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FSA finalises new Libor rules

The FSA has finalised new rules to regulate Libor and other financial benchmarks in the wake of last year’s rate rigging scandal.

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Libor will be regulated from 1 April when the Financial Conduct Authority comes into force.

Under the final rules, published today, the Libor administrator will need to corroborate submissions and monitor suspicious activity.

Firms submitting Libor data must outline a clear conflict of interest policy with appropriate systems and controls.The FSA believes this will result in clear, robust rules which will give firms and their employees comfort that the regulatory regime clarifies what is expected of them.

The FCA will also introduce two new significant influence controlled functions under the approved persons regime for the administrator and submitting firms.

FCA chief executive designate Martin Wheatley says: “Confidence and trust are critical to financial markets. That trust has been eroded by the Libor scandal and the recent enforcement action against several banks. These new rules today should help restore that faith and bring integrity back to Libor.”

In the last year, the Royal Bank of Scotland, UBS and Barclays have faced billions of pounds worth of global fines after their traders were found to have fixed rates. Last month, an internal review into the FSA’s handling of Libor rigging found failings in its approach.

The Wheatley review, published in September 2012, outlined 10 recommendations to improve the Libor system. The new rules were passed into law under the Financial Services Act 2012.

They include the appointment of a new Libor administrator to replace the British Bankers’ Association. Last month, the Government appointed the Hogg Tendering Advisory committee for Libor to choose a new administrator that will report back later this year.

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