In a speech entitled 'Pushing the re-set button on Libor', FSA director Martin Wheatley, today set out his plans to overhaul the benchmark which has been rocked by evidence of systemic abuse by traders rigging the rate to boost their bonuses and the standing of their bank.

Wheatley recommends that the British Bankers Association is stripped of its governance role in running the system, with oversight reverting to the FSA and a new independent third party that would be responsible for the administration of data submissions by market participants.

Key to the restoration of credibility will be the creation of a link between transaction data and submissions, says Wheatley, allied to the creation of a new code of conduct for submiting banks.

"This code of conduct should introduce specific guidelines prescribing that submissions be corroborated by trade data," he says. "Submitting firms will be subject to new tough systems and controls that will be put in place. Transactions will need to be recorded and there needs to be a requirement for regular external audit of submitting firms."

The new administrator will be chosen by a competitive tender run by an independent committee convened by the regulatory authorities. The tender process is likely to attract bidders from across the market data and index compilation industry, including Thomson Reuters (which calculates the current rate on behalf of the BBA), Bloomberg, Markit and FTSE.

"The new administrator should fulfil specific obligations such as surveillance and scrutiny of submissions as part of its governance and oversight of the rate," says Wheatley. "It is essential that the conduct of the new administrator should be rigorous and transparent, in order that they cleanse the brand of Libor, and generate trust in the process moving forward."