Libor rate oversight to be handed to new UK regulator

Due to come into force on April 1, the rules meant to restore credibility to the tainted benchmark

Regulatory oversight of Libor rates will be handed to the UK Financial Conduct Authority on April 1, under rules meant to restore credibility to the tainted benchmark. Those who set the London interbank offered rate must corroborate submissions and monitor for possible rule-breaches, the Financial Services Authority said today. The administrators will have to appoint a person approved by the regulator to oversee compliance, as will an individual at banks that contribute submissions.

Libor, used to set rates for more than $300 trillion of securities, is being overhauled after three banks were fined for attempting to manipulate the benchmark and more than a dozen other lenders are still being investigated. "Confidence and trust are critical to financial markets," said Martin Wheatley, chief executive officer-designate of the FCA that will replace the FSA on April 1.

"That trust has been eroded by the Libor scandal and the recent enforcement action against several banks. These new rules today should help restore that faith and bring integrity back to Libor."

Wheatley carried out a review at the request of Chancellor of the Exchequer George Osborne. Barclays Plc, Britain's second- biggest lender, paid a record fine in June for manipulating Libor.

Banks must also develop clear conflict of interest policies under the new rules, the regulator said.