UK sets out terms for urgent Libor review

LONDON, July 30 (Reuters) - Britain's government set out on Monday terms for a fundamental revamp of a key interest rate rigged by a number of banks, including Barclays, saying urgent reform is required.

The review will be conducted by Martin Wheatley, a top official at the Financial Services Authority regulator.

It will look at how Libor is constructed, the feasibility of using actual trades, governance, the potential for alternative rate-setting processes and how to move to a new regime.

"The benchmark rate is used globally for trillions of dollars worth of financial contracts. Therefore, it is clear that urgent reform of the LIBOR compilation process is required," Wheatley said in a statement published by UK Treasury.

He will publish a discussion paper on August 10 with final conclusions by the end of September when the government will make recommendations for legislative changes to be included in a financial services draft law already being approved.

Authorities in Britain and the United States fined Barclays a record $453 million for trying to influence Libor or the London interbank offered rate at which banks are willing to lend to each other.

UK bank, Royal Bank of Scotland signalled on Sunday in a Guardian newspaper interview that it too faced a fine for its role in the rate rigging scandal as authorities across the world probe about 20 banks.

HSBC bank said it has been named in U.S. private lawsuits linked to Libor and its Continental European counterpart Euribor.