July 9, 2012 / 3:33 PM / 8 years ago

EU plan should punish Libor-style abuse: Barnier

BRUSSELS (Reuters) - The top EU financial regulator said on Monday he intends to reinforce planned market-abuse legislation to include manipulation of benchmarks such as Libor, after British bank Barclays was fined for the practice.

“I consider that we now need to reinforce these texts to cover these types of manipulations more directly,” Michel Barnier said in a speech to the European Parliament’s economic and monetary affairs committee.

As it stands, the market-abuse proposal, which is now being negotiated with the European Parliament and EU member governments, defines insider dealing and market manipulation as criminal offences and lays down minimum penalties.

A global investigation into manipulation of interbank lending rates widened last week with Britain’s fraud squad taking up the case.

The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars in contracts around the world.

Authorities in the United States, Europe, Japan and Canada are examining more than a dozen big banks over suspected rigging of Libor (the London Interbank Offered Rate).

British-based Barclays has so far been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.

Reporting by Ben Deighton and John O'Donnell

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