Regulators and global banks are considering an overhaul of how interbank lending rates are calculated and regulated, following claims that the benchmark Libor lending rate may have been manipulated, the Financial Times reported on Monday.
The British Bankers' Association, or BBA, which sponsors the London interbank offered rate, along with many of the banks that help set it, met with officials on Monday to start a review process, the newspaper said.
A worldwide investigation of the manipulation of the benchmark rate that underpins $10 trillion (6.29 trillion pounds) in loans to consumers and companies and a further $350 trillion in derivatives is ongoing.
As part of the normal reviewing processes of Libor, a number of contributing banks met today to consider future regulatory and market developments, such as the incoming liquidity rules, relevant to the parameters that Libor measure, the BBA said in a statement, according to a report on the Financial Times website.
The BBA and the banks met with officials from the Treasury, the Bank of England and the Financial Services Authority (FSA).
The BBA said a technical discussion with interested groups including users of the rate will commence shortly and said it would keep government officials and the market informed, according to the report.
The review could include everything from a revamp of how Libor rates are set to new regulatory oversight and compliance requirements for participating banks, the FT cited people familiar with what was discussed in the meeting as saying.
Industry participants discussed market concerns about the rate-setting process and made suggestions on how to improve it. Representatives from the Treasury, the FSA and the Bank of England did not make clear which approaches they favoured, according to the report.
Regulators have been investigating banks that helped set Libor and Tokyo's Tibor, since late 2010. Authorities want to determine whether banks colluded in setting overnight rates during the financial crisis and whether traders and their clients used the information for trades.
No traders have been charged in connection with manipulating Libor, but several global banks have said they have been approached by authorities investigating how Libor is set.
More than a dozen traders at U.S. and European banks and interdealer brokers have been suspended or fired in recent months because of the Libor probe, the FT said.
(Reporting by Clare Kane; Editing by Dan Grebler)