In response to the recent LIBOR scandal, European policymakers are introducing regulatory amendments that aim to clearly prohibit the manipulation of market benchmarks, and to make benchmark manipulation a criminal offence.
The European Commission is adopting amendments to regulatory proposals on insider dealing and market manipulation that were initially tabled last October. The amendments aim to prohibit the gaming of benchmarks, including LIBOR and EURIBOR, and make that sort of manipulation a criminal offence.
To that end, the commission Wednesday adopted two amended proposals. One that implements various changes to a proposal for regulation on insider dealing and market manipulation, that expands the scope of the proposed regulation to include benchmarks. And, another that amends the proposed directive on criminal sanctions for insider dealing and market manipulation to include any intentional manipulation of benchmarks.
It is not proposing to set the minimum types and levels of criminal sanctions at this stage, but wants to require each country to provide for criminal sanctions in its national laws to cover the manipulation of benchmarks.
“Public confidence has taken a nosedive with the latest scandals about serious manipulations of lending rates by banks. EU action is needed to put an end to criminal activity in the banking sector and criminal law can serve as a strong deterrent. This is why we are today proposing EU-wide rules to tackle this type of market abuse and close any regulatory loopholes. A swift agreement on these proposals will help restore much needed confidence of the public and investors in this crucial sector of the economy,” said the EU’s justice commissioner and vice president, Viviane Reding.
Internal Market and Services Commissioner, Michel Barnier, added, “The international investigations underway into the manipulation of LIBOR have revealed yet another example of scandalous behaviour by the banks. I wanted to make sure that our legislative proposals on market abuse fully prohibit such outrages. That is why I have discussed this with the European Parliament and acted quickly to amend our proposals, to ensure that manipulation of benchmarks is clearly illegal and is subject to criminal sanctions in all countries.”