The Financial Times reported draft legislation from the European Commission aims to move direct supervision of Libor to Paris, as well as putting an end to self-regulation for hundreds of benchmarks including most of those commodities, shipping and interest rate.
The move would bring all published benchmarks under the control of a regulator. The majority of indices administrators would be supervised by their home country, but those running Libor, Euribor and other ‘critical union benchmarks’ would be placed under the control of Esma.
If successful it would be a bitter blow to UK chancellor George Osborne who has already overhauled the monitoring of the benchmark following the rigging scandal which broke out last summer.
Do you think the Libor scandal was blown out of proportion? Read our analysis, Libor scandal, who cares?
In April, the interest rate benchmark was brought under the control of the FCA following recommendations in the Wheatley Review, making it the only regulated benchmark in the UK.
The EU legislation would give supervisors the authority to seize documents, demand market information, gain access to traders systems in the commodities markets, suspend trading of financial instruments that reference a benchmark, freeze assets and correct mistakes.
The proposal is due to be published this summer, although it is not expected to be passed into law before next year’s European parliamentary elections.
