OPINION: Regulatory authorities in the United Kingdom have sought to recapture lost authority with the release of a discussion paper outlining proposed changes to the governance of the London Interbank Offered Rate (Libor).
The review is informed by three conflating and conflicting dynamics. It is diplomatic about past regulatory failure, blaming the lack of external supervision on an incomplete mandate.
It is forceful in detailing the past and continuing risk of manipulation by market actors. Third, it is exceptionally defensive about the need to safeguard London’s centrality in establishing global benchmarks.
In none of these areas does it offer tangible evidence of how the proposed reforms will provide warranted confidence in the integrity of the Libor benchmark or thought leadership in the design of a potential successor.
Professor Justin O’Brien is director of the Centre for Law, Markets and Regulation in the UNSW Faculty of Law.
This opinion piece first appeared in The Australian Financial Review. Read the full article here.