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.
Cairo’s new monorail slices across the city skyline, running above the familiar chaos of blaring horns and aging buses’ exhaust fumes that mark rush hour below. The US$4.5 billion monorail, opened this month, is among Egypt’s most prominent new transport projects, part of a debt-funded infrastructure drive criticized for sapping state finances while bringing limited benefits to most of the country’s 109 million people. “It feels like you’re in a different country,” said Ramy Sayed, a restaurant manager, aboard a driverless Innovia 300 train. “No noise, no traffic, we’re not used to this.” The eastern line runs 56km from the bustling middle-class
Taiwanese firms have increased investment in the Philippines in recent years as Manila’s ties with Washington deepen and global supply chains continue to shift away from China, an expert at the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The Philippines had not been among Taiwanese investors’ top choices in Southeast Asia, CIER Taiwan ASEAN Studies Center director Kristy Hsu (徐遵慈) said at a seminar in Taipei. However, Taiwan’s investment in the country has grown significantly since the COVID-19 pandemic, reaching US $257 million last year, a high in recent years, she said. Although Taiwan’s total investment in the Philippines still lags
Intel Corp regards Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) as a longstanding partner, as the US chipmaker would continue outsourcing production of advanced chips to TSMC, Intel chief executive officer Lip-Bu Tan (陳立武) said yesterday. “I don’t look at people as competitors. I look at the collaboration... Nvidia is also, you know, a good friend,” Tan told a news conference following his keynote speech at the Computex trade show in Taipei. “It’s a very trusted partnership for us... We are a big, top customer for them, and we’re going to continue doing that,” he said, referring to TSMC, the world’s largest foundry
Artificial intelligence (AI) agents would supplant smartphones as the center of people’s digital lives, fundamentally reshaping personal devices and driving a major computing upgrade cycle, Qualcomm Inc CEO Cristiano Amon said yesterday. In his keynote speech for this year’s Computex trade show in Taipei, Amon said that the rise of "agentic AI" — AI systems capable of reasoning, planning and carrying out tasks autonomously — would transform how people interact with technology across phones, PCs, vehicles and wearable devices. Describing the technology as the next major evolution in computing, Amon said that "2026 is the year of agents.” For decades, smartphones have sat
RSS