The voting on the European Commission's proposal on indices used as benchmarks in financial instruments and financial contracts scheduled for today was postponed to 30 January and an agreement on new rules for regulating benchmarks such as the Libor or Euribor indices is no longer expected to be reached during the current parliamentary term.
In September 2013, following the Libor and Euribor scandals, the Commission proposed new legislation to help restore confidence in the integrity of benchmarks. The new rules are said to be aimed at enhancing the reliability of benchmarks and facilitating the prevention and detection of their manipulation by authorities. In December, the Commission fined a group of major global banks - accused of manipulating European and Japanese benchmark interest rates for years - a total of 1.7 billion euros.
The Economic and Monetary Committee MEP’s decision emerges from the need to agree on a joint position since the negotiations between member states are progressing at too slow a pace. MEPs agree that the proposal includes too many benchmarks and that they should not deviate from the goal to design a regulation with “as wide a scope as practical," said Emilie Turunen, a Danish centre-left member.
Although there is consensus among lawmakers that there is no need to include all benchmarks, MEP's remain divided over which benchmarks to include and whether legislators or an EU supervisor should decide it.
British Conservative MEP Syed Kamall said "we should not be regulating a benchmark simply for the sake of it”, calling for the supervision of Libor to remain in the UK. Also, the committee's chairman, UK Liberal Democrat Sharon Bowles, proposed that ESMA could have responsibility for top benchmarks with day-to-day supervision delegated to individual countries.
BETTER FINANCE reaffirms that the manipulation of currency markets is an alarming situation that needs to be addressed post haste and is miffed by the fact that the European Union institutions are missing the opportunity to submit these markets to regulation. Following the widespread cases of index manipulation, BETTER FINANCE again calls for the thorough regulation of indices used as key benchmarks for widely used retail products, and intended to measure the price or performance of an opaque and/or illiquid market (such as the interbank short term loans market for example and the index supposedly measuring it, the LIBOR). In turn, the information of other widely used financial indices such as many equity or bond indices should be made available by index providers to the general public.