partners to inform the international work in this area and work towards a globally consistent solution.”