| the Journal of Regulation

Mise à jour : 17 septembre 2012 (Rédaction initiale : 12 septembre 2012 )

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On 5 September 2012, the European Commission launched a consultation on the production of financial indices

The case of Libor continues to produce its effects. Some of its ramifications are jurisdictional, through prosecution for price manipulation or cartel, some are normative, through institutional reflections about reforms deemed necessary of the Libor mechanism. After UK, it's the turn for the European Commission to organize a large consultation about it.

Mise à jour : 17 septembre 2012 (Rédaction initiale : 8 septembre 2012 )

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On 5 September 2012, the French bank, Société Générale, said it was conducting an internal investigation and it is working with the U.S. authorities in the case of Libor

Libor is the rate set by the bank statements, anticipating purchases liquidity between them. The Libor rate is the result of self-regulation. On this rate, the financial system leans to fix rates many different financial transactions. However, now many banks are sued by authorities, for manipulation. The banks made false statement or organize a cartel, producing a rate in their favor. From the condemnation of the Barclays 26 June 2012 by the Financial Services Authority (FSA), the commencement of proceedings, the constitution of the Commission to think reform Libor estimated pernicious, banks choose their strategy. Most prefer to cooperate fully in themselves investigation leading home and helping the authorities. This was the case of the Royal Bank of Scotland (RBS). Today it is the case of Société Générale (SocGen).

Mise à jour : 10 septembre 2012 (Rédaction initiale : 2 septembre 2012 )

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On August 24, 2012, Reuters news agency reported the amicable proceedings of Royal Bank of Scotland to obtain a transaction in the case of the Libor.

The Royal Bank of Scotland (RBS) is a British Bank controlled to 80% by the State. It is said involved in the case of the Libor. On August 24, 2012, Reuters news agency reported links between the Royal Bank of Scotland (RBS) and the British and North American regulators to stop the intended prosecution through a settlement. The interest is not in the subject of the announcement, but in the formulation. Indeed, the Bank denies the existence of this mutual understanding. Less than a month ago, it claimed that it would face prosecution and a few weeks ago, it claimed that it could be actions of traders and not its own, taken as operators. Today, these are lawyers who reveal the strategy of negotiations with the regulator. Thus, what made the right hand of the Bank, the left hand of the Bank ignores it and can do something else; the essential was to reassure the market.

Mise à jour : 28 août 2012 (Rédaction initiale : 23 août 2012 )

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On August 3, 2012, the Royal Bank of Scotland attributed to individual behaviour the breaches to the rules of operation of the Libor.

Libor is the rate of Exchange on the interbank market, important in that and also in what it's on the Libor rate that thousands of external financial transactions in interbank relations are based. In this manipulations on the Libor operated by banks are properly catastrophic. What can therefore be a disaster was opened with the sanction of Barclays on 27 June 2012 by the British Financial Services Authority (FSA) for manipulation. Investigations are underway, on multiple grounds, by many authorities on multiple grounds. The statement made on August 3, 2012 by the Royal Bank of Scotland is interesting in that, in the same time that it dismiss them, it said that manipulations that could discover in it are attributable to individuals and only to them. The system was thus not fraudulent. Therefore the declaratory system could be saved.

Mise à jour : 28 août 2012 (Rédaction initiale : 27 août 2012 )

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On August 18, 2012, the House of Commons of the United Kingdom published a report about Libor, alleging that the Bank of England and the Financial Services Authority (FSA) their lack of diligences.

This is the drama of the summer and the case of the Mistigri: in what game drag one that will drop the player? Indeed, it pretends to discover that the purely declarative Libor system works by the good of those who declare, namely the banks. If one day a child said that the King is naked... This day was June 28, 2012, when the Financial Services Authority condemned the Barclays for manipulation of course. Since then, is the head, the bulk of support as the other? Thus, the FSA condemns. Well takes it, since the Government asked him to consider a reform of the Libor. On 10 August, the FSA makes first conclusions, to an increase in the powers of the FSA. But the English Parliament responded on 18 August, stating that if the FSA had a little more control this before, nothing would have occurred. Oh, what beautiful summer...

Mise à jour : 28 août 2012 (Rédaction initiale : 22 juillet 2012 )

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The British Government has given to the Financial Services Authority (FSA) the study of the reform of the Libor. Works are expected to the end of September 2012.

The Libor is the rate of the interbank market practised in the United Kingdom. A large number of financial operations are based on it. So far, its daily development is grounded on a declaratory system on the part of the banks. Since the conviction of Barclays on June 27, 2012 by the Financial Services Authority (FSA) and the general suspicion that a very great banks have contributed to manipulations of the Libor, the relevance of the system itself is questioned. While investigations and prosecutions was put in place for the past in all countries, British Government give to the Financial Services Authority (FSA) study of reform of a Libor, either to detach itself from a declaratory system, or to keep an eye on it and internalize effective sanctions. The report, which will serve as a basis for the reform will be made the end of September 2012.

Mise à jour : 28 août 2012 (Rédaction initiale : 25 août 2012 )

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On August 10, 2012, the Financial Services Authority (FSA) proposes to make more objective the Libor system and increase the powers of the regulator and courts on the banks.

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.

Mise à jour : 1 août 2012 (Rédaction initiale : 7 juillet 2012 )

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On July 6, 2012, regulators, including English, German, Japanese, and North American open investigations about the Libor against banks.

On June 27, 2012, the "Financial Securities Authority – FSA" of the United Kingdom sanctioned the Barclays Bank to have manipulated the Libor. By a chain reaction, on July 6, 2012, the German regulator, Bafin, opened an investigation into banks, with no doubt on Deutsche Bank, while the Japanese regulator, the "Securities Exchange Commission" in the United States, the Canadian competition office, in particular open all investigations since the 6 July concerning all banks within their competence on their statements. In addition, JP Morgan said that it was already the subject of a class action in this regard. The domino effect begins.

Mise à jour : 23 juillet 2012 (Rédaction initiale : 17 juillet 2012 )

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The case of the Libor shows that from 2008 the Bank of England was alerted and would not have reacted. The July 9, 2012, Vice Governor denies formally.

The case of the Libor is already designated as case which will constitute a turning point in the banking regulation. Indeed, even beyond the astronomical amounts of fines, penalties and damages that were intended to be pronounced, it’ s the declarative system, that is to say the part of self-regulation, the system which is in question. All banks are implicated. Further investigation for agreement is also open. More importantly, it would appear that the Bank of England, Central Bank, knew as early as 2008, has not reacted, or has covered, or even may have been complicit in banks. Therefore, the terrible question appears: "who rely?".

Mise à jour : 17 juillet 2012 (Rédaction initiale : 5 juillet 2012 )

Sur le vif

On 27 June 2012, the Financial Services Authority - FSA (English Financial Market Regulator) by sanctioning Barclays Bank for the manipulation of Libor rates has put in the center of the regulatory system the credibility of crucial operators.

What is called the "Libor" is a contraction of "London InterBank Exchange Rate". Each morning, the banks reported Libor rates and all of the exchanges are backed with these statements. It is therefore the confidence that we make to them that holds the system. In a declarative system, it was easy for the Barclays Bank to report an inaccurate Libor, upward or downward, according to trade that it wanted to do. This is legally of course a price manipulation, which was sanctioned by the "Financial Securities Authority - FSA" on June 27, 2012, inflicting Bank fined nearly £ 60 million. But it is especially throughout the system of credibility of this Bank, and banks, which is undermined, since everything is based on the statements. We understand that therefore all managers are laid off, etc. Will that be enough to keep a system purely declarative?

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