Euribor maturities must be halved for simplicity, EU says

Accurate, Plausible

Organizations in charge of setting benchmark rates should seek to “verify the accuracy and plausibility” of the data they receive from banks and other market participants, according to the group, which said it may draw up a code of conduct.

The recommendations come less than a month after UBS AG, Switzerland’s largest bank, was fined $1.5 billion by U.S. and U.K. regulators for manipulating interest rates including Euribor. Barclays Plc was fined 290 million pounds ($467 million) in June last year for manipulating Euribor and Libor.

Regulators found that Barclays derivatives traders made at least 58 requests for Euribor submissions to be altered from September 2005 through May 2009, and that they coordinated with traders at other banks to manipulate Libor, including affecting specific rates when derivatives contracts are settled or reset.

At UBS, at least 45 bank employees, including some managers, knew of the “pervasive” practice of trying to alter rates, and a further 70 people were included in open chats and messages where attempts to manipulate Libor and Euribor were discussed, according to U.K. regulators.

Conduct Codes

The Royal Bank of Scotland Group Plc will be next in line to face sanctions.

The EBA set out guidelines for national supervisors, recommending they require their banks to have internal codes of conduct in place for Euribor submissions.

The report is an “important step towards ensuring that Euribor represents a transparent and reliable benchmark for financial transactions,” Andrea Enria, chairman of the EBA, said in an e-mailed statement.

The Stockholm interbank offered rate will also be pared down after the Swedish Bankers’ Association takes over the responsibility for setting the benchmark in March.

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