Britain’s Financial Services Authority announced on Monday detailed proposals on how to overhaul Libor following the scandal over fixing the key global interest rate.
The FSA announced final proposals for new regulations on how financial market benchmarks are calculated, tightening requirements that information is more transparent.
Barclays, Royal Bank of Scotland and UBS have paid over $2 billion to settle allegations they manipulated Libor to their advantage or hide their financial strains during the 2008 credit crunch.
Libor, or London Interbank Offered Rate, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money.
Libor is calculated daily, using estimates from banks of their own interbank rates, and affects the pricing of more than $300-trillion of contracts across the world, according to the FSA.
In addition to requiring Libor’s new administrator to corroborate data submitted by banks, the banks themselves will have to tighten their internal controls concerning Libor information.
Martin Wheatley, who is to lead Britain’s new FCA financial market regulator that begins operations next month, said that confidence and trust are critical to financial markets and that the Libor scandal had eroded them.
“These new rules today should help restore that faith and bring integrity back to Libor,” he said.
The management of Libor taken was away from the British Bankers’ Association in the scandal, and it has yet to be decided who will oversee the rate.