The EU wants to regulate financial benchmarks that are used in transactions worth trillions of dollars globally, an effort to prevent market manipulations such as the one involving the London interbank offered rate (LIBOR), an interest rate banks use to borrow from each other.
The European Commission, the executive arm of the 28-nation EU, on Wednesday unveiled draft legislation that tightens the financial instruments’ oversight, increases transparency and introduces stiff fines for manipulations.
Under the proposal, national regulators and a coordinating European body are granted new powers to investigate possible rigging or conflicts of interests and can issue fines of up to 10 percent of a firm’s revenue.
LIBOR is an average rate that measures how much banks expect to pay each other for loans. It underpins trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans. As a result, its manipulation can cause significant losses to consumers and investors, and distort the real economy.
“Market confidence has been undermined by scandals and allegations of benchmark manipulation,” said EU Commissioner Michel Barnier, who is in charge of financial services. “Some banks lied about the going interest rates by manipulating the index.”
“Today’s proposals will ensure for the first time that all benchmark providers have to be authorized and supervised — they will enhance transparency and tackle conflicts of interests,” he added.
The LIBOR scandal emerged last year when authorities realized banks — including Royal Bank of Scotland, Barclays and Switzerland’s UBS — were submitting false data to gain market advantages for their own trades.
US and UK regulators fined Royal Bank of Scotland more than US$460 million for rate-rigging. Barclays’ role led to a US$453 million fine and the resignation of chief executive Bob Diamond. Swiss bank UBS was fined US$1.5 billion, including a US$100 million fine imposed on subsidiary UBS Securities Japan during sentencing on Wednesday in the US.
The Commission’s proposal still needs approval by the European Parliament and the governments of the 28 member states, adding to a busy schedule of financial reforms to be pushed through in the coming months before parliament switches from working to full-time campaigning ahead of next May’s elections.
The proposal targets LIBOR and the Euro interbank offered rate (EURIBOR) interest rates, but its scope includes many other benchmarks that are used to reference financial instruments.
An initial idea to hand oversight of the benchmarks such as LIBOR and EURIBOR to a European agency was thrown out amid resistance from Britain — which is home to the bloc’s biggest financial industry — and concerns that the relatively small European Securities and Markets Authority (ESMA) agency does not have the resources for the job, EU officials said.
However, if national regulators cannot reach an agreement between them on a particular case, Paris-based ESMA would be able to decide by binding mediation, according to the proposal.
Macronix International Co (旺宏), the world’s biggest NOR flash memory supplier, yesterday said it would spend NT$22 billion (US$699.1 million) on capacity expansion this year to increase its production of mid-to-low-density memory chips as the world’s major memorychip suppliers are phasing out the market. The company said its planned capital expenditures are about 11 times higher than the NT$1.8 billion it spent on new facilities and equipment last year. A majority of this year’s outlay would be allocated to step up capacity of multi-level cell (MLC) NAND flash memory chips, which are used in embedded multimedia cards (eMMC), a managed
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
CULPRITS: Factors that affected the slip included falling global crude oil prices, wait-and-see consumer attitudes due to US tariffs and a different Lunar New Year holiday schedule Taiwan’s retail sales ended a nine-year growth streak last year, slipping 0.2 percent from a year earlier as uncertainty over US tariff policies affected demand for durable goods, data released on Friday by the Ministry of Economic Affairs showed. Last year’s retail sales totaled NT$4.84 trillion (US$153.27 billion), down about NT$9.5 billion, or 0.2 percent, from 2024. Despite the decline, the figure was still the second-highest annual sales total on record. Ministry statistics department deputy head Chen Yu-fang (陳玉芳) said sales of cars, motorcycles and related products, which accounted for 17.4 percent of total retail rales last year, fell NT$68.1 billion, or
In the wake of strong global demand for AI applications, Taiwan’s export-oriented economy accelerated with the composite index of economic indicators flashing the first “red” light in December for one year, indicating the economy is in booming mode, the National Development Council (NDC) said yesterday. Moreover, the index of leading indicators, which gauges the potential state of the economy over the next six months, also moved higher in December amid growing optimism over the outlook, the NDC said. In December, the index of economic indicators rose one point from a month earlier to 38, at the lower end of the “red” light.
RSS