Banks are trying to limit their liability in setting Libor rates by determining a more scientific method. After the Barclays Libor rate manipulation scandal, banks are looking for a very clean method of setting the rate that calculates the rate using actual data.
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Several proposals for instituting a new method will be released August 13 by the Financial Services Authority (FSA). The FSA said in a new report that banks on the Libor panel are seeking ways to better regulate the Libor rate and prevent future scandals.
About a dozen banks are under investigation as a result of the rate manipulation scandal, which tilted Libor rates in favor of banks’ balance sheets and made them look healthier than they really were.
The report issued by the FSA is reportedly expected to serve as the foundation for amending parliamentary legislation. An international network is being formed to provide a globally consistent way to ensure accuracy of the rate
and to avoid the significant fines banks identified as participants in the scandal are being forced to pay.