Japan to put benchmark interbank rates under tighter regulatory oversight
TOKYO Dec 25 (Reuters) - Japanese authorities said they will put benchmark interest rates under stricter regulatory oversight, in response to global scrutiny after scandals over manipulation.
Under measures to be introduced next year, the Japanese Bankers Association, which publishes the Tokyo interbank offered rate (Tibor), will be put under the oversight of the Financial Service Agency, the regulator said on Wednesday.
The regulator will have supervisory authority over the banking industry body as the publisher of Tibor to police the setting of benchmark rates, and it can take punitive actions if necessary, including suspending operations and removing executives, the agency said.
Reference banks, which submit rates for Tibor publication, will not be directly regulated, but they will be bound by the Japanese Bankers Association's code of conduct, the agency said.
These measures were proposed by a panel of outside professionals set up by the FSA, following global investigations into manipulation of benchmark rates such as the London Interbank Offered Rate (Libor).
Tokyo branches of some international banks were found to have been involved in some Libor manipulation cases.
In July, the International Organisation of Securities Commissions (IOSCO) issued guidance covering all benchmarks that are central cogs in the global economy, from interest rates to equities and gold.
The rate-rigging scandals have prompted authorities and banking industry bodies worldwide to overhaul rate-setting processes. For Tibor, no case of rate manipulation has been found so far.
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