LIBOR Manipulation Press Coverage - June 2013

Investigations and regulator action

In the February Bulletin we referred to the investigations by Germany's banking supervisor, BaFin, into possible EURIBOR manipulation by at least three banks. BaFin's preliminary findings have been summarised in an internal report, however this has not been made public. Investigations are continuing. The person in charge of the investigation, Raimund Roeseler, is quoted as saying that, so far, there has been no evidence of systematic crime involving management board members.

Deutsche Bank confirmed it was cooperating with regulatory authorities in Europe, North America and Asia Pacific after receiving subpoenas and requests for information from various law and regulatory enforcement agencies probing their role in the rates-manipulation scandal.

The Canadian Competition Bureau has indicated that the Canadian affiliate of RBS has abandoned its challenge to an order of the Ontario Superior Court of Justice compelling it to produce certain records located outside of Canada to the Commission. The Commission has indicated that this will allow it to move forward with its investigation in relation to the setting of Yen LIBOR rates. It is reported that the bank has said that it is cooperating fully with the investigation, and only challenged the method of obtaining the information due to confidentiality concerns.

The International Organisation of Securities Commissions (IOSCO), which sets standards for the regulation of securities markets around the world, prepared a Consultation Report on 'Principles for Financial Benchmarks'. This closed on 16 May 2013. The principles are intended to be used as guidelines by benchmark administrators, national regulators and other relevant bodies. They set out the roles and responsibilities of administrators and contributors, accountability mechanisms and complaints procedures. They also include guidelines on establishing benchmarking quality, including design, input and periodic review processes. The way the principles are applied should be proportional to the size and risks posed by each benchmark setting process, which may or may not include regulatory action. The Report also discusses the feedback from the Consultation Report on Financial Benchmarks published by IOSCO on 11 January 2013 (see more below).

Global regulators have said that the only way to repair and maintain public confidence in the financial industry is to urgently overhaul the rules for interbank lending rates and other benchmark rates.

A roundup of the views of the various regulators is noted in the table below:

Regulator Rules for internet lending rates The Financial Stability Board (FSB) (a group of finance ministers, central bankers and regulators from G-20 countries) Mark Carney, in his role as Chairman of the FSB, is of the opinion that whilst policymakers can set the standard of good conduct, it is ultimately up to the private sector to decide how to achieve that standard, including whether or not to change the way benchmark rates are set. Carney also stated that regulators internationally should ensure that the setting of benchmark rates globally meet...