UK - Individuals involved in the submission process for the London Interbank Offered Rate (LIBOR) should be "approved persons", but regulators' scope when it comes to criminal investigations should remain limited, according to the Investment Management Association (IMA).
Following the LIBOR scandal - in which Barclays and other banks admitted to having attempted to fix the rates for years - the UK chancellor of the exchequer commissioned Martin Wheatley, managing director of the FSA and chief executive-designate of the Financial Conduct Authority, to review the framework for the setting of LIBOR.
Responding to the consultation, the IMA strongly advocated correcting current deficiencies rather than replacing LIBOR with a new benchmark.
The association conceded that the Sterling OverNight Index Average (SONIA) could be used to "an extent", but it argued that the SONIA rate failed to reproduce all the characteristics of LIBOR.
Adrian Wood, regulatory adviser at the association, said: "We strongly prefer the correction of the current deficiencies in LIBOR over a solution that requires any transition or migration to other benchmarks.
"This will involve the wholesale re-organisation of the governance of LIBOR, placing the regulator at the heart of the process."
The IMA said that, because the LIBOR scandal had caused "significant" reputational damage to London, appointing a governance body in the short term would show that UK authorities were taking action, particularly given that revisions to the European Market Abuse Regime are unlikely to come into effect before 2015.
It also suggested that the regulator should approve both senior managers and individuals responsible for making submissions for LIBOR.
"Individuals may not be client facing, but they could have a significant influence on the firm, if they incur multi-million pound fines," it added.
However, it insisted that regulators should not be provided with specific powers of criminal investigation and prosecution.
"We should not support a rush to impose new criminal offenses, which would - potentially and unintentionally - criminalise a wide swatch of activities unrelated to LIBOR or other benchmarks," it said.
Meanwhile, a survey conducted by the CFA Institute among its members shows that 34% of respondents believe institutional investors have been most negatively affected financially by the manipulation of LIBOR.
The poll, which seeks to inform the UK government's Wheatley Review and the European Parliament's public consultation on LIBOR, also revealed that 55% of respondents believe LIBOR should be administered and overseen by industry bodies, but subject to regulatory oversight.
Additionally, 82% of respondents would like regulators to be endowed with powers to pursue criminal sanctions over LIBOR manipulation.
The survey suggested that there were a number of possible alternatives to LIBOR, including the use of other market-based interest rates and repo rates.
Rhodri Preece, director of capital markets policy, said: "Investment professionals have made it clear the process can be improved by using actual transaction rates and better oversight.
"Allied to a strong commitment to ethical behaviour among individuals and firms, these steps can help re-build confidence."