Martin Wheatley, the incoming head of Britain's new market regulator, is
expected to recommend this week that the lobby body lose its supervisory role in
the setting of the rate. "If Mr Wheatley's recommendations include a change of
responsibility for Libor, the BBA will support that," the BBA said on Tuesday:
The review was announced following revelations three months ago that big banks
were had been attempting to rig Libor for years. The scandal led to a £290m fine
for Barclays, ongoing investigations into manipulation at other banks, criticism
of the rate and calls for a new benchmark that is more transparent and relevant
to the credit worthiness of banks. Sir Mervyn King, Governor of the Bank of
England, believes Libor has stopped working and should be replaced, while Mr
Wheatley, who is the chief executive-designate of the Financial Conduct
Authority, has said Libor rate-setting is “no longer viable”.
The BBA, a lobby group for banks, has been heavily criticised for its
oversight of Libor, which is used to price loans and transaction for businesses
and individuals worth more than $350 trillion globally. Libor is based on what a panel of banks expect to be charged rather than
measuring actual lending rates. It is not directly supervised by regulators in
Britain but has been overseen by the BBA since 1986. The Wheatley's review, due out on Friday, is expected to propose anchoring
Libor interest rates to real transactions, rather than rates which panel banks
believe they could borrow from their peers. (source telegraph.uk)