LONDON (Reuters) - European Union lawmakers have pledged rapid approval of a draft EU law to regulate market benchmarks such as Libor, though they sparred over how comprehensive the new regime should be.
Big fines for Barclays (BARC.L) and other banks over the past 18 months for rigging interest rate benchmarks such as the London Interbank Offered Rate or Libor, prompted the European Union to propose the rules to supervise such indexes for the first time.
The draft law proposes that an administrator is appointed to oversee how each major benchmark is compiled, ensuring there is a record of who contributed to it.
Since then regulators have begun studying the foreign currency markets for possible manipulation.
“We have seen the scandals from last year with Libor and Euribor and now we have cases of suspected fraud in forex and commodities,” Emilie Turunen, a Danish member of the European Parliament’s economic affairs committee said.
“There is a legislatory gap we need to fill,” Turunen told the committee, meeting in Brussels on Monday.
The parliament has joint say on the law with EU states but is running out of legislative time ahead of elections in May with other major financial regulation to approve as well.
The committee’s British Liberal chairwoman, Sharon Bowles said the scope of rules was too wide to be practical and should be curbed to focus on top interest rate and commodity benchmarks, such as those using to price financial products sold on the high street.
“We can start slowly and then accelerate,” Bowles told the committee.
British Conservative lawmaker Syed Kamall said the Libor scandal should not be used as an excuse for more European regulation than is necessary.
“If we are going to do this as quickly as possible then we need to focus on a few benchmarks,” Kamall added.
But Turunen, whose Socialists & Democrats party is the second biggest bloc in parliament, said scope should be broad.
“I think the on-going cases of manipulation in many different areas shows we do need as wide a scope as possible when it comes to different products in different markets,” Turunen said.
Bowles said the aim was for the committee to vote on January 30 with a vote in full parliament in March. Parliament and lawmakers will have to agree on a common text to become law.
Reporting by Huw Jones; editing by David Evans