Press release

The Wheatley Review

The Chancellor has commissioned Martin Wheatley to undertake a review of the framework for the setting of LIBOR.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government


As announced on 2 July 2012, the Chancellor of the Exchequer has commissioned Martin Wheatley, managing director of the FSA and Chief Executive-designate of the Financial Conduct Authority, to undertake a review of the framework for the setting of LIBOR.

The Wheatley review will formulate policy recommendations with a view to:

  1. Reforming the current framework for setting and governing LIBOR. This work should, inter alia, consider:

    • whether participation in the setting of LIBOR should be brought into the regulatory perimeter under the Financial Services and Markets Act 2000 as a regulated activity; 
    • How LIBOR is constructed, including the feasibility of using of actual trade data to set the benchmark;
    • The appropriate governance structure for LIBOR;   
    • The potential for alternative rate-setting processes; 
    • The financial stability consequences of a move to a new regime and how a transition could be appropriately managed.
    • Determining the adequacy and scope of sanctions to appropriately tackle LIBOR abuse. This work should consider:
  2. The scope of the UK authorities’ civil and criminal sanctioning powers with respect to financial misconduct, particularly market abuse and abuse relating to the setting of LIBOR and equivalent rate-setting processes; and the  FSA’s approved persons regime and investigations into market misconduct.  

  3. Whether similar considerations apply with respect to other price-setting mechanisms in financial markets, and provide provisional policy recommendations in this area.

As outlined by the Chancellor, the review will report by the end of the summer in order to enable the Government to consider recommendations with a view to taking legislative changes forward through the Financial Services Bill, which is currently being scrutinised in the House of Lords.

A discussion paper covering the points above will be published on 10 August 2012. Stakeholders will have four weeks to submit written responses to the Review. In recognition of the challenging timetable, Martin Wheatley and the review team will be seeking to engage actively with stakeholders during the consultation period. Martin Wheatley met with panel bank members today for an initial discussion of Libor reform and to set out his plans for the review. The review will aim to publish its conclusions by the end of September .

Martin Wheatley said:

The findings of the FSA - in conjunction with the US CFTC and the Department of Justice - relating to misconduct in respect of LIBOR and EURIBOR submissions are extremely serious in nature. This benchmark rate is used globally for trillions of dollars worth of financial contracts. Therefore, it is clear that urgent reform of the LIBOR compilation process is required. Such reform may include amendments to the technical definitions used for LIBOR, the associated governance framework and the role of official regulation. The review will also consider whether similar measures are required for other existing benchmarks.

The review will not consider any issues relating to the actions or alleged actions of specific financial institutions in attempting to manipulate LIBOR or other benchmark rates. These issues will continue to be investigated by the FSA and other regulators around the world.

Published 30 July 2012