EU lawmakers pledge speedy Libor reform, scope debated

Reuters

* Battle looms over scope of new benchmark rules

By Huw Jones

LONDON, Nov 4 (Reuters) - European Union lawmakers havepledged rapid approval of a draft EU law to regulate marketbenchmarks such as Libor, though they sparred over howcomprehensive the new regime should be.

Big fines for Barclays and other banks over thepast 18 months for rigging interest rate benchmarks such as theLondon Interbank Offered Rate or Libor, prompted the EuropeanUnion to propose the rules to supervise such indexes for thefirst time.

The draft law proposes that an administrator is appointed tooversee how each major benchmark is compiled, ensuring there isa record of who contributed to it.

Since then regulators have begun studying the foreigncurrency markets for possible manipulation.

"We have seen the scandals from last year with Libor andEuribor and now we have cases of suspected fraud in forex andcommodities," Emilie Turunen, a Danish member of the EuropeanParliament's economic affairs committee said.

"There is a legislatory gap we need to fill," Turunen toldthe committee, meeting in Brussels on Monday.

The parliament has joint say on the law with EU states butis running out of legislative time ahead of elections in Maywith other major financial regulation to approve as well.

The committee's British Liberal chairwoman, Sharon Bowlessaid the scope of rules was too wide to be practical and shouldbe curbed to focus on top interest rate and commoditybenchmarks, such as those using to price financial products soldon the high street.

"We can start slowly and then accelerate," Bowles told thecommittee.

British Conservative lawmaker Syed Kamall said the Liborscandal should not be used as an excuse for more Europeanregulation than is necessary.

"If we are going to do this as quickly as possible then weneed to focus on a few benchmarks," Kamall added.

But Turunen, whose Socialists & Democrats party is thesecond biggest bloc in parliament, said scope should be broad.

"I think the on-going cases of manipulation in manydifferent areas shows we do need as wide a scope as possiblewhen it comes to different products in different markets,"Turunen said.

Bowles said the aim was for the committee to vote on Jan. 30with a vote in full parliament in March. Parliament andlawmakers will have to agree on a common text to become law.

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