FSA to look at ways of reforming LIBOR

The FSA managing director Martin Wheatley has been asked by the government to look at ways of reforming LIBOR after the rate fixing scandal. As part of the review Mr Wheatley will look at how the benchmark borrowing rate is set. He will make recommendations to the Government, who will then make a decision, and implement any changes in the Financial Services Bill. He will investigate three main areas: Firstly, reforming the current framework for setting and governing Libor. Secondly, the best ways of tackling abuse and whether individual persons in banks with a role in LIBOR setting should be subject to prior approval by the regulator. And finally, he will look at other areas where price-setting mechanisms are used in financial markets and whether they need to make policy changes. Douglas Keenan, a former trader at Morgan Stanley, has been quoted by the BBC's Today programme as saying that there have been issues with LIBOR for quite some time: "This has been going on for decades. It's been blatant, it's been clear and if by some miracle they (the regulators) did not know, they should be fired for gross incompetence." August 10, 2012