Conservative MPs have hit out at an EU “power grab” to transfer the supervision of Libor from the Financial Conduct Authority to the European Securities and Markets Authority following last year’s rate rigging scandal.
A draft of the European Commission’s proposals, seen by the Financial Times, aims to move direct supervision of Libor to Esma, which is based in Paris.
This follows the FCA’s own review into Libor which was published in September. The review set out 10 recommendations to improve the Libor system but suggested keeping Libor UK-based.
The commission argues it should control benchmarks that are critical to more than one country. The FT reports it wants the power to seize documents, demand market information, gain access to traders’ systems in commodities markets, suspend trading of the financial instrument that references a benchmark, freeze assets and correct mistakes.
Conservative MP Mark Field says the UK has made Libor reforms in “double quick” time and the EU is using the issue to attack the City.
He says: “It’s basically a power grab by the European Commission that should be resisted at all costs. Hopefully our Treasury team put up a robust fight to make sure the Commission doesn’t get away with what it is trying to do.”
Conservative MP Brooks Newmark says: “We have seen enough transfer of powers away from the UK and as it says on the tin it’s a London offering rate so it should be based in London under our regulations and not under European regulations.”
Liberal Democrat MEP Sharon Bowles says: “Benchmarks are not on the priority list so for all the jumping up and down about it we probably won’t get very far. I would expect it to be modified even before it is published by the Commission and certainly afterwards.”