The Libor manipulations successively discovered, led the British Government to request to the Financial Services Authority (FSA) a report to reform the system. On August 10, 2012, a progress report is made public. It proposes not to end self-regulation, but to temper it. Firstly, the declaratory system, too subjective, must be tempered by objective data (real transactions and other reference rate). Secondly, the power of monitoring and sanction of public authorities must be increased. This growing power must be that of the courts... and the Financial Services Authority (FSA). Stakeholders have until September 7, 2012 to respond. The British Government has entrusted in late July 2012 the Financial Services Authority (FSA) a report on the reform that is appropriate to operate concerning the system of Libor. It must be submitted at the end of September. Subsequent events show the method followed.
The British Government has entrusted in late July 2012 the Financial Services Authority (FSA) a report on the reform that is appropriate to operate concerning the system of Libor. It must be submitted at the end of September. Subsequent events show the method followed.
On August 10, 2012, a study report was made public by Martin Wheatley, managing director of the Financial Services Authority (FSA). The diagnosis is that: the Libor rate no longer fulfils its role, namely the correct fixing of the interbank rate.
It describes the causes: this is due to the structure of the Libor, which is its declarative character, and its "governance", that is to say the fact that the system is entirely in the hands of banks, without that public authorities will be involved. Thus, the Financial Services Authority (FSA) refers to the self regulation as a cause of malfunction of the Libor. It must be reformed.
The calendar is short. The regulator has less than 15 days to make its first observations. The place has until Sept. 7 to make it’s observations. The British Government could transform the report expected late September in legislation, to insert it into the text on financial services, pending before the House of Lords.
The commission is moving towards an increase of the powers of the Financial Services Authority (FSA) as a supervisor of the system (it is never better served than by yourself, rather than a complete dispossession of the banks. The interim report also proposes increasing the prosecuting powers of the courts.
This shows once again the continuity between the ex-ante and ex post. In addition, the declarative character (therefore subjective), which so easily allows the manipulation should be tempered by the obligation on the banks to state of objective data: not only proposed and actual operations: insertion of other reference within the Libor rate. Again, this is a matter of cursor, as we move from pure statement to the statement argued.
This shows that the financial system becomes more "rhetoric" in the original sense of the term, that is to say justified by speeches.