British regulators plan major overhaul of rate system

The system at the centre of the rate-rigging scandal will be overhauled as regulators respond to public anger over the manipulation of the London interbank offered rate, or Libor.

Martin Wheatley, the British regulator in charge of overhauling the rate-setting process, outlined plans on Friday that could lead to wholesale changes to Libor, which is used as a benchmark rate for more than $360 trillion of financial products, including mortgages and loans.

The reforms may lead to the scrapping of the current system, which is overseen by the British Bankers' Association. "The existing structure and governance of Libor is no longer fit for purpose and reform is needed," said Wheatley, who is managing director of the Financial Services Authority, the British regulator. "Trust in a vital part of the financial system has been badly damaged and timely action is needed to restore it." The tough words from British authorities come after one of the country's biggest banks, Barclays, agreed to a $450 million settlement with American and British officials after some of its traders and executives were found to have manipulated the rate.

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